Award–winning journalist Andrea Bernstein is Senior Editor for Politics & Policy for WNYC News. She has previously served as Metro Editor, Political Director, Director of Transportation Nation, and Senior Reporter.
Ratings Agency Downgrades MTA Debt
Thursday, September 08, 2011
Adding to its financial woes, the MTA learned Thursday that the smallest of the three main ratings agencies, Fitch, was downgrading its debt from a rating of A+ to a rating of A. The action could mean that the MTA could have to pay more money to borrow for big projects like the Second Avenue subway, leaving less money for rider services.
Fitch said in a press release that the downgrade stemmed from increased operating costs and pension obligations, and a growing debt service.
Over the years, debt service has become an increasingly large proportion of the MTA budget, jumping from 10 percent in 2004 to an estimated 18 percent in 2014, according to Regional Plan Association, a non-profit group.
Fitch also said its downgrade "is exacerbated by the strong likelihood that operating subsidies (dedicated tax sources) will not grow as anticipated." Both Governor Andrew Cuomo and the New York State Legislature have expressed distaste for tax increases, and some lawmakers have called for the repeal of a tax passed last year to help the cash-strapped authority.
Word of the downgrade comes as the MTA faces contentious labor negotiations and the loss of its chairman, Jay Walder, who is leaving next month for a job in Hong Kong.
The MTA did not have a comment on the downgrade.
For the full press release on the downgrade, go to our transportation blog, transportationnation.org