MTA capital plan a 'ticking time bomb'

The MTA's plan to borrow almost $7 billion to keep the region's public transit in shape and finish ambitious "megaprojects," such as the Long Island Rail Road's connection to Grand Central Terminal, is a dangerous strategy that could burden the agency and its riders for generations, critics said Wednesday.

Outgoing MTA chairman Jay Walder, at the Metropolitan Transportation Authority board's meeting in Manhattan, laid out the scenario for funding the multi-year capital plan's outstanding $14-billion balance. The MTA wants to sell bonds to raise $5 billion and borrow about $2 billion through a Federal Railroad Administration loan. Officials said they hope the state will help back the bonds.

The new borrowing would bring the MTA's total debt to $35 billion -- what some observers said was a staggering figure for an agency that already dedicates 17 cents of every dollar to debt service.

"To me, this is an absolute ticking time bomb," Andrew Saul, the board's vice chairman, said after Walder's presentation. "This is not on anybody else's shoulders but the riders."

Walder told the board that incurring the debt is a reasonable way to address "the critical importance of the capital plan" without compromising any infrastructure projects, cutting service or raising fares more than already is planned.

The $24-billion plan includes infrastructure improvements and projects through 2014. But it is only funded through the end of this year -- jeopardizing the East Side Access project to Grand Central and the Second Avenue Subway project.

"We have to finish the megaprojects . . . They are enormous and they provide opportunities and benefits for our region," Walder said of the two plans, both of which are well under way and projected to be complete by 2016. "It's time that we had a capital plan that says we are just going to finish them."

SEE PHOTOSLIRR trains and commuters through the years

MTA chief financial officer Robert Foran acknowledged the plan is risky but said the new debt is "manageable." The MTA will have paid $6 billion in old debt by the time it finishes selling bonds for the new amount in 2018, he noted. The plan also calls for diverting $640 million in operating funds through 2014 to pay off debt service.

The agency really doesn't have an alternative without another state bailout, he said. In 2009, the legislature passed a $2.3-billion bailout of the financially strapped MTA that included a payroll tax on businesses, toll increases, fare hikes and various transportation-related fee increases.

"There is just absolutely no appetite for new taxes today," Foran said. "Without new monies, we need to find other ways to close this gap."

In a statement, the Citizens Budget Commission, a state budgetary watchdog group, said borrowing to pay for capital improvements is "appropriate." But the commission said the MTA has no plan to drive up revenue and pay back what it called the "mushrooming debt service in the out years."

Veronica Vanterpool of the nonprofit Tri-State Transportation Campaign, called the plan "unsustainable" and "incredibly precarious," saying it virtually assures future service cuts and fare hikes when the bills come due.