Escalating debt is no major concern for New York’s Metropolitan Transportation Authority, according to its acting board chairman.
“We have a measurable need, a demonstrable need, for more rolling stock, more buses, better buses,” Fernando Ferrer told reporters Wednesday after the board increased its 2015-2019 capital program request from $29.6 billion to $32.5 billion.
A state review board must approve the request.
Some board members worried that debt service at the MTA, a large municipal issuer, could escalate to as high as $43 billion from its current $38 billion, and crowd out needed programs such as state-of-good-repair maintenance and expansion.
“There are those who believe it should be more than 43,” said Ferrer.
“Our fleet is aging. You don’t have to tell that to anyone who is on a C train or the soon-to-be-replaced Staten Island [Railway]. These are things we have to do and we have to do quickly. We also have to add capacity.
“All of us who’ve been involved in public budgeting on the city and the state side will recall there’s a benchmark, 20% debt service,” said Ferrer, a former Bronx borough president and twice a candidate for New York mayor. “Once you’re getting there, you’re really worried. We’re not there yet.
“Do we have to borrow if we want things? We absolutely do. Are we ready to do that and do we have the capacity to do that? Yes we do.”
Stephen Barrang, the MTA’s director of program management, told the board that the new capital request keeps the state-of-good-repair level constant.
It includes nearly $2 billion for the Long Island Rail Road “third track” expansion project; $700 million for the second phase of the new Second Avenue subway line along Manhattan’s East Side; plus amenities such as more station countdown clocks, open-road tolling, clean-energy buses, contactless fare-payment technology and enhanced WiFi.
“There are no viable alternatives,” Barrang said in a memo.
The authority issued $680.3 million of dedicated tax fund green bonds and $82.6 million of dedicated tax fund variable rate refunding bonds on May 12 and 15, respectively.
In addition, the MTA is administratively transferring $464 million for the East Side access project, designed to route some LIRR trains to Grand Central Terminal.
Ironically, the $32 billion nearly matches draft plan the MTA requested three years ago, which the review panel rejected. Gov. Andrew Cuomo suggested at the time that MTA’s request may have been bloated.
The authority finally got approval for the $29.6 billion after Cuomo, New York Mayor Bill de Blasio and authority officials worked out an intricate three-way compromise.
Board member James Vitiello, while approving the request, called for a lower debt ceiling for the authority.
Veronica Vanterpool voted no, saying the extra debt would negate the state’s allocation to the MTA annually over five years.
“There’s a lot of good stuff in this capital program amendment, buy what is not good is debt,” she said. “A $5 million increase in [the MTA’s] debt service is significant.”
David Jones, who also opposed the request, called for more public scrutiny.