Congestion pricing would help MTA, Moody’s says
Momentum from a congestion pricing plan to help fund New York's Metropolitan Transportation Authority and the MTA's passage of toll and fare increases are credit positives for the authority, according to Moody’s Investors Service.
Moody’s, which rates the MTA A1 with a negative outlook, said the developments “suggest credit positive support and momentum for resolving MTA’s funding gap.”
The MTA is one of the largest municipal issuers with roughly $41 billion of debt.
Gov. Andrew Cuomo and New York Mayor de Blasio on Tuesday endorsed congestion pricing for Manhattan south of 61st Street as part of 10-point program to overhaul the MTA and provide the authority with a consistent revenue stream.
“Although the announcement solidifies political and financial support, proposals to reform MTA’s organization and oversight will not necessarily reduce the management complexity that has complicated fare increases and capital program approval,” Moody’s said.
Moody's also cited board approval Wednesday of fare and toll increases after a one-month delay. The deferral followed public criticism of system over the MTA’s performance and dwindling political support for fare hikes.
The MTA, which operates New York City’s subways and buses, Long Island and Metro-North commuter railroads and several intraborough bridges and tunnels, received two downgrades last year from S&P Global Ratings, landing at A with a negative outlook.
Toll and fare increases, to take effect in late March and late April, respectively, will provide $236 million for MTA’s fiscal 2019 operating budget. Due to the delay, fare and toll revenues will be $27 million less than MTA originally budgeted, “though this will be manageable in the context of the system's $16 billion budget,” said Moody’s.
The proposal before the state legislature would backstop congestion tolling with a portion of new taxes on legal marijuana and Internet sales in New York City. With Albany approval, the tolling could begin by December 2020, shortly after the start of MTA’s 2020-24 capital program.
A major battle looms in Albany. The six-member Long Island Senate Democratic delegation on Wednesday cited “troubling concerns” with the plan.
Nicole Gelinas, a senior fellow with the Manhattan Institute for Policy Research, called the congestion pricing bill a work in progress.
“This can be improved and likely will be improved over the next few weeks,” she said.
The MTA projects budget deficits of up to $1 billion by 2022.
Cost containment initiatives include a requirement by all vendors providing professional, technical and advisory services to reduce per-hour rates by 10%.
MTA President Patrick Foye, in an email to vendors, requested email confirmation by March 8.
“The MTA reserves the right to terminate agreements pursuant with their terms with any vendor that does not commit to comply by March 8, and implement the cost reduction described in this letter effective March 31,” Foye wrote.