New York's MTA may have to increase debt in LIRR pay deal: Moody's
NEW YORK (Reuters) - Meeting wage demands of Long Island Rail Road workers threatening to strike over a pay dispute may mean New York's Metropolitan Transportation Authority will have to issue more debt to cover capital investment costs, according to ratings agency Moody's Investors Service.
The MTA has offered workers a 17 percent wage increase over seven years along with higher contributions for medical insurance and pensions by future employees, both sides said. The unions have asked for a wage hike of 17 percent over six years without such concessions for future employees.
"If the union successfully negotiates a higher increase in salaries, the MTA would likely have to cut pay-as-you-go capital spending or reduce its voluntary deposits to a trust for retiree healthcare benefits," Moody's said on Friday.
The MTA operates the largest regional transportation network in the United States. It has a yearly budget of $13.5 billion. Its long term debt amounts to over $33 billion and it spends 17 percent of its budget on debt service costs. MTA's capital plan calls for $29 billion investment from 2010 to 2014.
The MTA and a coalition of eight unions representing LIRR workers have been negotiating for four years to try to reach a contract deal. The winding down of a cooling-off period in the talks allows the 5,400 unionized workers to walk off the job on July 20, which would leave some 300,000 daily commuters without train service.
The MTA's proposal would increase costs by about $21 million each year from 2015-18, according to Moody's, which amounts to about 1 percent of total labor costs, a level that Moody's called "manageable." However, the deal could include $64 million in retroactive labor costs for 2010 to 2014, a figure which could increase to $126 million if applied to other MTA unions.
(Reporting by Edward Krudy; Editing by Leslie Adler)