Monday, January 3, 2005

Rolling out cuts to curb a shortfall
MTA needs $40 million more
By Lisa Mascaro - Staff Writer

Millions of dollars over budget midway through the fiscal year, the MTA has frozen hiring and contracting and cut employee travel and new equipment purchases in order to save money.

The agency that operates Los Angeles County's bus and subway systems expects to exceed its $3 billion budget by $40 million in 2004-05. It's a problem the agency has faced for years, forcing it to resort to layoffs, fare hikes and program cuts, even as it draws on its cash reserves to pay the bills.

"There simply is not enough money in the fund to support the level of service we are providing," CEO Roger Snoble wrote in a mid-December memo to staff.

"One of our important strategic initiatives this year is to pinch every penny. We have been doing a good job of living by our budget in those areas we can control. Unfortunately, several factors outside of our control have made it necessary to go beyond pinching pennies."

Snoble hopes the agency can save $23.5 million though the hiring freeze and other cost-cutting measures, which he will present in January to the Metropolitan Transportation Authority board.

But the Bus Riders Union warned it would challenge any effort to close the budget gap by raising fares, especially since bus-pass prices were hiked by $10 a month in 2003.

"MTA shouldn't even dare think about raising fares," said Manuel Criollo, an organizer with the Bus Riders Union, whose suit against the MTA led to a federal consent decree requiring the MTA to improve bus service.

"When you look at the vast majority of who rides MTA, these are the poorest of the poor folks in Los Angeles."

Criollo pledged to make any proposed fare increase an issue in the 2005 city election in which Mayor James Hahn -- who serves on the MTA board and controls three other seats -- is seeking re-election.

"We're going to go after (those who) stay silent," he said. "They cannot stay silent and say there's no other alternative."

The MTA's budget problems have been worsened in recent years by the $100 million it spends annually to buy more buses to comply with the consent decree. It had to borrow more than $10 million from its reserves this year to put more buses on the street.

Now the MTA projects it will be $40 million over budget when it closes the fiscal year on June 30 -- $20 million because fare-box revenues are sharply down, and $20 million because of higher costs for fuel, liability claims and workers' compensation.

MTA Chairman Frank Roberts called Snoble's immediate directives a "starting point" and said the agency will have to look for other ways to cut operating expenses, including reducing overtime pay.

"We come back, seems like every midbudget time, with a heck of a hole in the budget," said Roberts, also the Lancaster mayor.

"We have so many demands and so many people with high priorities and a lot of clout. It's hard to make the budget stretch."

Roberts said the continuing practice of spending reserve funds is problematic because it takes money away from highway and transit improvements across Los Angeles County.

The MTA is not required to hold a specific amount of money in reserve as some other government agencies are.

About half of the MTA's nearly $3 billion annual budget is funded by the 1 percent countywide sales tax. Government grants generate $600 million and fares $300 million with various other sources making up the balance.

Bus and rail operations cost nearly $1.2 billion a year, taking up nearly half the annual budget, with street and highway improvements also eating up a big chunk of the total.

Because of the MTA's reliance on its reserve fund, the account now has just $50 million that could be tapped.

MTA's chief financial officer, Richard Brumbaugh, cautioned against fully depleting the reserves, and said the agency could face a critical situation by fiscal 2006-07.


Lisa Mascaro, (818) 713-3761

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