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Gov. Andrew M. Cuomo is proposing a 1.35 percent increase in assistance for the Niagara Frontier Transportation Authority – far below the level that local transit officials sought for a system they insist remains underfunded.

NFTA officials had sought a 5 percent increase in the operating-assistance portion of the overall budget, and acknowledged that the goal was not realized. C. Douglas Hartmayer, spokesman for the NFTA, called the proposal “a work in progress” and said the transit agency will continue to ask local state legislators to champion the cause in Albany.

“We will look at all our options,” he said. “We will continue to make our case with the delegation for operating assistance, and also look at our budget and possibly postpone some of our capital projects.”

Over the last several months, the NFTA has cited a 2013 Federal Transit Administration report warning that New York’s reluctance to adequately fund Metro Bus and Rail could result in drastic cuts in service.

The budget proposal unveiled Tuesday would result in only a $605,000 increase for the NFTA, with state officials saying the transit agency that serves Erie and Niagara counties is slated for the same percentage increase as other systems across upstate.

The new budget figure amounts to a rejection of the NFTA’s plea for the state to recognize the expense of running a light-rail system not faced by the other upstate agencies, which run bus-only operations.

NFTA Executive Director Kimberley A. Minkel said last month that the federal report “validates” the agency’s contention that it cannot sustain operations without an increase in state aid. “The challenge is that when the subsidy goes down, we can’t maintain the same level of service,” she said then, noting serious challenges also facing the $40 million program to rebuild the subway fleet.

The potential for layoffs or cutbacks within the authority has been exhausted, she emphasized, pointing out that Washington commends the NFTA for its management.

“The NFTA has managed its operations effectively and efficiently but has been hampered by zero growth in the revenue sources used to provide operating assistance,” the federal report said.

Minkel said in December that she wonders how cuts could balance the budget without catastrophic reductions in service. “If you look at what FTA says, we’re doing a good job and managing our operations effectively and efficiently,” she said. “If there is low-hanging fruit, I don’t know where it is.”

But state officials say the NFTA also enjoys benefits from sales tax revenue not realized by other upstate systems, and that the state has taken “extraordinary steps” to keep NFTA funding whole.

In other transportation matters, the new budget proposal implements the second year of a two-year, $1.4 billion capital program for improvements to highways, bridges, rail and aviation infrastructure. But key to the new budget is $155 million in new funding to create jobs by accelerating highway and bridge projects.

In their budget message, state officials emphasized the dual role of transportation funding to not only sustain the state’s transportation network, but also create jobs. “The executive budget makes new capital investments to improve the transportation system, enhance its resiliency and create jobs, delivers an increase in aid for transit systems, and continues to implement initiatives to improve customer service at the Department of Motor Vehicles,” the state’s budget message said.