February 17, 2010
Good afternoon Mr. Chairman, members of the Board, and to everyone assembled.
I am very pleased to be here today as NJ TRANSIT’s new Executive Director, and speaking at my first regular Board meeting in this position.
It is truly an honor to be selected by Governor Christie and the Board of Directors to serve as the E.D. I look forward to working with all of you, many in the audience with whom I have worked before.
As you may know, this is something of a homecoming for me, as I formerly served as Department of Transportation Commissioner and consequently, NJ TRANSIT Board Chairman.
As such, I am well aware of the extraordinary talent here and I know that NJ TRANSIT has an outstanding record of delivering safe, reliable service for customers statewide, as well as leadership for the transit industry nationwide.
I’m proud to say that the people who work here and have worked here over the years are the best of the best. In fact, I’ve spent eight years traveling around the country, and whether at Amtrak or AECOM, I’ve run into alums of NJ TRANSIT who are responsible for running transit systems or large agencies in other parts of the U.S.
I am committed to working with the Board and staff to build on that strong foundation and to continue improving the NJ TRANSIT system, particularly in the midst of building one of the largest infrastructure projects New Jersey has ever undertaken, the ARC tunnel project.
The opportunity to lead this agency is what drew me back to public service. Despite the many challenges we face in an uncertain economy, I know this organization is well positioned to respond with creative solutions, innovations to better serve customers, and an entrepreneurial spirit to turn business challenges into opportunities.
At my first Board meeting as executive director, it would probably be customary to end on a lighter note. But I think it’s important to be upfront and talk about the challenges we face because they are as urgent as they are complex.
As you may know, last week Governor Christie announced an 11% reduction in our FY10 state subsidy – a reduction of about $33 million. While the Governor understands and values our public transportation network and appreciates the importance of the transit system to our mobility, the state faces a current year deficit of $2 billion – and a set of very difficult choices to keep the state budget balanced.
Let me say candidly that the outlook is even more grim for FY 11 both for the state and for NJ TRANSIT. In the transition report that I helped prepare as head of the transportation subcommittee, we indicated that TRANSIT would face a budget deficit next year of about $200 million. After reviewing more recent data, the projected operating deficit is approaching $300 million.
Let me explain why. The state faces an $11 billion deficit next year and will not be in a position to afford historic levels of NJT subsidy. We are very unlikely to receive another round of stimulus and one-time federal funds, which was utilized last year to help bolster the operating budget by $150 million.
Also, there are certain inflationary costs such as fuel, parts and contractual agreements. Finally, ridership has declined systemwide by about 4%, which means passenger fare revenue has declined. As ridership trends mimic the regional and national economic outlook, it may be some time before we see a rebound to historic levels.
Working with the Governor’s office and the Board, I have an obligation to balance the budget. Make no mistake that this will be difficult. We cannot ask the state for help it cannot afford to give, and we cannot pretend otherwise or we risk making a bad situation worse.
Balancing the TRANSIT budget will take a combination of actions and some innovative thinking about doing things differently than we have done before. While we are still developing our budget plan, let me tell you that I am committed to a process that holds us to high standards:
First, we will not compromise safety and service reliability. That’s job one. Second, we will not ask our customers to pay more at the fare box until we have identified every possible efficiency and sacrificed internally. Everything is under review, including reducing our payroll and fringe expenses, locking in fuel costs and reducing parts inventories.
In discussing impacts on fares and service, we will be absolutely transparent, and seek the input of our customers and stakeholders on any fare and service proposals. I appreciate some of the good ideas we have already been hearing from our labor partners and will continue to seek opinions and listen carefully to suggestions that improve this agency.
I will be reaching out to many of you over the next few days to solicit your input as we develop the fare and service change proposals. But let me say clearly that some of the adjustments we will have to make will be painful.
To that end, we are announcing today a series of public hearings in late March on the fare and service change proposals. The hearings will take place mostly at our facilities and will be held in Newark, Atlantic City, Trenton, Secaucus, Camden, Paterson, Hackensack, Manalapan and New York.
An extended period of public comment will be available online on our website beginning in early March.
More detailed information on the proposals and the hearings will be made available in the next week or two on our website and through formal public notices statewide.
I also note that at the invitation of Chairman Wisniewski, I will be testifying before the Assembly Transportation Committee tomorrow morning to report on where we stand in this process.
Let me close by saying I am confident we will emerge from this challenging time as a stronger agency, with a more stable financial picture, and continued pride in our service to customers. I ask for the help of all of you, and the larger NJ TRANSIT community, as we navigate this financial storm.