Following a week of bad news for the MTA, the agency’s financial future grew a little dimmer yesterday as Moody’s, the bond-rating agency, warned of an impending rating downgrade. If Moody’s enacts this downgrade, the MTA would be slammed with higher interest rates and would find it harder to borrow money or issue new bonds.
The Times’ William Neuman had more:
The warning applied to about $12 billion in what are known as Transportation Revenue bonds. The bonds are backed by the fares paid by bus, subway and commuter rail riders, as well as other sources, including taxes on real estate transactions, which have declined with the worsening economy.
The report cited the authority’s deepening financial crisis and the failure of the State Legislature to enact a rescue plan backed by Gov. David A. Paterson. In response to the lack of action in Albany, and to help close a $1.2 billion deficit, the authority’s board voted on Wednesday to move ahead with a steep increase in fares and tolls and deep cuts to service.
“In the absence of a long-term funding solution from the State Legislature,” the report said, further fare increases and service cuts were probable. Even so, the report said, the authority faces growing budget deficits in coming years. It warned that “stopgap measures will not stabilize the long-term fiscal health of the M.T.A.”
As a result, the report said, the authority’s financial projections “may not support” the current rating for its fare-backed bonds.
As Neuman notes, Moody’s warning is a direct result of Albany inaction, and MTA officials were quick to point out the relation. “It is making the very direct connection between the failure of Albany to act and the financial viability of the MTA,” CFO Gary Dellaverson said.
I know I’m starting to sound like a broken record, but the point remains: Albany is not taking this MTA crisis seriously. Considering the very public and active statements of the MTA leaders, I’m not inclined to blame them for Albany inaction. Maybe it’s a nature of a legislative body with upstate representation attempting to legislate for New York. Maybe it’s a problem of out-of-touch politicians who don’t know their constituent needs. Maybe New York state really should split into two, as five State Senators recently suggested.
Whatever the cause, whatever the solution, as Albany delays, the MTA’s financial picture looks worse every day.