Caltrain declared a fiscal emergency yesterday to help the troubled transit agency balance its next budget without facing state-mandated review.

In May, Caltrain projected a $10.1 million deficit for fiscal year 2009-10. Since then, the transit agency was able to identify about $7 million in extra funds or savings — leaving the projected deficit for next year at about $2.7 million.

The Joint Powers Board, which oversees Caltrain, will vote next on whether to reduce midday service to one-hour headways, increase GO Pass pricing to the equivalent of the full fare three-zone monthly pass and increase parking fees to meet that $2.7 million shortfall.

In the meantime, the emergency declaration allows Caltrain to bypass the California Environmental Quality Act, which conducts reviews when transit service is modified.

Weekend service will be maintained as well as service to Gilroy and the board will not charge bicyclists a surchage, ideas all floated to solve the deficit.

Keeping the train operating on weekends was good news to representatives of the Bay Rail Alliance, members of the Broadway Business Improvement District in Burlingame and other Peninsula residents who rely on the service.

“Shrinking services starts the death spiral,” said Belmont resident George Kranen, who urged the board not to cut weekend service.

Burlingame’s Ross Bruce thanked the board for preserving weekend service, the only service the Broadway station gets, but also urged the board to find dedicated funding for the agency.

Currently, Caltrain gets less than 50 percent of its revenue from paying customers. The agency relies on San Francisco, San Mateo and Santa Clara counties for about $40 million a year, but that number is fluid, constantly changing because of the needs of San Francisco Muni, SamTrans and the Valley Transportation Agency.

For the last seven years, Caltrain was able to balance its budget with one-time funds that have since dried up.

The bad economy has also seen ridership drop in the past two months, said Michael Scanlon, executive director of SamTrans.

“People will find it hard to take a train in the morning and take a train in the evening if there’s no job in between,” Scanlon said.

Caltrain declared its emergency at a public hearing in San Carlos yesterday that featured officials from Monterey and San Benito counties concerned about cutting service to Gilroy.

Stanford representative Brody Hamilton, however, said Caltrain’s idea to increase Go Pass pricing will have the biggest effect on the university because it buys about 10,000 passes a year, or half of all the passes Caltrain sells.

The proposed Go Pass increase will bring in about $470,000 extra from Stanford alone.

Caltrain will roll over $3.7 million in fuel costs savings from the 2009 fiscal year budget and the Metropolitan Transportation Commission kicked in another $2 million in a maintenance grant. The board also identified about $410,000 in administrative costs to be cut.

Menlo Park Mayor Heyward Robinson took Caltrain to yesterday’s meeting in San Carlos with his bicycle. He thought it odd that higher fuel costs hurt Caltrain.

“It’s ironic. The rise in fuel prices should be positive for transit, not negative,” he said.

Bill Silverfarb can be reached by e-mail: silverfarb@smdailyjournal.com or by phone: (650) 344-5200 ext. 106.