Shortfall Won’t Affect Services, RTD Promises : Transportation: Board plans to cope with a $55-million budget deficit by borrowing against future income and cutting costs. But restoration of a county subsidy is key.

Emphatically rejecting both fare increases and “significant” service cuts, the Southern California Rapid Transit District board said Thursday that it will cope with a $55-million budget shortfall by paring all non-essential spending and borrowing against future income.

A critical--and yet highly uncertain--element of the district’s financial plan requires the Los Angeles County Transportation Commission to restore an RTD subsidy of nearly $30 million, which it had decided to cut because of its own $133-million shortfall last year.

Sharon Neely, the LACTC’s transportation policy director, said Thursday that the commission has already exhausted its reserves and is unlikely to be able to restore that money.

The transit commission, which collects and disperses federal, state and local transit funds, has been hammered by the recession, which has significantly cut sales tax revenues. Most of the commission’s revenue comes from a half-cent sales tax surcharge.

“We always say these (subsidies) are estimates, and if the funds don’t come in, they will have to make adjustments,” Neely said. “We don’t have any more cash on hand to give out to (bus) operators.”

The RTD board, meanwhile, also agreed to ask the commission to free $10.3 million in state transit subsidies it is holding up pending resolution of a legal dispute.

Even with the uncertain fate of these rescue ideas, RTD board president Marv Holen said the possibilities of higher fares or fewer bus lines are officially “off the table.”

“We have taken a collective stand,” he said, “. . . that if the commission will make the district whole by fulfilling previous (subsidy) commitments, the district will take care of its own shortfall without the prospect of a fare increase or a significant cut in service.”

Although significant service reductions have been rejected for now, RTD General Manager Alan F. Pegg said the district already has begun thinning service. No lines have been eliminated, but the number of buses on the road at rush hour is being cut by 102, to 1,852.

That reduces operating expenses in the short run, but Pegg acknowledged that thinning means the RTD will collect less in fares, which may well cost the district more in the long run.

A drop in fare revenues, caused by the district’s chronic ridership declines, is blamed for part of the district’s current problem. Pegg said that during this fiscal year, which ends in June, the RTD will take in $13.8 million less in fares than predicted.

To overcome part of its own shortfall, the RTD board voted to borrow $11 million to buy 202 new, “clean-fuel” buses instead of paying cash. Pegg acknowledged to the board that this also will cost the district more in the long run as it pays interest on the borrowed money.

Other measures to bridge the budget gap include a conventional hiring freeze, a cut in expenses, travel restrictions and limits on hiring temporary help. The board also left open a proposal to borrow perhaps $9 million from its self-insurance reserve fund, but this also would have to be repaid.

Board members vigorously voted down staff proposals to scrap a bus rehabilitation program and defer bus cleaning and graffiti removal programs. Such proposals would have resulted in unacceptable staff layoffs and reductions in the quality of service, they said.