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Yesterday, New York's Metropolitan Transportation Authority (MTA) board approved a 2009 budget that calls for raising fares and cutting service to make up a $1.2 billion shortfall.

The budget gap was caused by plummeting revenue, and higher fuel costs and debt service obligations, MTA said. The authority already has implemented numerous cost-cutting measures during the past year, such as consolidating back office functions and committing to reduce controllable costs by 6 percent during the next four years. In addition, each MTA agency cut costs by 4.7 percent.

The remaining budget deficit will be covered by service cuts and a fare and toll increase scheduled to take effect in June 2009 that's projected to generate about $670 million in additional revenue. The authority will hold public hearings on the service cuts and fare hikes next month.