RTD OKs Budget 20% : Over Projected Revenue Transit: Board also rejects a plea to stop service on two bus lines that the LACTC turned over to a private San Gabriel contractor.

Plagued by fewer riders, higher costs and plunging tax subsidies, the Southern California Rapid Transit District board on Thursday approved a $683.4-million operating budget that exceeds expected revenues by more than 20%.

The board also ordered a hurried search for additional revenue and refused a Los Angeles County Transportation Commission plea to abandon two San Gabriel Valley bus lines that the LACTC has turned over to a lower-cost private operator. RTD and the private firm have duplicated the service since Sunday at an additional cost of $7,600 a day.

RTD board President Marvin Holen called the duplication “preposterous” and told the board that “every day that goes by is a new embarrassment.” But, he said, the RTD will not ignore a state appeals court ruling that said the district would break its union contracts by turning over the two lines to the privately owned Foothill Transit Zone.

The RTD’s rebuff of the commission is certain to heighten tensions between the rival boards just as they are beginning a state-mandated merger--and the RTD is asking the commission for an additional $117.4-million subsidy to balance its books in the fiscal year that starts July 1.

The gap could grow larger if the transportation commission asks the RTD to start service on the Metro Red Line sooner than its March, 1993, target date. The commission has asked the RTD to be ready to run the Red Line as soon as possible, perhaps before the end of this year.

General Manager Alan F. Pegg warned that bus service would have to be cut by 11% and the basic fare would jump 40 cents to $1.50 if the transit district cannot find a way to make up its budget shortfall.

Accountants and managers from both transit agencies are scheduled to gather during July to scour their budgets, looking for ways to cut costs and increase revenues to close the RTD’s budget chasm.

At Thursday’s RTD board meeting, the primary focus was on increasing revenues. In particular, the board proposed tapping a large pool of money that accumulated while the courts determined the legality of a half-cent transit sales tax approved by voters in 1990.

That tax, which generates about $350 million a year, has been collected since shortly after voters approved the tax, but the money was placed in escrow until the state Supreme Court ruled last month that the tax surcharge does not violate the provisions of 1978’s tax-slashing Proposition 13.

But the LACTC has its eyes on the same money for a variety of other services such as building car-pool lanes, financing emergency road service crews on freeways and building more light rail lines.

Larry Schlegel, RTD’s management and budget director, said the focus must be on additional revenue because the two transit agencies already scoured their budgets for cost savings while trying to balance the books this year.

“That process found there’s nothing more we can do to save substantial amounts of money,” he said. “Certainly nothing that will get us back that $117 million.”

The shortfall results from a confluence of factors, Schlegel said. The primary cause is the LACTC’s decision to reduce its regular bus subsidy by $65 million. Another $25 million will be lost because of declining ridership, part of which is due to the LACTC turning over suburban bus lines to the private Foothill Transit Zone in the San Gabriel Valley. Low interest rates will shave $3 million off the RTD’s income from short-term investments.

Compounding these problems, Schlegel said, are an estimated $29 million in additional expenses--primarily employees’ raises and increased fuel costs. Union labor contracts signed before the current fiscal crisis contain automatic raises, and the district this year proposes to offer merit raises averaging 4.7% to its non-union workers and executives.