BAY AREA, Calif. -- The board of directors for Caltrain declared a fiscal emergency Thursday in an effort to combat a $2.7 million deficit, but did not make any decisions about service changes.

The fiscal emergency allows the Peninsula Corridor Joint Powers Board to implement changes such as fare increases and reductions in service without meeting the requirements of the California Environmental Quality Act, according to Caltrain spokeswoman Christine Dunn.

CEQA typically requires an evaluation of the potential environmental impacts of changes to public transit service, but the declaration of a fiscal emergency allows agencies to forgo that prerequisite.

The board voted unanimously to declare a fiscal emergency at its meeting today despite shrinking the deficit in the past month.

Caltrain initially projected a $10.1 million deficit for the 2010 fiscal year at its May 7 board meeting, but the deficit has been "significantly reduced" since then due to a number of adjustments, Dunn said.

The agency saved $3.7 million in reductions in staff, consultants and bank fees, and cut $410,000 in administrative expenses.

In addition, Caltrain anticipates receiving a $2 million grant from the Metropolitan Transportation Commission and implementing a fuel-hedging contract that would put fuel purchases at a fixed rate to save $2.5 million, according to Dunn.

At a July 2 meeting, the board will consider reducing midday service, increasing the cost of parking and raising the rate employers pay for a "GO Pass" for employees, according to Dunn.

If approved, service and parking costs would likely change in September, and the "GO Pass" price would change in July, Dunn said.

Last month the board considered cutting weekend service, suspending service to Gilroy and raising fares, but those options were taken off the table due to resistance from the public, Dunn said.