(New York, NY - WNYC) A bond ratings agency says there's a problem with the NY Metropolitan Transportation Authority's plan to pay for new construction over the next three years.
Fitch Ratings says the authority won't be getting the extra revenue it needs to pay off the $4.7 billion it wants to borrow to help plug a $10 billion gap in its capital construction program. Result: Fitch, the smallest of the three ratings agencies, is downgrading the authority's debt from "A+" to "A."
Charles Brecher, Director of Research for the Citizens Budget Commission, used a familiar analogy to explain the MTA's difficulty: "You can take on a big mortgage if you've got a big income. The problem here is they're saying we're taking out a bigger mortgage but there's no sign that our income is going up."
Specifically, the MTA's capital plan doesn't show it making enough money from cost-cutting, fare increases and dedicated taxes to back the new debt it says it needs to pay to complete large projects like the Second Avenue subway and keep buses, bridges, trains and subways in a state of good repair.
Fitch's vote of "no confidence" in the capital plan could raise the cost of borrowing for the authority, right when it is poised to seek more loans.
Brecher says more costly borrowing is now a danger for the NY MTA, but it's not automatic. The authority agrees. It said in a statement that it has weathered economic downturns and budget difficulties before, and that it doesn't expect the downgrade to substantially raise its debt payments. "While a downgrade is never welcome news," the statement said, the NY MTA's credit remains "fundamentally secure."