Testifying before an Assembly committee in Albany this week, the Metropolitan Transportation Authority’s executive director, Katherine Lapp, said that due to the MTA’s surprisingly rosy finances, a fare hike might not be necessary in 2007 – an admission that has left public policy advocates both pleasantly surprised and skeptical.

Ms. Lapp told members of the New York State Joint Legislative Fiscal Committee that increases in revenue from the MTA’s real estate transactions and favorable interest rates led to unforeseen windfalls last year. The MTA projected a $461 million surplus for 2005, but ended up with more than $1 billion.

“Not only is our financial picture more stable … but we have made great strides in becoming transparent in the way we conduct business,” Ms. Lapp said Tuesday.

Several public policy advocates said the rosy finances of 2005 don’t make up for anticipated billion-dollar deficits starting in 2008 as debt servicing for old bonds kicks in. The MTA predicts deficits of $49 million, $1.1 billion, and $1.5 billion for 2007, 2008, and 2009.

“If we have learned anything this year, it’s that predicting the MTA’s finances two or three years out is impossible,” the vice president for public affairs at the Regional Plan Association, Jeremy Soffin, said. “Obviously, we want to avoid a situation where there is an extremely big hit on riders – to spread the pain over a period of time.”

The head of the Straphangers Campaign at the New York Public Interest Group, Gene Russianoff, said he welcomed the news.

“Anyone who is for keeping the fare at the current – what we believe to be adequate – level is our hero,” he said.

Ms. Lapp’s statements portrayed a healthy MTA budget, but observers said that even the possibility of not instituting the scheduled fare hike was evidence of political pressure in the works.

Not only are record deficits seen on the horizon, but the MTA wasn’t able to obtain the entire amount needed to finance the 2005-09 capital plan to fund the building of the Second Avenue subway line and other projects.

Between 1975 and 1980, the transit authority refused to raise the fare from $0.50, a decision that is said to have driven the subways into unprecedented debt and disrepair.

Less than a year after Richard Ravitch took over the MTA in 1979, he instituted the first of three fare hikes during his tenure. He raised the fare to $0.60, a move that was greeted by an uproar of rhetoric from local politicians, he said.

“It’s never great for the economy, but its necessary if you don’t have enough money to run the system and pay your debts,” he told The New York Sun yesterday.

Mayor Bloomberg has said that his four members of the MTA board will vote against a fare increase. The governor controls six seats, which means that the fare hike issue may come up during this year’s gubernatorial election. None of the candidates had statements about a prospective fare hike.

With Transport Workers Union leaders attacking the MTA for not carving out a large enough piece of the $1 billion surplus for their benefits and wages this year, it is likely they will attack the MTA as well, Mr. Russianoff said.

An MTA spokesman, Tom Kelly, said reports of Ms. Lapp’s comments exaggerated their importance because the MTA has not yet made a decision on fare hikes.

The head of Permanent Citizen’s Advisory Council to the MTA, Beverly Dolinsky, said that though she was surprised at the possibility there won’t be a fare hike, the ones who are most affected and therefore most influential in the decision are straphangers.

“Riders are never happy with fare increases. If it isn’t absolutely necessary, it’s hard to sell them,” she said. “Sometimes they’re necessary.”