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MTA Capital Plan Shafts Riders

Does the five-year transit financing plan released by MTA Chair E. Virgil Conway on August 10 contain a hidden debt bomb? Under the new MTA plan, a considerable portion of farebox revenues would support the capital rebuilding plan -- $11.9 billion worth of system rebuilding and train car and bus replacement over the next five years -- to make up for cuts in New York City and New York State financing. Analysts of the capital program are troubled by indications that debt service obligations on bonds backed by transit fares could escalate dramatically after the year 2000. The MTA has been one of New York State's top bond issuers over the past ten years, and Conway's program has more than twice as much bonding as the last capital program. And this time, the bonds are heavily reliant on fare revenue as backing. One City source said that by the middle the next decade, transit riders could be paying off debt from five capital programs simultaneously, unless New York State returns to its "historic role of providing capital resources" for the transit system. On paper, the result would be $5 or higher subway and bus fares. Wednesday's Bond Buyer cited bond market experts who predicted the MTA capital program would have to be scaled back. The MTA needs to buy thousands of new subway and commuter rail cars and buses in the next five years, in addition to its pressing needs to fix up stations and replace antiquated subway signals, tunnel fans and other infrastructure. Transit advocates are worried that the MTA plan is structured to get the transit system through the next mayoral and gubernatorial elections (in 1997 and 1998), with little thought to financial health thereafter. The Straphangers Campaign's Gene Russianoff said the capital program debt service could force the MTA to raise fares and tolls before the end of the five year period, "Or they may do a really astronomical fare hike at the end of that period."

--Mobilizing the Region Number 44, 1 September 1995, published by the Tri-State Transportation Campaign


MTA CAPITAL PLAN AGAIN QUESTIONED

But can the MTA afford the new train cars? New York business interests, transit advocates, planners and academics joined the Tri-State Transportation Campaign to urge the MTA board to reject the proposed 1995-1999 capital plan. In a recent letter to MTA Chairman E. Virgil Conway, the groups questioned the funding basis of the $11.9 billion capital program Conway proposes, taking aim at the plan's high projected debt and its reliance on fare-backed bonding. Dramatic withdrawals of state and city financial support have led the agency to divide fare revenue between capital and operating needs. The groups -- including the NYC Partnership, NY Building Congress, the Long Island Association and the Regional Plan Association -- warned that escalating levels of debt service could drive fares up while service levels sink, or else cause the capital program to be scaled back. The signatories highlighted the need for new sources of capital funding and offered technical and political support for continuing the transit rebuilding plan on more solid financial footing. Robert Kiley, NYC Partnership President, recently told The Bond Buyer that "farebox-backed revenue has always been the least worthy of all MTA credits," and the Straphangers Campaign's Gene Russianoff characterized the MTA plan as "a debt bomb."

--Mobilizing the Region Number 60, 5 January 1996, published by the Tri-State Transportation Campaign

 


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Last updated: 4 April 1999