MTA WARNS OF HIKES EXPANSION PLANS BIG AND BUDGET FALLS SHORT.

Byline: Lisa Mascaro Staff writer

Although it gets a penny for every dollar spent in Los Angeles County - fueling more than half its $2.8 billion budget - the MTA lacks enough money to run its expanding public-transit system and warns of looming fare hikes and route changes.

The Metropolitan Transportation Authority is trying to close a $150 million budget shortfall for the 2006-07 fiscal year that begins July 1, but CEO Roger Snoble says the one-time fixes and cash reserves used to shore up the budget in previous years have almost run out.

"There's just no magic left," said Snoble, who earns nearly $305,000 annually.

"Part of the problem (is), we always say we're in trouble, nobody believes we're in trouble. We do things to mortgage the future, we keep digging the hole deeper.

"I just want everyone to understand we're real close to that."

The budget crisis comes as the MTA opens contract negotiations with its powerful bus drivers' and mechanics' unions.

Representatives from unions either declined to comment or did not return phone calls.

But the Bus Riders Union, which forced the MTA into a 10-year federal consent decree after claiming the civil rights of poor and minority riders were being violated, vowed to fight higher fares.

BRU leaders called on Mayor Antonio Villaraigosa, chairman of the MTA board - who wants to extend Los Angeles' subway system from mid-Wilshire to Santa Monica - to side with the bus riders.

"We're not going to be the sacrificial lamb. ... We are talking about folks that earn less than $12,000 a year," said Bus Riders Union organizer Manuel Criollo.

"There's going to be a lot of challenge on the mayor to step up to the plate. ... All of (this) will impact bus riders at the same time they're talking about extending the Red line to the sea."

Villaraigosa said it's too early to consider fare increases and expects MTA management to figure out other ways to control costs.

"MTA management needs to roll up their sleeves and identify efficiencies and administrative cuts first," said the mayor's spokesman, Darryl Ryan.

The MTA has already started chipping away at the deficit, thanks to Southern California's robust economy that has generated $50 million more in sales taxes than expected.

Plus, more people are utilizing MTA - with the opening of the Orange Line and high gas prices - so more money is coming into the fare box.

But Snoble says the reserves that have been used to plug the budget hole for years are nearing historic lows.

Next year at this time, the agency expects to have less than $70 million in reserve - enough to cover one month's payroll but hardly enough to handle the next $150 million shortfall in fiscal 2007.

"It's not sustainable," Snoble said. "Never has been."

Snoble is expected to present a budget in coming weeks that may likely include a fare increase in January - when a new smart-card system replaces paper bus passes - as well as bus route changes.

Some board members said these steps are needed to bring in more revenue so the MTA can continue running the system, which soon will include the Gold Line extension to the Eastside or the Exposition train to the Westside.

"If you can't pay for the services you've got today, how are you going to pay for these expanded services?" said John Fasana, a Duarte City Council member who has served on the MTA board for years, and supports increasing the $3 day pass to as much as $5.

"People want to talk about smart growth and linking it with transit. ... Right now, the current funding level isn't supporting the level of service people think should be out there."

Even those who oppose the fare hike know the board has been unable to seriously deal with the structural deficit but has to do so now.

"We have to get it under control," said former Assemblyman Richard Katz, Villaraigosa's appointee to the board. "Everyone on the board understands they've put it off for a long time and the day of reckoning is here."

The agency last changed fares in 2004 - the first time allowed since the 1986 consent decree - increasing monthly passes by $10 to $52 and lowering the one-way price from $1.35 to $1.25.

Ideas are circulating for new kinds of fares, perhaps based on distances traveled or special rates for low-income riders.

Even a modest fare hike could add to the $220 million the MTA expects to generate from its passengers this year.

Supporters realize any fare hike would be met with resistance but say the alternative is worse - cutting the frequency of buses and trains or eliminating routes altogether.

Opponents say the fare hike will only force the poorest riders off the system, and revenue must be found through efficiencies.

All sides hope that with the planned expiration of the consent decree this fall, the agency will be able to re-examine its routes.

But MTA critics say the agency should simply stop construction of expensive rail lines, which draw a fraction of the bus ridership.

"MTA is one of the richest governmental agencies on the face of the earth. Its problem is not that it has a shortage of funds. Its problem is it's never seen a project it didn't like, no matter how dumb it is," said longtime MTA critic Tom Rubin, a former executive of MTA's predecessor agency.

"You would think at some point they would say, `Gee, maybe we should concentrate on trying to operate what we have now because we have more on our plate than we can handle."' No major new revenue streams are on the horizon. The agency has declined to ask voters for another sales tax hike and no one is expecting big increases from the state or Washington.

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