Earlier this year, as the MTA went about securing its capital future, an infuriating state law concerning the issuance of debt rose to light. Even as New York State has required the MTA to issue debt, it is also takes a fee of about 8.4 cents per every dollar of debt issued. Thus, if the MTA issues $1 billion in debt, New York State, the body that required the MTA to issue the debt, takes in $84 million. As the state has collected over $100 million from the MTA over the years, I called it the great bond swindle.
When The Daily News brought the issue to light in February, it caught the attention of some New York politicians who were, rightfully so, outraged. Now, the MTA is, as the Staten Island Advance notes, getting a temporary reprieve. In an editorial calling for the permanent elimination of the debt fee, the Staten Island newspaper summarizes recent developments:
The authority would have had to fork over $50 million in BIC over the next two years alone to borrow the money it plans to raise through bond issues. Of course, this added financial burden has meant that the hard-pressed MTA, which is required to have a balanced budget, has been forced to resort to fare hikes, service cuts and even more borrowing to fund its operations.
As Ms. Malliotakis said, “This policy was completely counterproductive as it was bleeding the MTA dry and contributing to the agency’s chronic failure to maintain adequate bus service and keep tolls and fares at a reasonable level,”
Now that wrong has been righted, however – at least temporarily. At the urging of MTA officials, including Staten Island board member Allen Cappelli, and elected officials such as Ms. Malliotakis and Assemblyman Michael Cusick, who authored legislation to eliminate the fee, Gov. Andrew Cuomo finally relented and waived the bond issuance charge for new MTA bonds, but only on those issued in 2012 and 2013 to refinance old debt.
MTA Board members have quickly called for the authority to use the savings to restore services lost to the 2010 cuts. “The MTA needs to look at the additional money from this and increased passenger revenue and invest it in restoring much needed bus and subway restorations as well as some additions to service,” Cappelli said. Meanwhile, city workers removed two bus stops around the corner from my apartment that once served the late great B71, leaving me with the feeling that these lost routes ain’t never coming back.
Meanwhile, this absurd measure by the state has been rectified for now, and as the Advance says, it should be overturned permanently. Good riddance to bad polices.