MTA chief Thomas Prendergast Wednesday defended a $525 million labor deal struck with the Transport Workers Union Local 100 that provides raises after insisting costs need to be flat.

Service cuts and higher fares were cited as a reason why workers raises had to come with concessions on health care contributions on work rules. Prendergast said the three years of "net zero" were due to the aftermath of the financial collapse.

"There was not a single board member that didn't say 'oh no, that has to be, going forward' because of the difficulties we had," Prendergast said in response to one member calling the MTA's original premise "illusory."

With the economy rebounding and other labor groups in New York getting raises, "the landscape changes," he said.

The raises for 2012 through 2017 will be paid from money set aside for a Long Island Rail Road workers pension fund, according to MTA financial documents. TWU members and the MTA board must approve the deal.