NY MTA Takes On Major Debt Rather Than Raise Tolls & Fares To Pay For Sandy
Wednesday, November 28, 2012 - 09:26 PM
(New York, NY - WNYC) The NY Metropolitan Transportation Authority held a board meeting Wednesday -- its first after Sandy -- and the main topic was how to solve a conundrum: filling the $5 billion hole that the storm blew in the agency's budget while simultaneously rebuilding New York's damaged transportation system.
NY MTA Chairman Joe Lhota seemed determined to assure the public that the agency, at the very least, had a plan. He began by saying revenue will not be raised by additional increases to planned toll and fare hikes in 2013 and 2015.
"The burden of Sandy will not be upon our riders," he said. "I have an enormous amount of confidence in our federal government that we will receive a substantial amount of money to get us back to the condition of functionality we had the day before the storm."
He said he didn't expect to see service cutbacks--though he didn't rule them out--and that he'd stick to a pledge to add or restore $29 million in subway and bus service.
Lhota said he is expecting FEMA and insurance to pick up 75 percent of the $5 billion tab. And he's hoping FEMA will boosts its reimbursement up to 95 percent. But the MTA can't count on that. As of now, the authority is on the hook for $950 million, which it needs right away to rebuild.
They'll get it by issuing $950 million in bonds. Lhota said the move will add $125 million to the authority's debt burden over the next three years. The best Lhota could say about where the money would come from is "cost-cutting measures" that are "unidentified at this time."
The MTA is paying $2 billion dollars in debt service this year. By 2018, debt service is expected to gobble up 20 percent of the authority's revenue. That's before figuring in the nearly $1 billion in debt that it voted to add Wednesday.
Lhota said the budget setback would not stop the authority's megaprojects, which are funded by its capital program. The Second Avenue subway, the East Side Access tunnel between Long Island and Grand Central Terminal, and the 7 train extension are essentially funded and nearing completion. Sandy delayed their construction but didn't flood them.
Today's decision to bring on more debt raised an alarm with Gene Russianoff of the New York Straphangers Campaign, an advocacy group. "Funding these needs by MTA bonds will increase pressure on fares through increased debt service - and it sets a troubling precedent for the funding of the next five-year capital program starting in 2015," he said in a statement.
Lhota added that all of the $5 billion will be spent on restoring transit to its pre-Sandy state. (Repairing the South Ferry Station alone is projected to cost $600 million.) None of the funds will be used to harden the system against future storms. That's going to take a whole other pile of money that hasn't been located yet.