A board proposal for greater scrutiny of New York Metropolitan Transportation Authority capital projects triggered a broader discussion over how much debt the MTA should carry.
The board on Wednesday approved a request by MTA finance officials to increase 2019 authorization for new-money bonds and bond anticipation notes to a $5 billion maximum from $3 billion to help finance capital projects.
Finance committee Chairman Lawrence Schwartz wants more detail, notably about why projects are late and over budget and why others, labeled "futures," remain on the drawing board.
"I support the item, but I support the item with caveats," Schwartz said. He added that he is not trying to halt such megaprojects as East Side Access, the massively late and over-budget effort to bring Long Island Rail Road trains to Grand Central Terminal.
Board member Veronica Vanterpool voted against the measure, saying the MTA's debt levels were too high and that the authority should tap into receipts from the state and the city before borrowing more.
The state and city combined have roughly $10 billion earmarked for the authority's $33.3 billion capital program for 2015 through 2019. The MTA must use up its own capital funds before state and city allocations kick in.
Chairman Patrick Foye told reporters Wednesday that the MTA is tapping into $3 billion of the state's $7.3 billion allotment.
"It seems to me that we have exhausted our fiscal resources," Vanterpool said. "Just because we have this capacity to continue to borrow doesn't mean we should. It's not clear to me what our plan is to whittle down that debt over time."
Nearly one-fifth of the MTA's operating budget is for debt service.
"I think Larry Schwartz is asking reasonable and appropriate diligence questions," Foye told reporters. "Why is the project late? What can we do about it?"
The MTA is one of the largest municipal bond issuers with $42.7 billion of debt as of June 6, according to authority documents. The authority is at the end of its five-year capital program and intends to submit its new request to a state review panel in September.
"The MTA has dangerous levels of debt and will be paying more than three times recommended levels by 2021," said Rachael Fauss, senior research analyst for the advocacy group Reinvent Albany.
Debate over borrowing comes on the cusp of a planned reorganization of the MTA, with consulting firm Alix Partners LLP running point. It also comes as Gov. Andrew Cuomo has tightened his grip on board representation through measures lawmakers passed along with the fiscal 2020 budget.
"The incremental borrowing we're asking for is just for this year," chief financial officer Robert Foran said. "We're not going beyond what we're going to sell and the projects are all approved within the capital program ... just to meet the remaining cash-flow requirements for the current year."
Some projects are under the 2015 to 2019 current capital plan, with others funded under the 2010 to 2014 plan.
"I'm trying not to do a brain-freeze data dump here," Schwartz told Foran. "But as chair of the finance committee, I want to know everything before the fact, not after the fact. I want to know what the money's going to be spent on before you spend it."
Schwartz also suggested the MTA take a cue from the Port Authority of New York and New Jersey and re-evaluate its capital plan every two years. "Nothing in life is static except death, unfortunately," Schwartz said.
The Port Authority intends to propose its $37 billion capital program for 2017 to 2026 on Thursday.
Patrick McCoy, the authority's finance director, said invoices in the pipeline present a variable.
"When we go into the market to borrow money for approved capital projects, whether it's for the '10 to '14 or the '15 to '19 program, we don't really have good, strong visibility as to what invoices are going to be coming down the pike," McCoy said. "Our job at this point is to make sure that we have money available to pay the invoices when they come in.
"That's part of the reason we've gone to the process of issuing bond anticipation notes in advance of issuing long-term bonds for projects," McCoy added. "The capital program has such breadth and depth that that process gives us really good visibility when we long-term finance the notes and take them out."
Board member Susan Metzger said the discussion reflects silos at the MTA.
"Pat [McCoy] has to generate money, the project people have to generate projects, [and] the board gets to look at a capital plan once every few years," she said.
"It's so big that we just big hunks of money going to one thing or another. These things never come together in one package."
