MTA and NYC Transit Authority officials reported yesterday that the agencies would likely end 1998 with sizeable budget surpluses. Strong economic conditions have pushed tax revenues dedicated to the MTA above projections. Robust rider revenues have also exceeded expectations.

MTA finance chief Gary Caplan told an MTA Finance Committee meeting yesterday that the agency faced a transit "windfall" that could yield a surplus of $100 million by year's end. The announcement marked a big difference from the agency's behavior last year, when it tried to deny through most of the fall that any budget surplus existed. The MTA ended 1997 with a surplus over $180 million. That surplus led Governor Pataki to heed calls for monthly and weekly transit passes - the MTA began offering the passes this month.

Transit officials cautioned that the estimates are preliminary, only covering the year's first five months. But transit observers think the surplus will continue to grow during the year. For one thing, transit officials have underestimated ridership increases stemming from fare incentives and good economic times, and they have overestimated losses from the incentive packages.

The Straphangers Campaign has pushed NYC Transit to provide more service to ease current crowding and to accommodate the expected increase in transit use the monthly and weekly passes will bring after the summer. Transit service increases announced last week amounted to a .5% increase for buses and a less than .2% increase for subways.

But an MTA spokesperson told reporters that Governor Pataki had directed the MTA to "return any surpluses to the customers" and that investment in more service was a likely use for extra revenue.

While the MTA has large capital investment needs as well, surplus fare revenues, at the very least, should be invested in service. Last year, the fare surplus was about $73 million, and through this May, the fare surplus was over $20 million. Investments in more frequent service could ensure continued strong ridership and help ensure the overall health of the system.