S&P’s and Moody’s warned Monday that fallout from the ruling that overturned the Payroll Mobility Tax could have a negative impact on the MTA’s bond ratings if the decision is upheld by a higher court. Moody’s issued a so-called credit-negative yesterday while S&P’s statement warned of a “weakened” financial position for the authority “absent added support from the state, fare increases, or service cuts to offset the loss of revenue.”
A Moody’s analyst warned against reading too much into the statement, for now. “It doesn’t mean there is a ratings change,” David Jacobson said to Transportation Nation. “What we are saying is that the court case, could — key word ‘could’ — have a negative impact, but it is not enough to warrant a change in the rating or the outlook.” However, if these agencies decide to lower the MTA’s rating, the costs of borrowing will increase, and that is a spike the MTA can ill afford right now.
Meanwhile, as the MTA continues its offensive against the controversial ruling, Joe Lhota sat down last week with Transportation Nation reporter Alex Goldmark to review the authority’s finances. According to the Chairman, the MTA more heavily subsidizes commuter rail trips over the subway. The MTA spends $7 to each LIRR ride, $4 per Metro-North rider and $1 per subway rider. Of course, with far more subway riders than anything else, the $1 quickly adds up, but it’s more expensive to provide that commuter rail service on a per-rider basis than it is to keep the subways going. Just some food for thought.