NEW YORK Nov 28 New York's Metropolitan
Transportation Authority, the biggest transportation network in
North America, said on Wednesday that it could hike short term
borrowing and squeeze its already tight budget to pay for
repairs after Superstorm Sandy.
In its first look at the storm's financial impact, the MTA
said it may have to borrow an extra $4.8 billion. It is planning
to raise fares in March as it braces for a total deficit of $333
million projected through 2016.
In addition to storm-related losses, the agency is facing
higher electricity, employee healthcare and overtime costs. But
its chairman Joseph Lhota told reporters on Wednesday that he
wanted to avoid cutting back on service.
"I really do not want to be involved in service reductions,"
The MTA, with a $12.6 billion budget, operates New York
City's subway and bus system, area bridges and tunnels, and
commuter railroads that stretch into Long Island and the city's
After Sandy made landfall in neighboring New Jersey on Oct.
29, the devastating storm temporarily blacked out power, flooded
tunnels for trains and roadways, and damaged infrastructure and
equipment across the region.
"We're not back to normal. We're still on limited service,"
Lhota told reporters.
Altogether, New York and New Jersey say they need at least
$78.8 billion to recover from Sandy and prevent similar damage
from future storms, according to the most current estimates.
On Wednesday, New York City Mayor Michael Bloomberg lobbied
Congress for relief funds. He said he was confident that
lawmakers would agree to help pay for damage, even as they deal
with a looming "fiscal cliff" of tax hikes and automatic
A leading issuer in America's $3.7 trillion municipal bond
market, the MTA has nearly $32 billion of outstanding debt.
Moody's Investors Service rates the MTA's transportation revenue
SHORT-TERM NOTES COULD PAY FOR INFRASTRUCTURE DAMAGE
The agency took a $5.02 billion hit from Sandy, with nearly
$4.8 billion of damages to its infrastructure and $268 million
in operating losses, officials said at a board meeting on
The agency expects insurance to cover up to $1.08 billion,
with additional funds coming from the federal government.
The MTA could cover the operating losses, which will hit its
fiscal 2012 budget, in part with money from its general reserve
and from a temporary, $75 million internal loan from its fund
for retiree healthcare benefits, the agency's chief financial
officer said at the meeting.
But to pay for the restoration of tunnels and equipment
damaged in the storm, the MTA proposed the sale of $4.8 billion
of new bond anticipation notes over the next two years.
The notes are a form of short-term borrowing, to be repaid
with reimbursements that the MTA thinks it will get from
insurance and the Federal Emergency Management Agency, officials
Under the plan, the MTA would sell $2.9 billion of the notes
in 2013 and $1.9 billion in 2014, with the proceeds earmarked
for repairing damaged infrastructure.
The borrowing would add an estimated $29 million of new debt
service costs in 2013 and $48 million in 2014 until the notes
are repaid. It could take up to three years to complete the
reimbursement process, the MTA said.
To offset the increased borrowing costs, the MTA would cut
spending by about $25 million in 2013. Spending reductions would
continue escalating annually until the debt is paid off, the MTA
Even so, the agency may be left to cover $950 million on its
own if FEMA only reimburses 75 percent of damages, it said.
Estimates of Sandy's impact were "highly provisional" and
were not expected to change the agency's long-term financial
strategy, according to budget documents.
The MTA's fiscal year ends Dec. 31. Board members will vote
on the budget at their December meeting and will decide whether
to approve the new short-term borrowing in January, a spokesman