New York’s Metropolitan Transportation Authority is looking to boost its bond issuance for fiscal 2009 by $200 million, with its next sale set for early to mid-December.
The additional $200 million will help address cash-flow issues. Certain bills for larger capital projects have come in earlier than expected, and at the same time the authority has yet to receive certain federal reimbursements.
The MTA’s full board on Wednesday will weigh in on the proposal to increase its last 2009 bond sale. The authority has $160 million of remaining bond capacity in 2009 and the additional $200 million would bring its final sale to roughly $360 million.
The additional borrowing is not due to cost overruns on capital projects, according to Gary Dellaverson, the MTA’s chief financial officer.
“This is unusual in that this has not happened recently, but in issuing the amount of money that we anticipated from the cash-flow analysis that was done leading into the calendar year that we’re in, it’s inadequate to support the spending needs of the capital construction companies and the operating agencies for the rest of the year,” Dellaverson said during a finance committee meeting.
“When we saw some shortfalls in the cash flows, we did an analysis that appeared to us to be principally related to the timing of federal reimbursements,” he said. “As the year progressed, this tightened and we ended up in the number that we’re in now, which is about $200 million.”
The MTA plans to borrow, in total, $2.5 billion in 2009, up from the $2.3 billion that board members approved earlier this year.
Officials have yet to select an underwriter or finalize the structuring of the roughly $360 million bond sale, according to finance director Pat McCoy.
McCoy said next month’s transaction will help finance expenses on larger capital projects that came in sooner than expected.
“It’s the federal reimbursements and it’s spending on the big projects, the mega-projects, where it can be difficult to predict when all the big bills are going to come in. And of course, we bond out to pay those bills,” he said.
Meanwhile, the MTA anticipates roughly $115 million less in revenue from the state. Lawmakers in Albany are working on legislation to fill a $3 billion hole in the fiscal 2010 budget.
New York’s fiscal year began April 1. Any decrease in state funds to the MTA requires legislative approval.
Gov. David Paterson last month proposed decreasing the MTA’s allocation of certain dedicated taxes and fees by $115 million to help reduce state expenditures.
The authority did not address the expected cuts at yesterday’s finance committee meeting but will release its final 2010 budget proposal tomorrow.
The MTA board would then weigh in on that spending plan at its Dec. 16 board meeting.
The authority’s fiscal year begins Jan. 1. It’s not clear whether the MTA would absorb the state cuts in 2009 or 2010, or both.
