Audit Urges Reductions in Bus Service, Salaries : Transit: The report comes as the MTA begins to deal with projected $126-million operating deficit.

To close a massive budget shortfall next year, the county transit authority must consider reducing bus service, cutting superfluous administrative positions, and slashing salaries and benefits of thousands of employees, a team of independent auditors said Wednesday.

A report presented to the Metropolitan Transportation Authority recommended that the agency eliminate bus routes that run parallel with trolley and subway lines, and cut back service on weekends. Management should also endeavor to reduce labor costs as it enters into negotiations with the authority’s biggest unions.

“There are no harmless or painless means of reducing the MTA’s expenses,� the report said. “. . . Many require changes either in fundamental policies and philosophies, or in the collective bargaining agreements that bear on the bus operations.�

The audit, compiled after a five-week study, comes as the MTA begins to grapple with the specter of a $126-million operating deficit in the coming fiscal year--about 20% of the entire operating budget.

“We are going to be, as an organization, . . . under great stress as of July 1,� said MTA chief Franklin White, referring to the start of the next fiscal year.

The audit did not address fare increases, but MTA officials are studying the possibility.

In comparison with five other major public transit agencies nationwide, including those in New York and Chicago, operations and maintenance costs for MTA’s bus service hover near the average, according to the report. However, wages for drivers and mechanics are at least 10% higher. Sick leave, vacation and medical costs have also increased--by 20% in the last fiscal year alone, the report said.

The MTA must press those issues as it begins talks with its major unions representing bus drivers, mechanics and clerks, whose contracts expire June 30, the audit recommended. The authority should also consolidate some smaller operating divisions to cut overhead.

MTA alternate director Marvin Holen called the report helpful but warned that the authority could not “plunge pell-mell ahead� with its recommendations absent a more complete picture of the agency’s operations--including an analysis of rail services, which auditors were not asked to cover.

While bus service accounts for nearly 90% of MTA’s $710-million operating budget, more than half of the shortfall is attributable to rail operations.

Holen also criticized suggestions that the MTA scale back bus service where routes run parallel to rail lines, both above and below ground, and duplicate municipal services, as in Culver City and Long Beach. Such a move would undermine the authority’s attempt to fashion an integrated countywide transit system, he said.

But he acknowledged that savings could accrue from streamlining administration of the MTA, a super-agency created when the Los Angeles County Transportation Commission and Southern California Rapid Transit District merged.

Finances will also probably be an important factor as the authority considers appointing a single security force to patrol all of its transit services--rail, bus and subway. Officials are weighing a bid from the MTA’s in-house police, and one submitted jointly by the county Sheriff’s Department and Los Angeles police.

An independent audit conducted last month concluded that using transit police would be more cost-effective at $87 million a year, about $24 million less than the LAPD-sheriff’s plan. Most of the difference comes from the fringe benefits--especially pension contributions--that each agency grants its employees, according to the study.

But in a reply to the audit, Los Angeles police officials contend that the cost difference is actually much smaller, accusing the MTA police of providing “artificially deflated� or inaccurate figures.

MTA Police Chief Sharon K. Papa called the accusations a red herring.

“They’re trying to divert attention away from a 30% cost difference� between the two proposals, she said. “I’m happy that the audit that was done by an independent firm said (there is a) $24-million difference, because it validates what we’ve said all along.�

Currently, the in-house force patrols buses and the Red Line, while the Sheriff’s Department covers the 22-mile Blue Line trolley under a $13.5-million agreement. The sheriff’s contract ends June 30.