The Fuse Is Still Lit on MTA Debt Bomb

Flash back a few weeks to the heat of the MTA funding debate: Remember all the talk about long-term, sustainable funding streams for our transit system? That’s what the Ravitch plan was supposed to deliver. We knew as soon as the deal went down last month that the state legislature and Governor Paterson flubbed their chance to make good on that promise. Now, writes Ben Kabak at Second Avenue Sagas, state comptroller Thomas DiNapoli has issued a report that makes it official:

Most notable in DiNapoli’s reports are the debt warnings. While fairly
technical and seemingly far off into the future, the MTA’s current
projected borrowing levels will come back to plague the agency. The MTA
is going to use the mobility tax to generate $6.8 billion in Bonds. By
2020, according to DiNapoli, debt service will cost the MTA $440
million in revenue from the mobility payroll tax. Furthermore, the
agency is going to take on new debt to fund the 2010-2014 capital plan,
and the MTA could be mired in $3.2 billion of debt service spending by

That’s more than double what the MTA currently pays each year to cover its debts. With all those billions coming out of the operating budget, everyone who rides the subway or the bus is going to pay, while car commuters continue to get a free ride.

  • Glenn

    Did Larry Littlefield ghost-write this post?

  • Larry Littlefield

    No, but the MTA — and the future of the transit system — was screwed even if the Ravitch plan was passed whole.

    “The MTA is going to use the mobility tax to generate $6.8 billion in Bonds.”

    Meaning that the FUTURE mobility tax revenues will be spent in the next two years under the current plan. Best case, they would have been spent in the next five. At this point, the MTA would be better off not paying off most of its existing debts and pension liabilities than incurring more.

    In the end, what’s good for General Motors may be the only hope for our mass transit too. What were those shares of ownership for GM’s unions, the bondholders and the government? I’ll take it! Are we going to pay more taxes while slashing public services like transit for working and middle class people, and benefits for poor old people, in order to pay tax-free interest to rich old people, and tax-free pensions to early retired ex-public employees?

    Want to buy municipal bonds? Read this.

    California is heading for a default on its bonds, New Jersey for a default on its public employee pensions. Some people will pay taxes for public services for themselves and benefits for the needy. Who is going to see those services and benefits erode and pay taxes for the past? The next Black Swan.

  • Aaron Berkman

    It’s amazing how ideology like yourself can report good news and draw insane conclusions. Yeah, that report is like every other report about MTA finances for over 3 decades. That is funny is that this blogger believes that giving the MTA more guaranteed revenues would have prevented this…that is it would be funny if it wasn’t so sad.

    Absent from this analysis is even the slightest understanding of the MTA’s operations, basic freshman political science, or any knowledge or analysis of the history of MTA spending patterns.

    The only spending pattern the MTA has is that they spend every dollar they can get, plus one more and leverage every dollar they get for debt to expand their income and then leave the state and riders with their financial ruin, plunging the city into crisis after crisis.

    There is no evidence that they do anything else or that they will ever do anything else.


Joke of the Day: Dean Skelos “Concerned” About MTA Debt

In a letter to MTA Chair Joe Lhota, State Senate Majority Leader Dean Skelos writes that he’s withholding approval for $770 million in MTA capital funding and a hike in the agency’s borrowing limit because “a staggering $42 billion bonding debt level is of great concern.” (Hat tip to Dana Rubinstein at Capital New York.) […]

Comptroller: Paying for MTA Capital Plan With Debt Will Crush Riders

What does it look like when mild-mannered accountants hit the panic button? Something like the latest report on MTA finances from State Comptroller Tom DiNapoli’s office [PDF]. According to the comptroller, the MTA is entering a financial situation unprecedented since the agency’s first capital plan in 1982. In 2009, the transit agency put forward its […]