The San Francisco Municipal Transportation Agency board of directors declared a fiscal emergency for the 2011 and 2012 fiscal years.

The board's vote on March 30 signals the anticipation of more budget difficulties, despite a notice that the agency could expect roughly $67 million in additional funds for the next two years from the state. Gov. Arnold Schwarzenegger signed two bills on March 22 related to a gas tax swap that would provide additional funding to the transit agency.

By declaring a fiscal emergency the board has the discretion to raise fares and reduce transit service without conducting environmental reviews.

Transit riders may be able to breathe a sigh of relief, however, as Board Chairman Tom Nolan cited the extra state funding as a way to rescind the plan requiring commuters to use the Premium "A" monthly pass to ride cable cars and most express lines, a provision set to take effect May 1.

"We have a bit of breathing room," Nolan said. "I think it might be a good idea to take these things off the table. My hope is that we are very prudent with the money."

The 10 percent service cuts, that were approved by the board on Feb. 26 and set to take effect May 1, are likely to remain in place as they are factored into the budget for the next two years.

The board will consider reducing work orders, extending parking hours deeper into the evening, charging for parking on Sundays and adding more metered parking spaces to close the budget gap for the next two years, MTA documents show.

The board will also consider proposing ballot measures to raise the sales tax as well as other taxes and to increase vehicle licensing fees, as a means to generate more revenue for the cash-strapped agency.

Irwin Lum, president of Transport Workers Union Local 250-A, repeated many of his points from earlier meetings and urged the board to cut spending in areas that don't affect riders.

"The issue of cuts and service modifications is the wrong way to go," Lum said. "If people expect Muni to be used, it has to be reliable, it has to be affordable."

The anticipated budget shortfall for the next two years was also decreased in size because of the additional funding, according to MTA documents. The projected deficit for the next two years is $54.8 million, down from the $101.7 million projected earlier.

The board met in City Hall to discuss the dire financial situation facing the transit agency and outline possible solutions. A two-year budget must be approved by May 1.

SFMTA CEO Nathaniel Ford expressed optimism towards the additional funds, but warned that "we probably have one more year of really stiff belt tightening."

"We're in a much better situation than our peer systems," Ford said in relation to how other major cities are coping with reductions in funding, but added, "Over the last three years we've lost $180 million."

The public once again showed up in force to voice their frustrations. One man was escorted from the meeting at Nolan's request after he shouted at board members. Nolan also threatened to close the meeting to the public on at least two occasions.

The board meets again on April 6 to continue discussion about the budget deficit and will possibly adopt a budget for fiscal years 2011 and 2012.