MTA staff unveiled a preliminary budget full of bad news at this morning’s board meeting, with the biggest news an eight percent fare and toll increase to take effect in July 2009. The hike, which would be larger than the 2008 fare and toll increase, would raise $200 million towards what could be a $900 million deficit in the FY2009 operating budget. The remainder of the deficit would be made up by increased city and state subsidies for student and senior fares, increased city funding for paratransit, internal budget cuts, and other sources (the MTA’s presentation to its board is available here).

One of these sources would be a $4 million cut in funding to Long Island Bus, a move which makes a mockery of the MTA’s claim that its financial plan does not include service cuts — the cut represents one-fifth of the MTA’s $20 million subsidy to LI Bus. The MTA may be trying to provoke a response from Nassau County, which funds LI Bus along with the MTA and the state. Nassau gave $10.5 million to LI Bus for this fiscal year, which is less than it contributed in 1999. It also allegedly owes the MTA more than $100 million for LI Bus cost overruns and unpaid debt dating back to the 1990s. Still, as TSTC associate director Veronica Vanterpool said in testimony at the board meeting, it is unacceptable for the MTA to cut funding when LI Bus is bursting at the seams with new riders. LI Bus ridership for the first half of 2008 rose 4.8% over the same period one year ago.

The fare hike would surely torpedo whatever is left of the MTA’s credibility with the public. Since the last fare increase, riders have been paying more but have received few service improvements for their trouble. The MTA has nudged up service on nine subway lines and launched the Select Bus Service in the Bronx. But many riders are more affected by large system-wide problems such as worsening delays on many subway lines and the deferral of $2.7 billion in capital projects. Symbolic gaffes, including some MTA board members’ initial reluctance to give up free transit passes, haven’t helped either.

Many of the MTA’s problems are out of its control, stemming from broad economic trends and the historical failure of the state and city to properly fund the system. Elected officials at all levels have lined up against the fare hike, but it will be their responsibility over the next year to come up with a solution that doesn’t punish riders. By December, the governor’s Ravitch Commission is expected to release recommendations for sufficiently funding the MTA. Help could also come from the federal government. As the Staten Island Advance noted today, a transit aid package which passed the U.S. House (but has no Senate sponsor) would deliver $237 million in operating funding to New York — more than the fare and toll increase is expected to raise.