Moody's Investors Service last week revised the outlook of New York's Metropolitan Transportation Authority to negative from stable and affirmed its A2 rating.
The outlook change to New York City's mass-transit provider is due to an increased risk of financial strain over the medium term. The MTA last week adopted a revised budget to reflect a $143 million decrease in state funds and underperforming payroll mobility tax revenue.
In Moody's view, there are several areas of uncertainty: "The state could take further action to balance its own budget by withholding additional funds from the MTA; a deeper recession and-or prolonged economic recovery would further weaken economically sensitive revenues dedicated to the MTA; a weak regional economy would hurt system utilization and thus fare and toll revenues; and projected expenditure savings may not be realized."
Credit strengths include the strong demand in the New York City area for public transportation, and the system's diversified revenue base of dedicated taxes, fares, tolls, government subsidies, and Triborough Bridge and Tunnel Authority surplus revenue.
The MTA oversees New York City's subways and buses, the Long Island Railroad, and the Metro-North Railroad.
