STATE PUTS BRAKES ON MTA SPENDING.

Byline: Paul Hefner and David Bloom Daily News Staff Writers

Concerned that the MTA might try to juggle its books, state officials agreed Thursday to require the agency to promise to spend new subway dollars only on specified projects - not to cover operating shortfalls.

At the request of Commissioner David Fleming, the state Transportation Commission agreed to force all MTA board members to sign a written pledge - under penalty of perjury - as a condition of obtaining extra subway funding.

The signed declarations would have to be received for the MTA to get $207 million in new state funds to complete the Red Line subway to North Hollywood, officials said.

Fleming, who also is a San Fernando Valley civic leader, said the panel has a duty to be sure state funds won't be used to replace money shifted to cover the MTA's day-to-day costs.

``A lot of people have serious questions about the accounting practices of the MTA. We want to find out why,'' he said. ``Let's get to the bottom of it. If there's funny business going on, we want to find out now.''

Fleming's move came only a day after the MTA's board voted to suspend work on three controversial rail projects for at least six months. MTA officials said they were not familiar with the new guideline and could not comment on it immediately.

But others said it likely would strengthen the hand of subway opponents, who have pressed for the MTA to abandon its bid to build subway extensions to East Los Angeles and the Mid-City area and to construct a light-rail line to Pasadena.

Fleming said the MTA wants more state money for the North Hollywood project even though the cost hasn't changed - and agency officials said last summer that they had enough money to cover the cost.

The concern is that the subway is being hit with undisclosed cost overruns or that previous funding was spent on other operations by the financially beleaguered MTA. For that reason, state officials should require some assurance that its money won't merely be replacing funds shifted to cover other costs, Fleming said.

``It's our responsibility to see that this money is being used for capital projects,'' he said. ``Otherwise, all we're doing is covering up operating losses.''

But the guideline could have far wider effects as well, including giving individual MTA board members - some of them steadfast opponents of further subway spending - veto power over the funding request, officials said.

The guideline calls for the pledge to be made by all board members, so a refusal by any one member to go along would scuttle the request, said David Brewer, the commission's deputy director for highways.

``The practical effect would be, they couldn't ask for a funding increase,'' Brewer said.

The requirement could push board members to demand more detailed financial analysis from the MTA's staff. And it would likely give more clout to subway opponents like county Supervisor Michael D. Antonovich, who also serves on the MTA board.

It won't be easy to sell Antonovich on anything that clears the way for more subway spending, said Rosa Fuquay, Antonovich's transportation deputy.

``He believes it has been disaster after disaster, scandal after scandal,'' she said.

State Sen. Tom Hayden, D-Los Angeles, said it will take more than paper promises to wean the MTA off its addiction to expensive subway and rail projects.

Hayden said the state panel should reject any MTA plan that dedicates more money for subway projects.

``It's very simple,'' he said. ``The question is whether you want to spend $207 million to complete the North Hollywood line, which is by all accounts going to be very inefficient, or do you want $207 million to do improvements for the Valley?

``It's an `either/or.' The days of free money seem to be over.''

Fleming said he believes the MTA would be better off shifting money set aside earlier for the now-suspended lines to the North Hollywood effort, which would free up more money for road repairs, sound walls and other needs.

But no matter how the MTA decides to proceed, Fleming said he wants board members to give more scrutiny to the agency's bookkeeping.

``What I wanted was to get their attention. I think we've gotten their attention,'' he said. ``And if they've got directors who don't want to sign (the declaration), I want to find out why they don't want to sign it.''

Meanwhile, the MTA's vote to suspend the rail projects will require the agency and the city of Los Angeles to renegotiate a $200 million agreement signed last summer to help finance the North Hollywood, Eastside and Mid-City lines.

Wednesday's suspension will mean the MTA will violate numerous milestones in the agreement as soon as this summer, violating the contract and causing it to owe the city $50 million in 2008, said Councilman Richard Alarcon.

``(Wednesday's suspension decision) was tantamount to killing the agreement and starting from scratch,'' he said. ``The board took a very important step to say it had overcommitted on rail. Now there's a lot of different directions we can go.''

The roughly $90 million the city had agreed to spend on the North Hollywood line should still be used for that purpose, said Alarcon, who plans to begin negotiating a new deal with the MTA next week. But the other funds the city had committed to help finish the Eastside and Mid-City segments probably should go to other transportation needs, he said.

The MTA's suspension vote won kudos from some officials in Washington, D.C.

``This is a realistic pause while they figure out what their needs are and what they can afford to do,'' said Bruce Frame, a spokesman for the Federal Transit Administration, which oversees how the MTA is spending federal subway funding.

Exactly a year ago today, Frame pointed out, then-Secretary of Transportation Federico Pena and Federal Transit Administrator Gordon Linton ordered MTA leaders to Washington for an extraordinary meeting where the agency was told to fix its messy finances.

``The board took a step toward getting its fiscal house in order,'' he said. ``They still have a ways to go.''

The FTA froze subway funding until the MTA could prove that its financial projections were sound and that it could finish the projects. It still hasn't been able to do that, MTA interim Chief Executive Officer Julian Burke said Wednesday.

``We have to have good answers before we can expect them to turn the faucet back on,'' Burke said.

Frame was unwilling to speculate on whether Burke can protect federal funding for the suspended Red Line projects.

Given the number of proposed rail projects around the country, Frame said it would take until 2078 to finish all those lines at current funding levels.

U.S. Rep. Brad Sherman, D-Woodland Hills, said Los Angeles' suspended lines are unlikely to survive this year's appropriations process, however.

``I think those lines that have been delayed will never get built,'' Sherman said. ``But whatever we end up with, I want to make sure the Valley gets something.''

Delaying the lines will buy the MTA some badly needed credibility in Washington, however, Sherman said.

``It shows that somebody there has awakened, understands there's a problem and is trying to do something about it,'' he said. ``I think it will help.''