NEW YORK (Reuters) - The New York Metropolitan Transportation Authority could “further complicate” its difficult financial position if it goes ahead with a $14.8 billion borrowing plan to fund its capital program, the state comptroller said in a report on Wednesday.
The bonding would be the largest borrowing program in the history of the MTA, which is America’s largest mass-transit system and one of the biggest issuers in the $3.7 trillion U.S. municipal bond market.
A review by Comptroller Thomas DiNapoli found the proposed financing program would cost the authority’s operating budget $33 billion over the term of the loans, or nearly $13 billion more than the approved financing program.
“Before taking on nearly $15 billion in new debt, the MTA must present the public with the facts about the potential long-term implications of this new borrowing on services, fares and budget gaps,” DiNapoli said in a statement.
“There is no debating that the capital program is critically important, but my analysis shows that the magnitude of this borrowing plan will have serious implications for the operating budget in the coming years,” he said.
The MTA’s financial plan for the current year also includes “significant budget risks,” DiNapoli’s report said.
The MTA said in a statement “the increased debt service would be covered by reallocating revenues included in its existing budgets and earmarked for pay-as-you-go capital.”
“The MTA’s plan would fully fund the 2010-2014 capital program without increasing the burden on the operating budget,” said MTA spokesman Kevin Ortiz.
This month Fitch Ratings cut the MTA’s credit rating to A from A-plus, citing mounting operational costs, a soaring pension liability and “higher-than-expected near-to-medium-term financial pressure.”
Reporting by Edith Honan; Editing by James Dalgleish