Additionally, Fitch affirms approximately
KEY RATING DRIVERS
--Strategic Importance: The MTA transportation network is essential to the economy of the
--Highly Constrained Financial Operations: Despite high debt service coverage ratios from gross pledged revenues, the MTA's financial position is constrained given its extremely large operating profile and high fixed costs, including significant retiree pension benefits. In addition, some of the MTA's operating subsidies are vulnerable to economic conditions. While the MTA is required to provide a balanced current year budget, some tools available to meet a balanced budget, such as service reductions and fare increases, are politically unpopular.
--Strong Security Pledge: The bonds are secured by a gross lien on a diverse stream of pledged operating and non-operating revenues.
--Extremely Large Capital Needs: The MTA anticipates issuing a total of
--Growing Annual Debt Burden: The MTA's capacity to continue to leverage resources to fund expansion projects while meeting renewal and replacement needs may be limited in the future if projected financial performance or additional operating subsidies do not come to fruition.
--Inability to achieve future projected operating efficiencies and implement other key elements of the cost reduction initiatives and/or maintain an ongoing state of good repair and other elements of the capital program;
--Significant cost overruns or delays in the capital program's mega-projects that lead to additional borrowing;
--Future service cuts or deferral of core capital projects that result in deterioration of key transportation services;
--Receipts in dedicated tax subsidies that are measurably below forecasted levels.
The transportation revenue bonds are secured by a gross lien on the MTA's operating receipts and subsidies, including: transit and commuter rail fares and other operating revenues, surplus toll revenues, and certain dedicated tax sources, state and local operating subsidies, and reimbursements.
The series 2014 bonds are being issued to finance transit and commuter projects and to refund certain MTA bonds.
The MTA's 2014 - 2017 November Financial Plan (Final Proposed Budget) forecasts a higher cash balance for fiscal year (FY) 2014 and positive projected operating cash balances for 2015 and 2016 assuming three years of 'net zeros' related to contract renewals, 4% fare and toll increases in 2015 and 2017, additional savings initiatives and no reduction in taxes or subsidies. The increased positive cash position reflects both positive and negative financial changes since July. Higher passenger and toll revenues, lower debt service expenses, higher real estate subsidies, paratransit savings, lower health and welfare re-estimates and lower pension re-estimates all contributed favorably. Conversely, higher overtime expenses, lower petroleum business tax receipts and operational and maintenance needs exceeded estimates.
Additionally, the plan increases PAYGO funding for the capital program by
Fitch continues to monitor insurance receipts and
Given the construction complexity associated with the Mega Projects (East Side Access (ESA) and 2nd
Risks to the delicately balanced November plan include the ability to achieve a favorable outcome from the current labor negotiations, potential volatility in some operating subsides (real estate related dedicated tax sources), greater than expected elasticity from future proposed fare and toll increases, the ability of the MTA to deliver on planned operating efficiencies and uncertainties associated with the final completion and operating costs of the East Side Access and
Additional information is available at 'www.fitchratings.com'.
--'Rating Criteria for Infrastructure and Project Finance' (
--'Tax Supported Rating Criteria' (
Rating Criteria for Infrastructure and Project Finance
Tax-Supported Rating Criteria
Source: Fitch Ratings
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