The chairman of New York’s Metropolitan Transportation Authority, Joseph Lhota, said on Wednesday he will step down at the end of the year and is considering a run for mayor of New York City.

The announcement came as the MTA’s board approved a 2013 budget, including fare and toll hikes expected to raise $450 million annually for the struggling agency. The MTA is still facing a total long-term deficit of more than $330 million by 2016.

Lhota has been chairman and chief executive of the MTA since January 2012, and his term was scheduled to end in 2015. He told reporters after the MTA board meeting that he would hand his resignation to New York Governor Andrew Cuomo later on Wednesday. New Yorkers will elect the successor to three-term Mayor Michael Bloomberg in November.

The decision to leave the agency was “bittersweet,” he said.

“I will be exploring a potential candidacy for the Mayor of New York. This will be a life-defining decision,” he said. “I never expected this to happen. I never expected this opportunity to arise.”

Lhota, a long-time Republican who had been deputy mayor for operations under former Mayor Rudy Giuliani, is expected to run on the Republican ticket, according to a source.

Fernando Ferrer — the MTA’s vice chairman and himself a former Democratic Mayoral candidate — will temporary replace Lhota at the MTA, which operates New York City’s subway and bus system, major bridges and tunnels and commuter railroads.

Lhota led a quick recovery of the city’s transportation network after Superstorm Sandy flooded numerous subway lines and the tunnels leading to Manhattan. Partial service was restored in three days, with most other service back online in the next few weeks.

The MTA voted on Wednesday to borrow up to $2.5 billion in short-term bond anticipation notes to help cover emergency costs from Sandy.

The notes, which would be repaid with money the MTA expects to get from the federal government, would not all be issued at once but rather “as spending dictates,” said spokesman Aaron Donovan. None of the notes will have maturities longer than five years, he said.

The board also signed off on fare hikes that will raise the base price of a subway or bus ride to $2.50 from $2.25. The price of a 30-day unlimited ride MetroCard will also rise to $112 from $104.

The fare hikes will go into effect on March 1.

(Reuters)