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Yesterday, New York’s Metropolitan Transportation Authority (MTA) released its preliminary 2008-2011 financial plan, which calls for raising revenue and cutting costs to make up budget gaps. The authority also proposes to increase service.

MTA will benefit from continued growth in real estate tax revenues that make up a portion of the authority’s funding. However, other revenues are flattening and MTA continues to deal with “uncontrollable costs” such as debt service, pensions, and health and welfare benefits. So, the authority projects a $2 billion budget deficit by 2011.

As a result, MTA has proposed using a one-time cash surplus in 2008 and 2009, paying down debt, pre-paying pension costs and implementing a fare increase. The authority also will require all MTA agencies to cut costs by 1.5 percent annually.

Meanwhile, the authority has proposed adding and improving service. MTA New York City Transit plans to add rush hour, weekday off-peak and weekend trains on the L Line and evening and weekend service on the No. 7 line, as well as rehabilitate five subway stations.

MTA Metro-North plans to add weekend express service on the Hudson Line, peak-period service and a new round-trip off-peak train on the Harlem Line, an off-peak round-trip express train on the New Haven Line, and off-peak and weekend service on the Pascack Valley Line.

MTA Long Island Rail Road expects to add morning peak service on the Port Jefferson and Port Washington Branches and afternoon peak service on the Babylon, Montauk and Far Rockaway branches, as well as provide additional evening, weekend and special event service.

MTA will hold public hearings on the financial plan during the next five months. The board is expected to approve the plan in December.