L.A. officials call MTA bus costs bloated, seek to privatize system.

The City of Los Angeles is trying to persuade the Los Angeles County Metropolitan Transportation Authority to allow the city to take over some of the MTA's commuter bus lines and contract the service out to private operators.

City transportation officials said they believe MTA bus operation costs are bloated, and that the service would cost considerably less if provided by a private company, saving MTA dollars for other needed transit projects.

"They (the MTA) operate at a much higher operating rate than anyone else," said James Okazaki, the city's chief of transit programs. "I run a lean and mean operation here. ... We are proposing more service for less cost."

In 1987, the city and county took over 16 bus routes canceled by the ten-Southern California Rapid Transit District and contracted out operation of those routes to private companies. The Federal Transit Administration reported that competitive contracting in that case "resulted in cost savings of 60 percent over a three-year period, improved quality of service and increased ridership."

Okazaki categorized the costly MTA bus operating budget as a "black hole" that is sucking up all the connty's transit dollars.

Back in June, Okazaki's senior transportation engineer Michael Uyeno wrote a report supporting the proposal to contract out MTA bus service.

"The budget problem is that LACMTA service costs too much. ... In fiscal year 1992, LACMTA service cost $88.61 per revenue service hour. The average cost for the municipal operators is $52.44 per revenue service hour. This is 41 percent lower than LACMTA and is consistent with findings of studies by Price Wa[erhouse and Ernst and Young," wrote Uyeno.

"The bottom line is that there is a real operating budget savings attainable by having an operator other than LACMTA provide service; 26 percent almost immediately and possibly up to 60 percent in the longer term. This higher cost at LACMTA may be due, in part, to poor management. But more likely it is due to the inherent difficulties in operating a large 2,000 bus system.

"Another factor in the high cost is that the LACMTA has had a virtual monopoly in providing but transit in Los Angeles. This has led to two problems characteristic of monopolies -- high cost and poor service quality. Without direct competition, there are few controls on LACMT's operating costs or service quality."

Dana Woodbury, deputy executive director for planning and programming at the MTA, said the MTA's costs are higher than those of municipal operators (that contract out with private companies) because the MTA provides a number of services the others don't -- such as transit police and customer relations.

Okazaki, however, said he believes the MTA's inflated costs may be due largely to its payroll. MTA bus drivers make more money than any other bus drivers in the country, Okazaki said.

He ssaid the MTA's unions have "more political clout" than the Teamsters, which represents most bus drivers that work for private companies.

Woodbury said the MTA unions have been able to negotiate high salaries for bus drivers, mechanics, transit police and others because "the MTA officials have not been in a position to bargain equally hard."

Woodbury said that it would be extremely difficult for the MTA to hire enough replacement workers, in the event of a strike, to maintain its huge operation. For this reason, the MTA has been forced tw accept union terms that a smaller transit agency/private company may be and to negotiate, he said.

Okazaki said he and his staff have been meeting with MTA Chief Executive Franklin White and his staff for months, and the MTA is "looking at this seriously," but "right now, they don't like our numbers."

The debate over potential cost savings revolves around the difference between "marginal" and "fully allocated" costs, said Okazaki. Marginal cost savings are those that result in the short-term from small changes in service. Fully allocated most savings are based on long-term effects.

Woodbury said the MTA has to look first at short-term casts because it is trying to balance a $100 million-plus deficit.

"We are in the midst, at the staff level, of looking at all bus services to restructure and cut costs," said Woodbury. "When we're looking at how (to) address a huge budget deficit looming ahead, we have to look at out-of-pocket expenses, and that's basically marginal expenses.

"It's kind-of an academic exercise to look at fully allocated costs now. Saving money five or 10 years down the road doesn't do us any good with the buget deficit this year."