Troubled MTA Cautiously Predicts Windfall

In a stroke of good fortune for an agency that rarely has any, the Metropolitan Transportation Authority is projecting that it will have $1 billion more than expected over the next six years to help stabilize its topsy-turvy finances and fund bus improvements and highway and mass transit projects.

The projections come as the MTA awaits more good news: Congress’ expected approval next week of $62 million to help complete the subway to the San Fernando Valley and $8 million to study and design mass transit improvements on Los Angeles’ Eastside and in the Mid-City area. Transit officials said the appropriation would keep the Hollywood to North Hollywood subway extension on track to open in two years.

The new projection is the latest twist in the often Byzantine finances of an agency that only months ago was struggling with a massive budget deficit. Legislative action in Washington and the rebound of the state and local economies all have contributed to the suddenly sunnier forecast for the transit agency.

Still, MTA officials were wary of making too much out of the new estimates. After all, the agency is not out of financial trouble. It has a $7-billion debt, and it faces a projected $140-million shortfall in the amount of money required to operate its buses and trains over the next several years.

“We don’t want to make the same mistake that this agency made in the past,” said MTA Chief Executive Julian Burke, mindful of past criticism that the agency was overly optimistic. “I want the board to be very careful.”

The agency still faces considerable uncertainty, such as how a federal judge will react to its plan for complying with a court order mandating improvements to its bus system.

Although the agency expects additional money, it also faces new costs, such as possibly having to pay for repairs to El Nino-damaged roads and taking over responsibility from the state for building freeway sound walls.

It is as yet unclear how much money will be available for new projects, but certainly not enough is available to resume the suspended rail projects on the Eastside and in the Mid-City in the near future, officials said. The MTA is examining other ways to improve mass transit to those and other communities.

“While it’s clear that we now have substantially more capital in sight . . . we must recognize that all of this newfound money is not available for transit expansion,” Burke said Friday.

Burke added that stabilizing the agency’s finances and improving the county’s public bus system are his top priorities. The agency still expects to have $1 billion even after it spends $265 million that officials have pledged to put into an accelerated plan to replace its aging and problem-plagued bus fleet.

The bulk of the additional money comes from a multiyear highway and mass transit bill approved by Congress this year.

The Transportation Equity Act for the 21st Century, known as TEA-21, freed up 4.3 cents from the federal gas tax that was set aside for reducing the federal budget deficit and made it available for transportation.

An MTA budget official said the agency’s stability is being enhanced by cost-cutting and its revenue is being helped by California’s improving economy. On Friday, local transit officials said they now believe they will get double what was expected from the state.

Additionally, although the MTA budgeted a 4.2% increase in revenues from Los Angeles County’s 1% transit sales tax, receipts for the first three months of the fiscal year were up 7%.

“Based on a preliminary analysis,” said an MTA report, “TEA-21 could meet most of the MTA’s capital needs for the existing transit system through [fiscal year] 2003. Substantial new money also will be available for regional programs and for new transit improvements.”

The projections were made as part of a study on ways to improve public transit throughout Los Angeles County. The study was ordered after the MTA suspended the subway extensions to the Eastside and Mid-City and put plans on hold for subway lines across the Valley and to the Westside.

A set of options--such as busways or trolley-like rail lanes or perhaps shorter segments of subway--will be presented later this month to the MTA board.

The MTA must deliver to the state Transportation Commission in December a plan for improving the county’s public transit system, including how it proposes to spend $151 million in state funds allocated to the suspended projects.

In the past, optimistic revenue estimates have touched off scrambles among board members to pay for pet projects. But this time, county Supervisor and MTA board member Zev Yaroslavsky urged caution.

“If the response to the TEA-21 by the MTA is to go back to business as usual, then we’re going to have results as usual,” he said. “And we’ll be right back where we started.”

MTA officials were especially pleased by the expected vote in Washington.

Although the transit authority originally had sought a $100-million annual appropriation for the subway project, agency officials worried they would receive less than half of that after the Senate recommended $30 million.

But the MTA--after waging an intense lobbying campaign that included a bipartisan coalition of business, labor and political leaders--now expects to win the full $62 million recommended by the House. Mayor Richard Riordan, who heads the MTA, led that lobbying effort, making three trips to Washington and calling on political friends to push for the higher appropriation.

Rep. Julian Dixon (D-Los Angeles) called the $62-million appropriation an “important milestone in MTA’s rehabilitation.”

Rep. Esteban E. Torres (D-Pico Rivera) said the funding bill will directly benefit “the most transit-dependent residents of our community by expanding the mass transit options available to them.”

The federal government is paying for about half of the subway project’s $5-billion cost, with county and state taxpayers covering the rest.

A subway extension to Hollywood is scheduled to open in May, followed in May 2000 by the segment to North Hollywood.