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With Wall St. In Shambles, MTA Sounds Budget Alarm

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Sep 23, 2008 9:05 am US/Eastern

With Wall St. In Shambles, MTA Sounds Budget Alarm

Drafting Up Budget That Includes Fare Increases And Service Cuts

Each Of Its Agencies Told To Cut Spending By Almost 5 Percent

Reporting
Jay Dow
NEW YORK (CBS) ― The crisis on Wall Street is likely to affect not only homeowners, but also anyone who uses mass transit. Officials from New York City's MTA are now drafting up a budget that includes both fare increases and service cuts.

With the economy sputtering, Wall Street in shambles and optimism about its immediate recovery in short supply, the MTA is sounding the alarm that it may have to cut service.

Each of its agencies has been told to draft detailed doomsday plans to cut spending by almost 5 percent, in case the economy doesn't turn around. In a budget already saddled with a projected $1 billion deficit, MTA officials say they may have no other choice but to reduce bus or subway service.

MTA Executive Director Elliot Sander didn't need a crystal ball when he offered this gloomy assessment back in June:

"I think riders should be concerned. We are really approaching a time of reckoning."

The MTA's new belt-tightening plans are on top of $200 million in cost cutting actions proposed for 2008 and 2009. They include a limited hiring freeze and not one, but two fare hikes over the next three years.

MTA Chief Financial Officer Gary J. Dellaverson says he has directed the heads of various agencies to come up with alternative budgets in case the economy is "worse than predicted" or state and city funding fails to appear.

He told the divisions that run the subways, buses and commuter rail roads that they must cut about 4.5 percent of expenses.

He said cuts should target management-level expenses before affecting services. 

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

© MMIX, CBS Broadcasting Inc. All Rights Reserved.