Despite unprecedented federal assistance and better-than-expected state tax revenues, the Metropolitan Transportation Authority (MTA) continues to plan to use borrowing techniques that postpone difficult financial decisions in the future and could leave less money to pay for services, according to New York. State Comptroller Thomas P. DiNapoli’s Annual Report on MTA Debt. If passengers do not return faster than the MTA projects, or if new sources of revenue are not found, the increase in debt payments could force the MTA to fill future budget gaps through service cuts, larger-than-expected rate increases or delays in capital projects, the report concludes.
“The MTA’s finances are stable this year, but just around the corner it faces growing budget gaps with no solution to close them at this time,” DiNapoli said. “The MTA shouldn’t kick the box on the road. His plans to issue debt to pay operating costs and defer repayment of his debt for capital projects might save money in the short term, but those bills will eventually come due for future users and taxpayers. Continuing on this path will make it harder for the MTA to pay for maintenance, repairs and other work that keeps the system running and to finance the capital projects needed to improve service to users.
The MTA’s structural budget problems predate the pandemic, with expenses growing faster than operating revenue. When the pandemic hurt fare collections and tax revenue, the MTA’s poor financial condition became a serious problem. It relies on more than $14 billion in one-time federal aid to balance its budgets through 2025. By 2026, the MTA faces a budget shortfall of more than $2 billion and could, as a last resort, having to borrow to pay operating costs. , as planned for 2025.
DiNapoli called on the MTA to work with its federal, state and municipal funding partners to accelerate and improve funding sources for its capital plan to reduce pressure on its near-term debt burden. The report also encourages the MTA to prioritize its capital expenditures on projects that address the resilience of the transit system, so that it has a clear understanding of which projects are critical and which can be delayed if necessary.
The report identified several concerns about the MTA’s debt, including:
- The amount of outstanding long-term debt issued by the MTA increased from $25.8 billion in 2010 to $35.4 billion in 2019 (37%) and increased by a further 13% to reach 40 .1 billion in 2021.
- Outstanding debt will reach $47 billion by 2026 and could reach $57 billion by 2030, including all obligations backed by congestion pricing revenues to pay for its 2020 capital program- 2024.
- Debt service is projected to reach $4.3 billion by 2031, up $1.5 billion from 2021 (55% higher), including projected debt service for bonds that could be issued to fund operating costs.
- If the MTA issues all of the $15 billion in debt backed by so-called locked funds, which are dedicated to paying for capital projects and include revenues from congestion pricing, house tax and internet sales taxes, debt service could reach $4.9 billion by 2031.
- 20% of the MTA’s total revenue will be used to pay down debt from 2021 to 2025, and the MTA aims to keep its debt burden below 18% of its operating budget over time. On the other hand, the city of New York imposes a threshold of 15% on the weight of its debt.
- Vault funds are restricted by law to the 2020-2024 capital program and are not available for the operating budget, but if state law were to change to make these funds available for operations, the MTA’s debt burden could reach nearly 23% by 2031.
- The MTA has deferred principal payments on all debt issued since 2018 for 10 years, masking its short-term financial problems. This includes planned funding for operating services provided in 2025, a debt that would still be paid out of revenues in 2053.
The MTA anticipates that future revenue growth will ease the burden its debt places on the operating budget and create flexibility to fund future capital programs. However, growth in ridership is far from certain.
Since 2010, debt has been the primary source of funding for the MTA’s five-year capital programs, which are critical to keeping the system running smoothly and reliably for riders. However, he is consistently late in completing these programs. DiNapoli’s report identifies $54.4 billion that has yet to be committed for projects that date back as far as the 2010 plan. Based on the pace of commitments in 2022, it would take MTA until 2028 to commit these funds and 2031 before completion.
The MTA’s current $55.3 billion investment program for 2020-2024 is the largest ever. Only $8.3 billion of the program has been committed, primarily due to a pause in capital commitments during the pandemic and the delay in receiving congestion pricing revenue. The Infrastructure Investment and Jobs Act will provide approximately $10 billion over five years, which the MTA estimates will provide $1.7 billion more than planned for the capital program 2020-2024. These funds are expected to help the MTA cover the potential $2.9 billion capital plan shortfall that could be opened if the MTA uses its borrowing capacity to issue debt for operating purposes rather than capital. .
The Metropolitan Transportation Authority’s debt burden
DiNapoli Metro Ridership Dashboard
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