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Transit advocates have a plan to avert the service cuts the MTA is proposing to implement this summer. They say, use a small portion of the money that's being allocated to big capital construction projects. But MTA officials say that would be sacrificing the transit system's future for short-term gains.

Back in 1975, the U.S. Congress approved a piece of legislation that became known as the Beame Shuffle. It was named after then-Mayor Abe Beame, who was struggling to keep New York afloat during the fiscal crisis. Jay Walder, the new MTA chairman, recalled those days when he testified before a state Assembly committee last week.

"The monies that were intended for capital investment, for the maintenance of this system, that were critically important to be able to do that, were flexed, was the word that was used: The Beame Shuffle," he said.

The legislation allowed the MTA to borrow half of the money that the federal government was giving New York for a subway tunnel under the East River. The MTA used the money instead to fill an operating deficit, and was able to keep the fare at 35 cents.

Peter Derrick’s a subway historian. "They were getting federal money to build an expansion of the subway system," he says.

Derrick says that diverting capital money is a big mistake: "If you do that long enough, it means the system starts to fall apart."

Transit advocates say the MTA should use 10 percent of its federal stimulus funds to offset proposed service cuts. They say the Beame Shuffle is an unfair analogy. For decades before the 1970's, hardly anything was spent on maintaining and upgrading the subway. Now the MTA spends $4 billion a year on its capital program.

Gene Russianoff of the Straphangers Campaign says the MTA wouldn’t be alone in using stimulus money to prevent service cuts.

"That's national policy," he says. "That's not an exception to New York. There are other cities around the country —- St. Louis, Atlanta -— that are using that option."

The stimulus package gave about $8 billion to transit, including roughly $1 billion for the MTA. At first, the money was only to be used on capital projects -- buying new buses, laying new track. But in June, Congress amended to law to allow transit systems to devote 10 percent of their money for their operating budgets.

Jeff Rosenberg is legislative director of the Amalgamated Transit Union, which represents about 4,000 MTA workers. "The bill was failing," he says. "It simply makes no sense to appropriate $8.4 billion to capital projects when you are laying off people."

The MTA didn’t take advantage of that provision last year -— it got bailed out by new state taxes instead. But this year, those taxes have fallen short. The MTA is facing another deficit. The authority has proposed deep service cuts, including eliminating two subway lines and 18 bus routes entirely, starting in July.

The Straphangers Campaign has identified about $140 million that could come from the stimulus and other sources. The money would be enough to prevent the service cuts and a reduction in MetroCard discounts that students now receive, at least for the year 2010. City Council Speaker Chris Quinn has come out in support of the idea: "It will make a massive difference in preventing the cuts we’re talking here."

Transit employee unions say there’s an economic angle also: The MTA’s current plan calls for cutting more than 1,300 jobs this year. By comparison, the MTA’s stimulus funds have only created 20 jobs so far, according to the latest federal data.

In September 1975, the MTA ended up raising the fare to 50 cents. The following year, it cut service. The East River tunnel was eventually finished -— it’s where the F line runs now -— but only many years later.

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