The two-year budget deficit for The City’s transportation agency has been slashed significantly, but still looks bleak.

In November, the San Francisco Municipal Transportation Agency projected deficits of $34.5 million and $45.6 million for the 2012-13 and 2013-14 fiscal years. Yet after cutting planned expenditures and tapping state funding, the agency has reduced those shortfalls to $19.6 million and $33.6 million, respectively.

The agency plans to reduce salaries and benefits by $2 million to $6 million, cut insurance and payments to other city agencies by $18 million, and terminate a building lease to save $2 million. It also will shift $10 million from its capital budget into its operating budget.

To increase revenue, the agency has proposed extending parking meter times late into the evening and charging for meters Sundays.

The agency will discuss those options and its expenditure reduction plans at a meeting of its board of directors today.

As part of its charter, the agency is required to forecast and balance two-year operating budget projections. The 2012-13 fiscal year starts July 1.

The board also will review the agency’s five-year capital plan today. That program, which includes initiatives to rehabilitate transit vehicles and improve railways, is facing a $36.5 million shortfall as well.

wreisman@sfexaminer.com