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The Utah Transit Authority proposed Wednesday to spend $44.5 million more than revenues actually will cover next year — forcing it to dig into cash reserves despite a recent audit criticizing such practices.

But the resulting budget would increase transit service hours by 2 percent, including restoring service on the Memorial, Independence and Labor day holidays that was cut during the recession.

The budget also does not include any fare increases in 2015, but the UTA board said Wednesday it hopes to convert to a distance-based fare system early in 2016 — and would cease to charge the same fare for trips of any length.

"We're adding service hours, miles, holidays" with the budget, said UTA Chief Financial Officer Robert Biles. "We're addressing priority projects. We going to keep fares low, stay efficient and become more efficient."

The UTA Planning and Development Committee endorsed the budget Wednesday, and sent it to the full UTA Board, which will review it on Oct. 22. It plans a public hearing on the budget on Nov. 19 at 2:30 p.m. at UTA Headquarters, 669 W. 200 South in Salt Lake City.

Spending far more than its annual revenue could be especially controversial because a recent legislative audit criticized the agency for such practices, among other things, saying it contributed to shaky finances after it had borrowed heavily to build new TRAX and FrontRunner lines.

The debt service on bonds for rail projects is projected to cost UTA $100.5 million next year, about a third of its operations budget. Given that obligation, the legislative audit warned, "UTA has little margin for error if sales-tax revenues do not meet expectations" in coming years.

UTA is proposing to spend $12.3 million more than revenues in its operations budget, and $32.2 million in such deficit spending for its capital-improvements budget.

That comes as it proposes spending $347.2 million overall for operations, and $133.8 million in capital improvements.

The combined $44.5 million use of reserves nearly totals as much as the $51 million that UTA expects to receive in passenger fares in 2015. It is also about a fifth of the $221.3 million UTA expects to receive next year from sales tax for transit.

"It's been part of our financial projection for some time that we would use some of the [reserve] fund balances we have now to meet our long-term financial" needs, Biles said.

UTA projects that after dipping into reserves, those savings will still total about $160.9 million at the end of 2015. Biles said UTA plans to dip into them more in coming years, leaving reserves at a low point of $101 million in 2019 before starting to rise again.

Rep. Johnny Anderson, R-Taylorsville, chairman of the House Transportation Committee, who earlier this year unsuccessfully pushed a bill to allow voters to raise sales tax rates for UTA, said the deficit spending could complicate such efforts.

"Showing that UTA is in a situation where it is spending reserves could be a two-edged sword," he said. Some "may say that's financial mismanagement to use reserves to cover operations, and others may say it clearly shows there is a need for more money."

Anderson added, "It's not a great way to budget, but I guess it's what UTA feels they have to do to maintain acceptable levels of services."

About half of the capital improvement budget — $68 million — is targeted for construction of a "bus rapid transit" line between Orem and Provo.

Biles said that money will come entirely from federal grants and Utah County.

Such lines have bus-only lanes for much of their distance, require riders to buy tickets from machines before they board at train-like stops, and allow drivers to shorten traffic signals in their favor.

UTA also plans to spend $1 million to replace its Wi-Fi wireless Internet system on FrontRunner trains. Other technology initiatives include developing an improved mobile version of the UTA website and studying ways to implement a mobile-ticketing system.

The budget also includes buying 11 replacement buses, 32 replacement paratransit vans, 50 replacement Rideshare vans — and 18 additional Rideshare vans to expand vanpool service.

Service hours are projected to increase by 1.9 percent for buses, and 2 percent for rail and paratransit service.

The budget also includes $2.1 million for early repayment of some bonds to decrease debt.

It also budgets a 2 percent pay hike for administrative workers in April, and a 1 percent increase for other workers in July followed by a 2 percent raise for them in December.