INDEPENDENT BUDGET OFFICE
The City of New York
110 WILLIAM STREET, 14TH FL., NEW YORK, NY 10038
|For Immediate Release
Tuesday, October 17, 1999
|Contact: George V. Sweeting
* NEWS RELEASE *
PROPOSED TRANSPORTATION BOND ACT WOULD YIELD
FOR NEW YORK CITY - 44% OF THE TOTAL
On Election Day, November 7th, New York voters will be asked to choose whether or not to approve the $3.8 billion state Transportation Infrastructure Bond Act. Due to the importance of the issue to the city and a lack of detailed information generally available, the New York City Independent Budget Office undertook a study of the Bond Act to determine the costs and benefits for New York City residents. "IBO does not advocate a position on the act," said IBO Director Ronnie Lowenstein. "We hope that this report will help voters reach their own conclusions about the merits of the proposal by providing the analysis and information that have been missing from the debate."
IBO estimates that $1.69 billion, slightly over 44 percent of total Bond Act proceeds, would be spent on projects directly benefiting New York City residents, with the balance benefiting commuters and upstate residents. The study shows that because the bonds would be paid off using general state revenues rather than fare-box receipts or dedicated taxes, city residents would bear 40 percent of the cost of the bonds.
IBO prepared its analysis to enhance public understanding of the proposed Bond Act in accordance with its mandate to provide objective and impartial analysis to the public regarding fiscal issues facing New York City.
The main findings in IBO's study include:
- 44 percent of the proceeds would be used for projects directly benefiting city residents, while city residents would bear about 40 percent of the debt service costs.
- If the Act is rejected and the Metropolitan Transportation Authority and State Department of Transportation use debt backed by their own revenue sources to keep their capital plans on track, city residents' share of the debt service would increase to 48 percent.
- The Bond Act would fund 9.4 percent and 12.9 percent, respectively, of the MTA's and the New York State Transportation Department's recently adopted 5-year capital plans. Even if the Act passes, the plans fall short of the amounts needed to fully support the state's transportation capital needs.
- The Bond Act would add $350 million to the money already allocated in the MTA's capital plan for a Second Avenue subway. However, most of the money designated in the 2000-2004 plan will be used for design and engineering work rather than actual construction. Virtually all of the actual construction costs will have to be financed in future capital plans beginning after 2004.
- Most of the money ($1.0 billion) going to the MTA would be used to replace debt that would otherwise be backed by revenues from the fare box. Although passage of the Bond Act would reduce the MTA's use of revenue-backed debt, the Authority's capital plan continues to rely upon a questionable debt refinancing plan. The refinancing will make it more difficult to finance the actual construction of a Second Avenue subway and other system expansion projects.
- In addition, the bonds add tax-supported debt to the state at a time when New York carries the fourth-highest debt burden in the nation and has one of the lowest credit ratings of any state. Although state-backed debt has recently been growing at a slower pace than personal income, the long-term capacity of the state to sustain its debt burden remains a concern.
See The Transportation Infrastructure Bond Act of 2000 report.
The IBO is an independent city agency whose mission is to provide non-partisan budgetary, economic, and policy analysis for the residents of New York City, and to increase New Yorkers' understanding of and participation in the budget process.
# # #