BATTLE LOOMS ON BUS FARES MTA OFFICIALS SAY EXPIRING COURT DECREE KEEPS PRICE LOW.

Byline: RACHEL URANGA Staff Writer

Beset by a bleak financial outlook, MTA officials face increasing pressure to raise fares -- which have been fairly stable over the past decade -- to close a looming $1.8 billion deficit.

Officials with the Metropolitan Transportation Authority, given an award last week as the best-run transit agency in North America, said they are running out of options to eliminate a budget shortfall that is growing every year.

And two new reports show the depth of the financial crisis.

An independent report blames the agency's woes on a federal consent decree, imposed a decade ago and set to expire this month, that helped keep fares artificially low -- $1.25 for a one-way ride on a bus or subway.

And an internal report projects that the MTA will face a $1.8 billion shortfall within a decade unless it generates more revenue.

``We wanted to lay down what is causing this bleak picture,'' said Terry Matsumoto, the MTA's top financial officer, who prepared the internal report. ``It is the consent decree.''

The decree was imposed in 1996 to settle a lawsuit filed by the Bus Riders Union, which alleged that the agency was developing rail lines to the detriment of service for low-income bus riders. As a result, the MTA has spent about $1.2 billion to expand bus lines and modernize its 2,000-bus fleet.

A hearing is scheduled for Thursday on the Bus Riders Union's request to extend the consent decree.

While provisions requiring the MTA to keep fares low have technically expired, transit advocates believe an extension of the decree is their best chance for keeping bus service affordable for the greatest number of people.

They plan to lobby Mayor Antonio Villaraigosa -- a powerful member of the MTA board -- to continue improving the bus system rather than focus on new rail lines, including his proposed ``subway to the sea.''

``It's ridiculous to have a discussion about budget deficits when the board is talking about rail lines gone crazy,'' said Manuel Criollo, lead organizer at the Bus Riders Union.

``There are profoundly poor people in this city. ... Whether economic justice prevails will fall on Villaraigosa, who controls four votes (on the MTA board).''

The only way?

But MTA officials have said higher fares may be the only way to erase the operating deficit. And with the consent decree set to expire, now is their chance for an increase.

The base fare has not been raised since 1995, a year before the decree went into effect. In fact, it was the effort to raise the fare by 25 cents that prompted the BRU's suit against the agency, eventually leading to the consent decree.

The MTA hopes the federal monitor overseeing decree compliance will determine that the agency has made sufficient progress over the past decade and will allow the decree to expire.

``If that is not lifted, then it presents a whole other set of questions,'' said David Yale, the MTA's director of regional planning and policy analysis. ``It means our flexibility in respect to service is really limited.''

It also means the agency could sink further into the red if it must continue buying more buses and adding routes.

Transit officials vow that they'll increase fares only as a last resort.

``Nobody is touching (rate hikes) on the MTA staff because nobody wants to be accused of putting the cart before the horse,'' said Michael Cano, transportation deputy for Los Angeles County Supervisor Michael D. Antonovich, who sits on the MTA board.

``Everyone knows it's coming, but nobody knows what shape or form it's coming in, and it's up for debate.''

Mayor's clout

Officials also hope that Villaraigosa will be able to use his personal and professional relationships with Assembly Speaker Fabian Nunez and other key state and federal lawmakers to secure more transportation funding.

For now, agency officials are recommending that the board approve a policy tying fares to the $1-billion-a-year cost of providing bus and rail service.

The report released last week by the American Transportation Association -- the same group that recognized the MTA as the nation's best transit agency -- found that the $1.25 bus fares, coupled with the consent decree, are ``having a significant negative impact'' on the agency's reliability.

The association noted that transit agencies in New York, Chicago and Philadelphia charge $2 for a one-way trip.

The report also says the MTA's strategy of subsidizing the cost of operating its 2,000-bus fleet with money from its capital fund could lead to the deterioration of its rail and bus systems -- and possibly push the agency into another consent decree.

At the heart of the discussion is how the agency pays for the expanded bus service required under the consent decree.

For years, agency officials have complained that fares cover only 25 percent of the cost of running buses.

But these figures can be misleading since the MTA's costs are higher than those of smaller, more nimble agencies, said Brian Taylor, director of the Institute of Transportation Studies at the University of California, Los Angeles.

To reduce costs and avert fare increases, the MTA could be broken up into smaller agencies or it could contract out for services, he said. But he conceded that those solutions would be more politically charged than fare increases.

MTA chairwoman Gloria Molina said she is awaiting the results of the Nov. 7 election -- when two transportation measures will appear on the ballot -- before making any predictions on fares.

``There is a lot of opportunity out there to not hike fares,'' she said.

Proposition 1A would prevent the Legislature from raiding the state's gasoline-tax revenue, ensuring that $1.3 billion earmarked for transportation is actually spent on those types of projects. While the measure would not generate additional revenue, it would protect the $28 million a year the MTA receives.

Proposition 1B, which holds a slight lead in early polling, would provide up to $5 billion for transportation projects in Los Angeles County, although none of it could be used to operate buses.

MTA chief Roger Snoble said other efforts to close the budget gap are under way, although he's unsure how much money any of them would actually save.

``I don't think that you should read too much into (these efforts),'' he said.

rachel.uranga(at)dailynews.com

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A fare shake

Officials at the Metropolitan Transportation Authority have been speculating for months that they will eventually have to raise bus and rail fares. A convergence of several issues this month opens up the possibility of fare hikes for early next year:

The 10-year federal consent decree, which forced the agency to operate expanded and affordable bus service, is set to expire.

A new internal report shows a $1.8 billion deficit looming over the next decade.

A new independent report blames the agency's budget woes on the consent decree and insufficient fares.

Agency officials consider raising fares under a variety of scenarios, including distance traveled.

Agency officials consider a new policy linking fares to actual operating costs.

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A fare shake (see text)