New York’s Metropolitan Transportation Authority should use some of its unexpected $1.9 billion in revenue to mitigate fare and toll increases, according to state Comptroller Thomas DiNapoli.
“While the MTA still faces budget risks, the July plan reveals that the MTA’s financial outlook is much improved compared [with] just seven months ago,” DiNapoli said in an analysis released Friday. “The MTA still faces challenges, perhaps none greater than funding its next capital program, but reducing the size of planned fare and toll increases should also be considered.”
Since February, the MTA identified $1.9 billion in new resources for the plan period from 2013 to 2017. The authority cited higher tax revenues, and lower pension contributions, energy costs, debt service and health insurance costs for active employees and retirees.
The MTA plans to use that money to offset unplanned costs and other budgetary needs, and to reduce proposed budget gaps. According to DiNapoli’s analysis, about $1 billion would fund discretionary actions including the funding of capital projects on a pay-as-you-go basis; improved maintenance and services; and paying down long-term Long Island Rail Road pension liabilities.
“Although these were appropriate uses, none of the resources were used to reduce the size of planned fare and toll hikes,” said DiNapoli. “While the MTA used a portion of the resources to reduce projected budget gaps, it could have eliminated the gaps entirely and reduced the size of the next fare and toll increases.”
The MTA has been raising fares and tolls biannually as part of a 2009 agreement with New York State, which enacted new taxes and fees to help the agency fix a long-term structural imbalance.
DiNapoli’s office estimated that each percentage-point reduction in the proposed fare and toll increase for 2015 would cost the MTA $56 million in 2015, and $69 million in each subsequent year.
The MTA, one of the biggest issuers in the municipal marketplace, has $32.3 billion of debt outstanding. According to Moody’s Investors Service, which called the MTA’s portfolio “a complex array of bonds backed by a myriad of revenue sources,” that excludes state service contract bonds and $550 million in commercial paper.
Moody’s rates the MTA’s transportation revenue bonds -- the authority’s primary form of issuance among four major credits, with $18.3 billion outstanding -- A2, while Fitch Ratings and Standard & Poor’s rate them A.
The authority expects overall debt to rise to $39 billion by 2017, a 19% increase even as it retires $4.2 billion of existing debt. Its $34.8 billion capital plan for 2010-2014 includes $4.8 billion for Hurricane Sandy recovery projects and $5.8 billion for post-storm mitigation projects.
“The MTA is pleased that the report recognizes we have reduced our future budget gaps by $400 million and are on track to cut $1.3 billion in ongoing expenses, while making vital investments in maintaining and improving the MTA network,” authority media relations officer Kevin Ortiz said in a statement.
“Our goal is to keep all future fare and toll increases as low as possible, even though many of those costs are still projected to increase at twice the rate of inflation.”