TEXT-Fitch rates NYS Thruway's PIT bonds 'AA'

Aug 14 - Fitch Ratings assigns an 'AA' rating to the following New York
State Thruway Authority state personal income tax (PIT) revenue bonds
(transportation):

-- $480,165,000 series 2012A.

The bonds are expected to sell via negotiation the week of Aug. 13, 2012.

In addition, Fitch affirms the 'AA' rating on $25.5 billion in outstanding PIT
bonds issued by various state agencies.

The Rating Outlook is Positive.

SECURITY

The bonds are secured by financing agreement payments to be made by the State of
New York, subject to legislative appropriation. Payments are derived from 25% of
the state's PIT receipts.

KEY RATING DRIVERS

STRONG STRUCTURE ELIMINATES RISK OF NON-APPROPRIATION: Bond payments require
annual state legislative appropriation; however, in the event of
non-appropriation the state would be unable to receive PIT revenue deposited in
the revenue bond tax fund, up to the greater of 25% of annual PIT receipts or $6
billion. Fitch believes that this structural feature effectively eliminates the
risk of non-appropriation.

PIT THE STATE'S MAJOR REVENUE SOURCE: The PIT makes up about 60% of state tax
receipts, and the additional bonds test is adequate to offset volatility in the
revenue stream.

GENERAL CREDIT QUALITY OF NEW YORK STATE: Due to the strengths noted above, the
rating on the PIT bonds is equal to that assigned to New York's GO debt. Fitch's
'AA' GO rating on New York is based on a wealthy economy linked to financial
services, the state's moderate debt burden and well-funded pensions, and strong
financial planning and reporting practices. The Positive Outlook reflects
actions in recent budgets to identify sustainable solutions to budgetary
challenges, a notable change from the historical tendency to rely on
nonrecurring measures to address weakening in the state's volatile revenue
system during downturns.

WHAT COULD TRIGGER A RATING ACTION

Changes in New York State's GO rating, to which this rating is linked.

CREDIT PROFILE

Underlying the 'AA' rating on the PIT bonds is the importance of the PIT to
state finances (about 60% of tax receipts), the set-aside of PIT revenues for
debt service, the trapping of funds if appropriation is not made, and the 2x
additional bonds test (ABT). Because of these strengths, the rating on PIT bonds
is equal to that assigned to New York's GO debt despite the appropriation
requirement.

The PIT revenue stream responds quickly to changing economic conditions.
Although a temporary rate increase was included in the state's fiscal 2010
enacted budget, the fiscal 2010 revenue forecast was reduced repeatedly and PIT
receipts for the year declined 5.7% from fiscal 2009 levels. Fiscal 2011
revenues, though below budget expectations, rose 4.2% over the prior year.
Despite reductions in the revenue forecast in fiscal 2012, performance for the
year was solid with PIT receipts up 7.1%, year over year, and 3.8% growth is
expected for the current fiscal year, which began on April 1. In a December 2011
special legislative session, the state extended through 2014 the bulk of the
temporary income tax rate increases on the highest earners that were scheduled
to expire after tax year 2011. This will bolster PIT revenues through fiscal
2015. Positively, debt service coverage remained strong throughout the downturn.

Although payment of debt service on PIT bonds is subject to appropriation, each
month an amount equal to 25% of estimated available PIT revenue (i.e. receipts
after refunds) is deposited into the revenue bond tax fund from the withholding
portion of the tax. After retention of 125% of financing agreement payments for
PIT bonds due in the succeeding month, excess monies are transferred to the
state's general fund. Should amounts in the revenue bond tax fund be
insufficient, the state comptroller is required to transfer from the general
fund without the need for further appropriation. If no appropriation is made,
deposits to the revenue bond tax fund are trapped and cannot be used (except for
GO debt, if necessary), depriving the state of the monies in excess of debt
service.

The state repeatedly lowered the forecast for PIT revenues over the course of
fiscal 2009, and revenues came in at $36.8 billion, basically flat to fiscal
2008. Even with the temporary PIT rate increase, which established two new
brackets and a top rate of 8.97% as compared to the prior 6.85%, fiscal 2010
revenues fell to $34.8 billion, reflecting a large decline in state personal
income. Although the state's revenue forecast was reduced over the course of the
year, fiscal year 2011 revenues rose to $36.2 billion.

The PIT revenue stream showed continued growth in fiscal 2012, although the
state's outlook again weakened during the year. (The temporary tax rates in
effect for tax years 2009 through 2011 had a significant positive effect on
state revenues through fiscal 2012.) Fiscal 2013 revenues are projected to rise
to $40.3 billion. Fitch believes that given the economic sensitivity of the
state's revenues and the uncertainty in the economic environment, downside risk
to the forecast remains, although debt service coverage continued to be
substantial even with deterioration in revenue performance in the recession and
Fitch expects it to remain so.

For additional parity bonds to be issued, historical revenue bond tax fund
receipts must cover future maximum annual debt service (MADS) on all PIT bonds
by at least 2x. MADS coverage under this test is about 4.2x after this bond
sale. PIT bonds are the primary financing vehicle for the state and substantial
additional issuance is expected in the coming years. The current state financial
plan assumes that there will be $30 billion of PIT bonds outstanding by fiscal
2016, up from $25.5 billion now, with coverage remaining well above the
additional bonds test level.

For more information on the state's general credit, see Fitch's press release
'Fitch Affirms New York State GO Bonds at 'AA'; Outlook Positive' dated June 11,
2012, available on the Fitch web site at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

In addition to the sources of information identified in Fitch's report
'Tax-Supported Rating Criteria', this action was additionally informed by
information from IHS Global Insight.

Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 15, 2011);
--'U.S. State Government Tax-Supported Rating Criteria' (Aug. 15, 2011).

Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
U.S. State Government Tax-Supported Rating Criteria