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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