mta.info

Wednesday, January 21, 2009
Outline of remarks by Elliot G. Sander
Crain's New York Business Breakfast Forum
Grand Hyatt
New York, N.Y.

Thank you, Greg. I'm pleased to have the opportunity to talk about the MTA.

Before we talk about the dark financial clouds enveloping the MTA, important to talk about the good news - the dramatic progress the MTA has made.

The MTA has undergone one of the most dramatic public sector turnarounds over the last 25 years.

Mechanical reliability of our subway cars is 20 times what it was in 1982, and is the highest in the country.

That means that the average subway rider today experiences a delay related to equipment failure about once or twice a year. In 1982, the average rider experienced 27 such delays each year, or more than two every month!

Our commuter rail fleet and bus fleet has reached similar performance levels.

The LIRR hit its highest on-time performance, 95%, last year

Next week we will announce that Metro-North achieved its highest customer ratings ever, and our biggest operational challenge, subway on-time performance, is driven by the fact that our ridership has increased by over 50% in the last ten years.

In addition to the metrics, we have made very substantial progress on the seven priority areas I laid out in early 2007.

We have developed a stronger and more supportive relationship with our employees, and that includes both our management and represented staff, and that leads to better service for our customers.

We have transformed the very core organizational structure of the MTA:

We've merged our three bus companies.

We've implemented a transformative re-organization in subways featuring general managers that results in real operational accountability in our subway system for the first time, while also enabling us to eliminate a layer of management, saving millions of dollars.

We have implemented a wide variety of customer service improvements, including improved signage, text messaging, emails, and dramatically improved response and public information during storms and major incidents.

We have put forward a strong long-term planning vision for the MTA while advancing the megaprojects and with the strong support of NYC DOT implemented the first BRT line.

And we have made our network safer and more secure.

At the end of a public hearing last month, long-time MTA critic assemblyman Richard Brodsky said his only criticism of the MTA was that we had not been successful enough in getting credit for what we had achieved. So much for getting points for modesty!

Obviously these achievements reflect the capital investment that has been made in the MTA. I am proud of these achievements, but for the MTA and the average straphanger, who experiences the overcrowding and the other constraints of an aging system, it is not good enough.

But both quantitatively and qualitatively, it is a dramatic improvement from where it was in the 70s and 80s, and significantly better than it was even 10 years ago. And we are well positioned to make it even better.

Now for the bad news.

As most New Yorkers are aware, in December, our Board approved a doomsday budget that includes draconian fare increases and service reductions.

This is the result of the deficit the MTA faces in 2009 of approximately $1.2 billion.

This is driven largely by our debt service costs, combined with the collapse of the economy.

Many of you may recall that in 2000, the MTA restructured and stretched out its debt. However, what was missing was any new revenue to pay for that new debt service.

As a result, our annual debt service payments have grown from about $500 million in the mid-1990s to about $2 billion, or about 20% of the MTA's budget, by 2012.

At the same time, the real estate transaction taxes that are dedicated to the MTA, which are tied to the health of the economy, fell 41% in 2008, dropping $645 million versus the prior year.

We are in this position despite unprecedented belt-tightening at the MTA.

From 2004 to 2007, we cut our budget by 5%.

I committed to cut our budget by an additional 6% over the next four years. However, because of the urgency of our situation, these cuts will now take place

over the next three years instead.

We will reduce our managerial and administrative expenses by approximately 7%, with dramatic reforms such as:

The integration of our bus companies,

The consolidation of our back offices with a new MTA Business Service Center, which when fully implemented in our first phase will save between $30 and $40 million a year, and

Much greater collaboration between our two commuter railroads.

But, with administrative costs representing only 7% of our expenses, and with ridership still at record levels, we cannot get there alone.

However, the thing that concerns me the most is that we have no clearly identified State funding - which provides the bulk of our financial resources -for our next five year capital plan, which must be adopted by the end of this year.

Overall, the MTA system has an asset value of approximately one trillion dollars, and so while the numbers we talk about are huge -

$22 billion to maintain the system

$5 billion to complete the first phase of Second Avenue and East Side Access

$1 billion to bring Metro-North into Penn Station,

They are on the low side given the useful life of our system components. We still have an aging signal system, which means that except for the L line, we can only run 24 or 25 trains an hour rather than 28 to 30, and not provide the passenger information our customers demand. Running just four to five more trains per hour would mean a big reduction in the level of crowding on our busiest lines. Our subway signal system is the underlying safety mechanism that prevents trains from colliding and directs train movement throughout the system. It was designed and built in the 1930s and earlier.

[Lift relay device and cables.]

Here is what is called a relay device, and here are some 75-year-old cables, just removed from the Queens Boulevard Line.

When these items were new, Underwood typewriters were in every office, and radio teletype machines were the latest in communications.

Those machines are long gone, but our signal system, on which million of people rely each day, endures.

The talk in Washington these days is of investing in infrastructure as an economic stimulus. During the Great Depression, New Yorkers understood the value of new infrastructure. They knew that building the Empire State Building and the IND Subway System were smart investments in the city's future.

We are in similar economic straits today. Investing in MTA projects will help the city and region weather the global recession. Maintaining the core infrastructure and completing the Second Avenue Subway and East Side Access will also position the region to take advantage of the next upswing in the regional and national economy.

That is why it is critical that the legislature adopt the recommendations of the Ravitch Commission to secure the funding for our operating and capital budgets.

While the key elements of that plan are painful - an increase of three tenths of one percent to the payroll tax in the MTA's 12 county region, and the imposition of bridge tolls on the untolled East River and Harlem River bridges, the alternative of failing to adequately invest in the MTA is far worse:

Much higher fares and less service, both of which are unacceptable from an economic, social and environmental standpoint.

We are heartened by the Federal stimulus bill, which has the prospect of providing the MTA with, we estimate, between $1.5 and $3 billion, depending upon the House or Senate version. These resources are critical, but again, represent somewhere between 5% and 10% of our capital need for the 2010 to 2014 program.

Before I conclude my remarks, let me suggest that we remind ourselves of three things:

1) How important our transit system has been to making the NY metropolitan region what it is.

2) To appreciate how the revival of NY in the recent past is in many ways synonymous with the MTA's progress.

3) And to recognize the critical competitive advantage our transit system will give us with our global competitors if we make the investments that are required, and where our region will lie if we do not.

Before I close, I'd just like to share a very quick story.

Yesterday, shortly after the inauguration, Dick Ravitch was in our office for a meeting and I asked him to address our senior staff briefly.

He updated our team on his efforts in support of the commission, and thanked everyone for their hard work.

Then he summed up the importance of the situation better than I ever could.

He said, regardless of your politics, today is a day of renewal and hope from Washington for the future of our country.

And all of the things we might wish for our region - economic recovery, prosperity, equity, environmental sustainability - they all require a 21st Century transportation network.

So today, despite our situation, I am filled with hope. But I know that our future is tied directly to the health of our transit, and I need your help in ensuring it is not neglected at this critical time.

Thank you.