APTA | Passenger Transport
October 11, 2010

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Coping with Funding Challenges in a Tough Economy
BY SUSAN BERLIN, Senior Editor

Representatives of the two largest U.S. public transportation agencies—New York’s Metropolitan Transportation Authority (MTA) and the Chicago Transit Authority (CTA)—joined other speakers to examine funding issues in difficult economic times at an Oct. 4 General Forum during the APTA Annual Meeting in San Antonio, TX.

“In crisis there is opportunity—and I think we have a lot of opportunity now,” said moderator and APTA Chair Michael J. Scanlon. “We’ve been on a tough road. We would be worried about transportation authorization even if we weren’t in a recession. What we need to know are: what are the opportunities? Are there ways we can be smarter?”

In his keynote address, MTA Chairman and Chief Executive Officer Jay Walder noted that he rejoined the New York agency after a 15-year absence, saying: “I’m amazed at how much stronger our industry is today than it was before. You have done something I wasn’t sure was possible—transit is no longer an asterisk on the federal highway bill. In that context, the benefits we’re providing today are more fundamental to issues of the day than ever before. Whether the issue is environmental, energy, or dealing with economic crisis, we’re in the middle of it.”

Walder listed some ways fiscal retrenching has been beneficial for the MTA. The authority has consolidated its phone numbers from the previous 92 and brought together its five call centers: by comparison, multinational corporations have a single call center, he said. By eliminating jobs, renegotiating contracts, and consolidating redundant functions, MTA is on track to save $500 million next year and up to $750 million by 2014.

“We kept asking ourselves, if we cut costs and do what it takes to keep the place running, is that good enough? The answer was a resounding no,” he continued. “People want to know we’re using their tax dollars and fares wisely, that we really care about service. They don’t want to hear excuses.”

CTA President Richard Rodriguez, representing the second-largest U.S. transit agency, said his agency is facing struggles very similar to those in New York City. “About two years ago, we learned that our operating funds were being cut,” he explained. “We went to work streamlining operations, hedging fuel costs—we did have to reduce 18 percent of service, but ridership declined by only 1 percent.”

Carolyn Flowers, general manager of the Charlotte Area Transit System in Charlotte, NC, said she has faced experiences similar to those of Walder, but on a different scale. “Charlotte had experienced a large stretch of growth, but now there’s been an erosion in our sales taxes. We’ve had to look at our operations, find ways to control fuel and labor costs and ways to reduce structural costs going into the future,” she said.

Small and mid-size properties must leverage the assets they have, she said. “The only way you’ll grow is to build on what you have … look at best practices of larger operators and see if you can adapt them to your agencies, and be able to take those models and use them because we won’t have resources to do it by ourselves.”

Mortimer L. Downey III, chairman, PB Consult, and president of Mort Downey Consulting LLC, said transit agencies must begin with “fundamentals: control of operations, control of financial systems, focus on customers, treating transit as a business.”

He next spoke of the value of public-private partnerships in problematic economic times. “While partnerships provide new money, that isn’t the most important thing. Investors like a nice safe place to put their money,” he explained. “We can also change the way we design and manage projects: if we’re building a major new line, we can sit down with developers and determine how we can design it to increase the size of the pie for all of us. That’s something we really have to build on.”

Robert E. Skinner Jr., executive director of the Transportation Research Board, noted that recessions have occurred about every eight years since the early 1980s and that such cycles are inevitable.

“Every one of us in our jobs, every agency and organization, has an opportunity to innovate,” Skinner stressed. “That’s the way I think we should be looking at our own jobs and agencies: not just receptive to innovation, but proactive. This is a field worthy of being taken very seriously. We have all these challenges and innovation has got to be part of the answer.”

AECOM sponsored the session.


Participants in the General Session “Crystal Ball vs. Harsh Realities—The Future of Managing and Financing Public Transportation Systems in Unprecedented Economic Times” include, from left, moderator Michael J. Scanlon, Robert E. Skinner Jr., Carolyn Flowers, Richard Rodriguez, Mortimer L. Downey III, and Jay Walder.



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