Metro appears to be facing historic budget deficit

Budget news has been bad at all level of government for months and Metro doesn’t appear to be any exception.

A report released by agency officials and discussed publicly on Wednesday at a Metro Board of Directors budget committee meeting spelled out the problem: in the fiscal year 2010-11, which begins this July 1, the agency is projecting a $251.3-million deficit according to current figures. The number is preliminary and subject to change, but if it stands it would be the largest deficit the agency has faced to date.

The budget for the next fiscal year will be adopted by the agency’s Board of Directors this spring. By law, the budget must be balanced, meaning that any deficit must be eliminated.

One big problem the agency has been facing is that revenues are down. Voter-approved sales tax increases in 1980 and 1990 in Los Angeles County — Prop A and Prop C, respectively — aren’t producing as much money. Ridership has also fallen with the economy over the past year, meaning less farebox revenue.

On top of that, Metro expects to lose between $50 million and $100 million in money it would normally get from the state due to budget woes in Sacramento. It’s not the first time that’s happened and in recent years Metro has had to dip into local funds to make up for the loss of the state funds.

And the solution to all this?

It’s too early to say. Officials are saying that a wide variety of options will be looked at to reduce the deficit, including administrative cuts and trying to eliminate service that is either non-productive or duplicates other services Metro or other agencies provide.

Here are links to two reports by agency officials that are now online: The first report looks at the deficit in Prop C funds, which has created the $251.3 deficit. The second report lists some of the assumptions being made as next year’s budget is put together.

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