NY Mass Transit Fares Will Rise 35% From 2007 To 2015, And Surge From There
While Bernanke may see deflation here and there, and everywhere, don't tell that to your average NYC commuter (or anyone else for that matter who can't simply expense all non-core activities, such as living and getting around to the taxpayer debit card), who has seen relentless fare hikes by both the MTA and, recently, taxi cabs. But that is only the beginning. While according to a report issued by the State Comptroller Thomas DiNapoli total cost inflation between 2007 and 2015 will hit at least 35%, it is after 2015 that things get really aggressive. According to Reuters, New York's Metropolitan Transportation Authority will need at least $20 billion from 2015 to 2019 to keep its system in good repair, but the mass transit operator has yet to figure out how to pay for these upgrades, a report said on Tuesday. (For those unaware the MTA, the largest U.S. mass transit system, runs New York's buses, subways, commuter railroads and some major bridges and tunnels). As for how the MTA will fund its massive CapEx spending here is the simple answer: it will request, some time in 2015, that then president Barack Obama bail it out, to which he will promptly comply. After all, with total US debt crossing $23 trillion shortly thereafter, who will care about some paltry $20 or even $200 billion (as the number will eventually be revised to).
What was unsaid is that the $20 billion shortfall is merely to fund maintenance capex and spending, and does not cover anything beyond. Where the MTA plans on obtaining the needed capital is simple: debt.
The MTA's current capital plan, which runs from 2010 to 2014, totals $22 billion, an MTA spokesman said. This plan was cut from a proposed $28 billion due to a lack of funding, the report said.
In a statement, MTA Chairman Joseph Lhota said the comptroller's report recognized the MTA's significant financial hurdles, cost-cutting measures and "our ongoing efforts to address longer-term challenges, including identifying funding sources for our 2015-2019 Capital Program."
The authority is a major issuer in the $3.7 trillion municipal bond market. Its debt outstanding is expected to rise to $40 billion in 2016 from $31.8 billion at the end of 2012, the report said.
About 60 percent of the MTA's current capital plan is paid for with debt. If the authority relies on the same share of borrowing for its next capital plan, debt service could hit $4.4 billion by 2024, the report estimated. In 2012, debt service is expected to cost the MTA more than $2 billion.
Even with the biennial fare and toll increases that are planned, debt service as a percent of total revenue could rise to 19.8 percent by 2018 from 15.9 percent in 2011. Those are fairly high percentages. New York City, for example, has an informal policy of cutting its capital program when this ratio hits 15 percent, credit analysts say.
What is actually the funniest in the above, is that someone actually believes the system will exist, in its current form, sometime in 2024. Perhaps it is worth point out that at current run rates, the US, which by then will be better known as Japan ver 2.0, will have a little over 200% debt/GDP. As such, discussing such modest sums having a token 9 zeroes, is simply laughable.
- advertisements -