Analysts disagree on ruling's effect on MTA

Analysts disagree about how the court ruling last week deeming the Metropolitan Transit Authority's payroll tax unconstitutional will affect the organization's fiscal health.

Moody's Investors Service analysts said Monday the court ruling could hurt the MTA's credit rating; Standard & Poor's Corp. said the ruling doesn't matter yet because the MTA is appealing the judgment -- and continuing to collect payroll taxes in the meantime.

Aaron Donovan, an MTA spokesman, told Newsday the agency believes the appeal will be successful because "four other lawsuits challenging the constitutionality of the same law . . . have been thrown out by our state courts."

If the ruling is upheld, however, the MTA could lose up to $1.3 billion of revenue per year. That shortfall would put even more pressure on the organization as it "has faced financial challenges over the past several years owing to the effects of the economic slowdown and its implementation of a large capital plan," Moody's analysts wrote.

A credit downgrade would make it costlier for the MTA to borrow money; a lower credit rating means that the organization is more likely to default on its loans.

Currently, the MTA's bonds are rated A2 by Moody's and A by S&P -- upper-medium investment grades -- and stable.