NEW YORK (1010 WINS/AP)  -- The agency that runs New York City's subways, buses and commuter trains will need to raise fares or dramatically cut services to close a $1.2 billion budget gap next year, officials said Monday.


Senior Correspondent Stan Brooks reports.

The Metropolitan Transportation Authority didn't give specifics on cuts or fare hikes, but executive director Elliot Sander said "they will be very, very significant.''

"Whatever that mix that we come up with, in terms of fare and toll increases and service reductions, there's no question that they would have an impact, significantly, on our customers and on the functioning of that region,'' Sander said after an agency finance board meeting.

Last summer, the agency said it would likely need to raise subway and bus fares and bridge tolls 8 percent next year to raise more money.

The agency didn't specify how the increases would be divided among city subways and buses _ which cost $2 for a one-way ride _ its suburban rail lines and agency-run bridges and tunnels. Bridge and tunnel cash tolls currently range from $2.50 to $10; monthly passes on the Metro North and Long Island lines can cost over $300, depending on routes.

The deficit is $300 million larger than a projected gap announced over the summer, a change attributed to plunging revenue from real estate and corporate taxes. Sander also blamed rising interest rates on borrowing for the agency's capital projects, such as an East Side subway line.

The agency will release a budget proposal next month, and is awaiting the results of a state commission appointed by Gov. David Paterson to evaluate MTA finances. Sander said decisions on fare hikes or service cuts wouldn't be made until the state budget and the commission's work is complete.

The commission headed by former MTA Chairman Richard Ravitch is considering tolling motorists on four city-run bridges, including the Brooklyn Bridge, as a way to raise money. That recommendation would have to be approved by the state Legislature.

In a statement Monday, the governor said: ``Addressing the fiscal challenges facing the MTA and the state over the next several years will require shared sacrifice, difficult choices and cooperation from all funding partners.''

More than 8.5 million riders use the MTA's subways, buses and suburban rail lines on an average weekday.