Rating Agency Says Loss of Tax Revenue Could Hurt NY MTA

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Moody's Investors Service isn't quite buying New York Governor Andrew Cuomo's assurances that the state budget will compensate the New York MTA for a loss of revenue caused by a cut to the MTA tax.

Cuomo has promised the MTA will be reimbursed "dollar for dollar" by general funds from the state budget. But Moody's says that the $212 million in 2012 and $310 million in years after won't be so easy to find.

"The compensatory revenues would be subject to appropriation and are uncertain as the state still has to close a $1.7 billion fiscal 2013 budget gap," Moody's wrote in a just-released report.

The agency did not downgrade MTA debt, but it did warn that "failure to restore the lost revenue may put negative pressure on the MTA's transportation revenue bonds."

The MTA wants to borrow $7 billion for capital projects like the Second Avenue Subway and the East Side Access project, which will connect the Long Island Rail Road to Grand Central Terminal.

Any debt downgrade would make buying an MTA bond somewhat riskier -- and the authority would have to pay a higher interest rate to borrow the money. Earlier this year, the smallest of the three major bond ratings agency downgraded the authority's debt, but at the time the authority said its credit remained "fundamentally secure." (See TN's coverage here.)

No response from the MTA to the Moody's report.