By Christina Wallace, Metro Boston

A report by a key transportation commission released yesterday recommended sweeping cost-saving steps, including cutting back on the MBTA’s retiree benefits, to help avoid the financial ruin of the state transportation system.

The report by the Transportation Finance Commission outlined several revenue-building steps and 22 reform measures that should be taken at the MBTA, Turnpike Authority and MassHighway Department, to avoid a projected $19 billion budget shortfall in 20 years. One controversial recommendation that was met with outrage by a T employee union yesterday would seriously alter the current T retiree benefits package.

The report claims the MBTA health and retirement benefits are among the most generous in the U.S., costing the authority $147 million in 2006. The benefits include retirement after 23 years of service and 100 percent employer-paid health care premiums for retirees.

“The MBTA health and retirement benefits. ...will sink the authority if they are not brought under control,” according to the report.

The T is currently facing a $8 billion deficit. The T Carmen’s Union, which represents 6,000 current and former MBTA employees, is working without a contract, after failed negotiations over the past 15 months. One sticking point is the retiree benefits.

“To ask 6,000 working women and men to shoulder the burden of a debt service that funded MBTA expansion and has nothing to do with employment costs is unfair,” said Steve MacDougall, president & business agent of Boston Carmen’s Union Local 589.

“These workers will be paying increased taxes for gas, tolls and transportation to work and facing cuts at work that affect their families’ futures.” MBTA General Manager Daniel Grabauskas said yesterday the changes in the retirement package are essential. The commission’s suggestions would save the authority $1.1 billion over 20 years.

Other recommendations in the report include using private flagmen instead of police officers at construction sites, and the end of using bonded funds for operating and personnel expenses at MassHighway.