New York's Metropolitan Transportation Authority plans to market bonds on a new credit using a new dedicated revenue stream that the state established last week, officials said at a special board meeting convened yesterday to reduce fare and toll increases.
"Our expectation is it will be another credit in addition to the other[s] ... that we utilize," said MTA chief operating officer Gary Dellaverson. It's not clear when bonds will first be sold on the new credit and he said there was "no anticipation of utilizing it as a credit" in calendar 2009.
The bonds will be backed by a new "mobility tax" collected in the 12 counties served by the MTA. It is expected to support $6.8 billion of bonds. The law imposes a 0.34% payroll tax on employers in New York City as well as Nassau, Suffolk, Westchester, and Rockland counties, and a 0.25% payroll tax on employers in Dutchess, Orange, and Putnam counties. The payroll tax is expected to generate $1.5 billion annually and will be used for both capital and operating expenses.
"Until we can start to make judgments about coverage, we wouldn't obviously seek to establish the credit until well after that," he said.
The payroll tax was part of the MTA rescue package passed and signed into law last week by Gov. David Paterson after more than a year of wrangling over different proposals to fund the nation's largest mass transit agency. The rescue package allowed the MTA yesterday to scale back enacted fare and toll increases to an average of 10% from 25%-30% as well as to restore service cuts, though some jobs will still be cut through attrition.
The MTA currently issues bonds on four credits: transportation revenue, Triborough Bridge and Tunnel Authority, state service contract, and dedicated tax fund.
"The Legislature and the governor have enacted the tax in a way that will allow it to be a quality credit, similar to our DTF credit," Dellaverson said. "The Legislature recognized the MTA's arguments about the need to utilize reasonably stable tax sources to support the MTA's needs and so as opposed to many of our other tax streams, this one should be a relatively stable one because it's predicated across a broad geographical area, the entire region, and applied to all payrolls."
In the past year the MTA has seen some of its more volatile taxes, especially dedicated real estate taxes, drop precipitously as the economy slid into recession. The authority received $942.2 million of real estate taxes last year, more than half a billion dollars less than the $1.59 billion it received from the same source in 2007.
The rescue plan also includes a menu of motor-vehicle related fees expected to generate about $250 million annually. The MTA is currently working on its 2010 through 2014 capital program. Though the total amount needed has not been determined, a special six-year capital program developed last year called for $29.55 billion of capital spending.
"While funding for a full five-year plan would have been preferable, Albany deserves credit for addressing the MTA's short-term capital needs despite this economic crisis," said outgoing MTA executive director Elliot Sander.
The new money will allow the MTA to continue fully funding its core maintenance and mega projects for two years. "It is our hope that an economic rebound will provide sufficient funding from current revenue sources to fund the final three years of the plan," Sander said.