As New York lawmakers push for a full payroll tax repeal with nary a nod toward its impact on the region’s transportation or economy, bond ratings are casting a wary eye on the MTA’s offerings as the agency’s revenue projections decline. As Bloomberg News reports, Moody’s Investment Services is warning of a “credit strain” at the MTA as the move to remove payroll tax funds “signals a shift in government support” for New York City’s transit network.
“The MTA’s financial operations are already tight, and failure to restore the lost revenue may put negative pressure on the MTA’s transportation-revenue bonds,” Nicole Johnson, a senior vice president, said in a Moody’s report. “Our credit analysis will focus on how the state establishes a new backstop.”
Moody’s currently rates the MTA bonds — which will soon be coming in bunches as the authority plans to support its capital plan through the issuance of debt — as A2 with a stable outlook. If a “credit strain” and lack of state support leads the ranking agencies to downgrade the bonds, it will cost the MTA more to issue them. No matter the outcome, the costs of the payroll tax repeal will fall on the shoulder’s of riders.