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On July 1, the Twin Cities-area Metropolitan Council will increase Hiawatha light-rail and local bus fares 25 cents.

The across-the-board increase will help offset a projected $60 million budget shortfall for the fiscal-year 2006 and 2007 biennium. The shortfall stems from increased fuel and health-care costs, as well as less-than-expected revenue from a motor vehicle sales tax — a main transit funding source.

The council expects the fare hike to generate about $6 million annually.

Meanwhile, council members postponed plans to cut service in hopes the state legislature will approve additional transit funding during a special session.