NEW YORK (1010 WINS)  -- Cash-strapped transit officials said Wednesday they are exploring new revenue sources including ads in train tunnels and CNN television monitors in stations.

Kathleen Maloney reports:

But Metropolitan Transportation Authority officials, who run the nation's largest mass transit system, said an 8 percent fare increase for subways, buses and commuter trains may still be inevitable next year given a stagnant economy and rising fuel costs.

``It's a very, very difficult, challenging time for all of us,'' MTA Executive Director Elliot Sander said. ``We are required by law to present a balanced financial plan.''

Sander offered to the MTA's 17-member board a preliminary budget that outlined fare hikes, cost savings and requests for more money from the state and city, all intended to close a projected 2009 budget deficit of more than $900 million.

The plan, on which the board will vote in December, would include an 8 percent increase in fares for the city subway and bus systems and the MTA's two commuter train lines. Bridge and tunnel tolls would go up as well. How the increase would be spread out among the different agencies would be determined later. Sander said it was too early to say whether the base subway fare, $2, might go up to $2.25.

The 8 percent increase would go into effect in July 2009, followed by another 5 percent hike in January 2011, the MTA said.

``This is not something that people in public service want to do, to raise the fares to the riders,'' MTA Chairman Dale Hemmerdinger said. ``The world is what the world is. We can't change reality.''

The MTA's projected budget deficit has risen sharply in the last few months, largely as a result of declining revenues from real estate taxes and rising fuel costs.

Sander and Hemmerdinger said they would need to close the gap by raising fares next year even if the city and state contribute more funding.

But Mayor Michael Bloomberg and Gov. David Paterson have suggested that the MTA should be able to balance its budget without raising fares.

Bloomberg said Tuesday that he wouldn't support a fare increase unless the MTA can demonstrate that it is cutting costs.

``Anybody that tells you they've got a $10 billion budget and they can't find a way to cut 5 percent, that's just poor management,'' he said.

Paterson noted that fares just went up 3.5 percent in March, and he said an increase ``this soon after the last fare hike just, in my opinion, is not wise.''

Some commuters shared the governor's view.

``Prices are going up everywhere, but I think this is too much, too fast,'' said Lois Matelan, who was getting on a downtown 3 train at Manhattan's Pennsylvania Station. ``We just had a fare increase.''

Sander said the MTA has cut costs by 5 percent since 2004 and plans cuts of another 6 percent over the next four years, all without reducing service.

And he said the authority is considering new revenue sources including ads in train tunnels and TV monitors installed by CNN.

MTA Deputy Executive Director Linda Kleinbaum said about six of the monitors will be installed over the next 12 to 18 months as a pilot program.

The TV screens will be in subway and commuter rail stations and will be used for MTA service announcements and CNN content.

If the pilot program is judged a success, the TV screens, similar to those in airports, could spread throughout the transit system, Kleinbaum said.

The MTA board will adopt a budget and schedule public hearings on fare and toll increases in late December.

Several board members said they were reluctant to raise fares.

``Before we ask the riding public to take an 8 percent fare hit, which is a substantial amount for hardworking people, I think we need to redouble efforts here at the agency to find every nickel, every quarter we can in expense reductions,'' Vice Chairman Andrew Saul said.