MTA COULD HIKE FARES, CUT SERVICES; AGENCY CEO UNVEILS PROPOSALS TO BALANCE $1.1 BILLION BUDGET.

Byline: David Bloom Daily News Staff Writer

The MTA needs to raise rail fares 37 percent, curb some weekend and overnight bus service and slash $48 million in other costs to balance this year's $1.1 billion operations budget, interim CEO Julian Burke said Monday.

Burke, a corporate-turnaround veteran hired in August to get the ailing agency back on its fiscal feet, released the results of his first intensive review of the Metropolitan Transportation Authority's finances at an informal board briefing.

``This is the start of a serious change in our whole way of thinking,'' Burke said. ``We're taking a businesslike approach to government accounting. We went over every single line item in the budget and challenged it.''

Board members and aides declined to say much about the proposals until they had time to digest them, though they applauded the analysis as overdue.

``I think it's a good step that should have been done before this,'' said Gardena Councilman Jim Cragin. ``We're facing reality. We've been living in dream time.''

Burke's revised $1.1 billion operations budget will be taken up in a special board meeting Thursday. If approved, some provisions like the rail fare hike and bus scheduling changes will take months to implement.

Burke already has cut 168 jobs - about half of them were filled - with more possible staff reductions next month when he completes his review of the agency's rail construction and other capital programs, which compose an additional $1.2 billion in annual spending.

Burke said the agency will be able to complete subway construction work to North Hollywood. But he made no promises about any other rail project beyond that in the budget, saying those questions must await his analysis of capital programs in the next month before another special board meeting.

On the operations side, the agency will need another $38 million in reductions to balance next year's operating budget, Burke and his Deputy Chief Executive Officer Allan Lipsky said.

``We still have a long way to go, despite balancing the budget for this year,'' Burke said.

Some of the changes Burke is calling for likely are to be controversial, such as a proposed April increase in the fare charged for riding the Red, Blue and Green rail lines from $1.35 to $1.85. And transfers from buses to rail lines would rise from 25 cents apiece to 75 cents.

People with monthly bus passes who previously were also able to ride the rail lines for free would have to buy an additional $15 monthly rail pass, under the proposal.

Burke and Lipsky characterized the fare increase as a ``premium'' for riding the faster, cleaner and safer rail lines. And they said the rail fare hike isn't protected by the lawsuit-settling consent decree the agency signed a year ago to improve and expand service while capping bus fares.

Still, a representative of the Bus Riders Union, which filed the suit, said he believes the fare hike punishes the transit dependent.

``We would be against any kind of raise,'' said Martin Hernandez. ``Everybody's paid for the damned thing with tax increases and borrowing against fare revenues. They've pushed people onto the rail lines, cut their bus service and now are charging them more to ride the rails. When are they going to stop?''

Burke's plan also shaves away weekend and overnight bus service on lines with low ridership, to save as much as $10 million a year. Such changes won't help much this year because they must go through a lengthy public hearing and review process before they take effect.

Burke told board members the consent decree is worded ambiguously, making it difficult to know what the agency can do to save money.

``Basically, (the decree) constitutes improved bus service, particularly for the transit dependent,'' Burke said. ``But it has to be done in the context of what's affordable.''

Burke said the budget will allow the agency to proceed with the purchase of 278 new natural-gas buses, which are vital to meeting consent decree requirements to modernize its fleet and improve its reliability and efficiency.

Burke's budget proposals would hit some sacred cows, whacking $2 million in a contingency fund set aside for pet projects of board members, and eliminating $3 million in pay hikes for managers and other nonunion workers.

The MTA is also wringing the ``water,'' as Lipsky put it, from the agency's budget, using about $15 million in unspent funds sitting in several accounts to cover the shortfalls.

``This is one-time money that represents the squeezing out of these accounts,'' Lipsky said. ``In the past, if the board had some project it wanted done, it seemed there was always a way to make it work (using funds like these.) This year, that will be almost impossible. Next year, it will be impossible.''

The agency will need to keep cutting high costs in such areas as workers' compensation insurance, security, middle management and union work rules, Burke said. The two MTA leaders repeatedly cautioned that much work still needs to be done to reduce costs.

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CHART: MTA`S OPERATING BUDGET