Mayor-President Kip Holden announced at a press conference Monday that he has lined up $1 million to keep buses rolling in East Baton Rouge Parish, averting a threatened shutdown of the Capital Area Transit System in October.

The immediate crisis was averted after the East Baton Rouge Parish Mortgage Finance Authority agreed to grant $500,000 to CATS and the state Office of Community Development stepped in with $500,000 in federal block grant funds to help local communities recover from hurricanes Katrina and Rita.

CATS Chief Executive Officer Brian Marshall praised Holden for his efforts to find CATS the money it needs to keep its doors open this year, but said after the press conference that the transit agency faces a difficult budget year for 2012. He said decisions will have to be made within the next two months on possible service cutbacks or fare increases to prevent a $2 million shortfall in 2012.

“The gap right now would be approximately $2 million,” Marshall said.

A Blue Ribbon Commission that Holden appointed to study the city-parish’s transit woes has recommended that a combination of a sales tax increase and property tax be placed before voters in the fall of 2012, but Marshall said that, even if approved, the money won’t come in time to bail CATS out of financial difficulty next year.

At the press conference, Holden noted that the Metro Council in January rejected the plan CATS had put forward to solve its budget woes through a combination of service cuts and fare increases. He said he stepped in, even though the city-parish government has no responsibility for funding CATS, to try to find a short term solution.

Standing at a podium before two large posters bearing signatures and the words: “Thank You Mayor-President Holden from 150 CATS Employees and Families and 10,000 Riders,” Holden said the funding obtained from the Mortgage Finance Authority and Louisiana Office of Community Development will be used to leverage additional federal funds, wiping out CATS’ anticipated $1.29 million deficit for this year.

“This means there will be no shutdown of service and no layoff of employees,” Holden said.

He said public transit is vital to residents who rely on buses for transportation to school, work, visits to the doctor and for other purposes.

Holden said the $500,000 from the Mortgage Finance Authority comes as a grant and is from a pool of funds used to support ownership and economic development in East Baton Rouge Parish. CATS is to repay the money over seven years if it receives a dedicated funding source to support its operations, Holden said.

The mayor said he will support any tax issue on the ballot next year to support CATS. He said the loss of bus services, if CATS had run out of money in October and forced to shut down, would have been devastating for Baton Rouge.

“Successful community have successful public transit systems,” Holden said. “We have to build one too”.