MESSAGE
| DATE | 2009-03-27 |
| FROM | Ruben Safir
|
| SUBJECT | Subject: [NYLXS - HANGOUT] Is this isn't fixed this will go on forever
|
They must roll back the capital budget...
March 27, 2009
M.T.A. Is Warned It’s Facing a Downgrade in Its Bond Rating
By WILLIAM NEUMAN
Adding a new note of urgency to the debate over how to fix the fiscally
troubled Metropolitan Transportation Authority, a financial rating
service warned on Thursday that without a comprehensive rescue by the
state, the authority was in danger of having its bond rating downgraded.
“This is a shot across our bow,†said Gary Dellaverson, the authority’s
chief financial officer. “Moody’s is saying that the M.T.A. is in
difficulty.â€
He said that the warning, in a report by Moody’s Investors Services,
could lead almost immediately to higher interest rates on some of the
authority’s variable-rate debt. If Moody’s were to downgrade the
authority, it would make it harder and costlier for it to borrow money,
he said.
The warning applied to about $12 billion in what are known as
Transportation Revenue bonds. The bonds are backed by the fares paid by
bus, subway and commuter rail riders, as well as other sources,
including taxes on real estate transactions, which have declined with
the worsening economy.
The report cited the authority’s deepening financial crisis and the
failure of the State Legislature to enact a rescue plan backed by Gov.
David A. Paterson. In response to the lack of action in Albany, and to
help close a $1.2 billion deficit, the authority’s board voted on
Wednesday to move ahead with a steep increase in fares and tolls and
deep cuts to service.
“In the absence of a long-term funding solution from the State
Legislature,†the report said, further fare increases and service cuts
were probable. Even so, the report said, the authority faces growing
budget deficits in coming years. It warned that “stopgap measures will
not stabilize the long-term fiscal health of the M.T.A.â€
As a result, the report said, the authority’s financial projections “may
not support†the current rating for its fare-backed bonds.
“It is making the very direct connection between the failure of Albany
to act and the financial viability of the M.T.A.,†Mr. Dellaverson said.
Governor Paterson and the Assembly speaker, Sheldon Silver, have
endorsed a rescue plan for the authority that would generate income from
a payroll tax and tolls on the East River and Harlem River bridges. It
would also include a lower fare increase than the one approved by the
authority.
But that plan has stalled in the Senate, where several Democrats oppose
the new bridge tolls.
Officials in the Capitol said that discussions were continuing and Mr.
Dellaverson said on Thursday night that he was on his way to Albany to
take part.
The Moody’s report applied only to the authority’s Transportation
Revenue bonds. The authority also has bonds backed by bridge and tunnel
tolls and others backed by tax revenues. Those were not discussed in the
report. The authority has a total of nearly $27 billion in debt and it
has budgeted $1.5 billion this year for debt service.
The subway and bus fare increases approved this week by the authority
are to take effect May 31, and increased prices for commuter rail
tickets on June 1. The base subway and bus fare is to increase to $2.50,
from $2; a monthly MetroCard will cost $103, up from $81. Most commuter
rail tickets will go up by 20 to 30 percent.
Tolls on the authority’s bridges and tunnels are to rise on July 11.
The service cuts include eliminating 35 bus routes and the W and Z
subway lines.
Authority officials say that if a rescue plan is passed in Albany, they
can roll back the cuts and fare increases.
--
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