NYS Comptroller Flags MTA Debt Bomb: $52.6B by 2023

Reinvent Albany thanks the State Comptroller’s Office for releasing today a detailed and informative report on MTA Debt. The report highlights a number of areas of concern among advocates and watchdog organizations who closely track the MTA. With the MTA’s debt burden at historically high levels, it is important that oversight agencies like the State Comptroller and State Legislative closely monitor their debt, as Reinvent Albany asked for in our testimony to the State Legislature in November 2019.

Below is a list of key findings/quotes from the Comptroller’s report, which highlight the need for the MTA to be more transparent about its budget and debt load. This should include forecasting multiple economic scenarios for future revenues and expenditures.

Growing Debt

• “Debt service is projected to reach $4.2 billion by 2023, an increase of 59 percent since 2019.”
• “The share of total revenue needed to pay debt service is projected to reach 22.5 percent by 2023, after averaging 16.1 percent over the past decade.”
• “The debt burden could grow even higher, depending on the timing of bonds to be issued by the MTA to fund its share of the 2020-2024 capital program.”

Limited Capacity for Capital Program, Lack of Details
(see also Reinvent Albany’s report on MTA Capital Spending Capacity)

• “The MTA is moving forward with the 2020-2024 capital program despite many uncertainties. For example, it has not yet released detailed cost estimates, capital commitments or completion timelines for individual projects. In addition, the financing program is not yet in place.”
• “It also remains to be seen whether the MTA can effectively manage a program of this size. To implement the 2020-2024 capital program and projects remaining from prior programs in five years as planned, the MTA estimates that it will need to more than double its annual capital commitments (from an average of $6.4 billion over the past five years to $13.5 billion annually).”

Economic/Cost Assumptions, including from Transformation Plan

• “…the MTA’s revenues are very sensitive to changes in the economy. A sharp drop in revenue (as experienced during the last recession) could cause the debt burden to rise even higher, possibly requiring higher-than planned fare and toll increases, or budget cuts. Given these risks, the MTA could be left with both a heavy debt burden and the need for unplanned fare and toll hikes.”
• “The transformation plan is key to changing the way the MTA does business and reducing costs. If the MTA falls short, riders could be saddled with both a heavy debt burden and the potential for unplanned fare and toll hikes.”

State’s $7.3B Commitment from 2015-2019 Capital Program
(see also Reinvent Albany’s Op-Ed from Gotham Gazette on this topic)

• “The MTA intends to issue bonds to finance $7.3 billion of the State’s commitment to the 2015-2019 capital program. The debt service on these bonds could reach $470 million by 2028.”
• “There is also a risk that the MTA could be left to fund some or all of the debt service on the bonds issued to cover $7.3 billion of the State’s contribution to the MTA’s 2015-2019 capital program. The Governor’s proposed budget for SFY 2021 includes $31 million for this purpose, but funding in subsequent years will be subject to future appropriations.”

Capital Plan/Congestion Pricing Concerns

• “…the State has not yet identified (or approved) the sources of its $3 billion contribution. The MTA’s financing plan also assumes that the City will match the State’s contribution, but the City has not yet agreed.”
• “Federal approval is needed before construction can proceed, which could delay implementation of congestion pricing and the timely completion of the capital program.”