The biggest news in the country if the world is the economic woes that have sent shock waves from Main Street to Wall Street. While the focus has been on banks, financial institutions, & such, they are not the only ones who are facing bleak times if things don’t improve. The MTA which is already in enough of a financial mess as it is, finds itself facing the possibility of the skyrocketing interest rates causing their debt payments to by tens of millions of dollars per year. New York Daily News transit reporter Pete Donohue has more in this report:
Skyrocketing interest rates caused by the Wall Street meltdown could raise the MTA’s annual payments by tens of millions of dollars above what was anticipated in its budget plans, experts told the Daily News.
The latest financial headache for the debt-heavy Metropolitan Transportation Authority comes as the authority faces a huge 2009 budget gap and is trying to avoid service cuts.
“The potential impact could be significant,” one expert said.
The best-case scenario would be for government bailout efforts to free up credit and lower interest rates soon.
“If that happens soon – very soon – our budget target for interest cost has a prayer of being met,” said Doreen Frasca, chairwoman of the MTA’s transit committee and the founder of a financial services firm.
In response to an inquiry by The News, the MTA released a statement yesterday stating it is “closely monitoring the credit market in this difficult time. The situation is in such flux that the full impact on our bottom line cannot yet be assessed.”
Click here for the complete report.
This news is terrible for the MTA in a time where such news has become the norm. While the chances of bankruptcy occurring are low, the possibility can not be ruled out if the creditors start to seek their money back in the near future. However that is a real longshot at this point but it illustrates the trying times the agency is currently in.
I personally did not support the bailout plan which rescued many companies who put themselves in their death bed with choices made by greed. While the MTA is no poster child for financial responsibility, the lack of adequate funding from all levels of government is a strong reason why they are in the position they are. Would the government bail them or any other transit agency out? The answer is most likely no & while that comes as no surprise, it still is a crying shame.
Will we ever see the day when government of all levels realizes how an adequately funded & financially stable mass transit infrastructure s is not a luxury but an absolute necessity? Such infrastructures do everyone good from Main Street to Wall Street & should be treated as such. The day they are treated the way they should be is the day our country truly will take a step in the right direction.
xoxo Transit Blogger