New York's Metropolitan Transportation Authority's heavy reliance on debt to finance its capital program will put increased pressure on its operating budget, state Comptroller Thomas DiNapoli said in a report yesterday.
Even with the additional revenue from the recent bailout package signed into law last month, the agency still faces fiscal challenges. The comptroller agreed with projections that a new payroll tax in counties served by the MTA, called a "mobility tax," would support $6.8 billion of bonds but said that debt service would consume an increasing amount of revenue.
"I'm ... concerned that the next five-year capital plan may rely too heavily on debt, which would divert resources from operating needs, just as heavy borrowing in the past has contributed to the MTA's current fiscal crisis," DiNapoli said in a press release. "An unprecedented increase in state assistance will stabilize the MTA's operating budget and could help fund the next capital program, but the MTA is not fully out of the woods yet."
The payroll tax will generate $1.01 billion in the current year and $1.53 billion in 2010. Most of the tax collections will come from the five counties of New York City, which will generate $1.13 billion in 2010, compared to $394.3 million from the other seven counties. The comptroller's office said that by 2020 debt service would consume $440 million of payroll tax revenue, but didn't provide estimates for how much revenue the tax would generate by that year.
The comptroller's office projects that the MTA's annual debt service will more than double to $3.2 billion in 2020, compared to $1.5 billion in the current year.
Although the authority has not yet proposed its 2010-2014 capital program, a special capital proposal put together last year suggested that the new program could cost about $30 billion. The MTA plans to issue $15 billion to fund its next capital program and could have a $15 billion funding gap to fill, the report said.
The notion that the bailout package would be insufficient to fully fund the MTA's capital needs was acknowledged when it was passed last month. The package also added various fees that are expected to generate roughly $300 million annually.
DiNapoli also announced that his office would begin three new audits that would look at, among other things, the MTA's use of banking services and its capital program.