Fitch Ratings, the smallest of the big three credit agencies, has cut the rating on the state-run Metropolitan Transportation Authority (MTA)’s $14.3 billion in debt that is backed by transportation revenues. Fitch dropped the rating from A+ to A.
One big problem? “Significant new debt” for the $23.8 billion capital plan, which will strain the operating budget for decades.
Fitch’s analysis points up the importance of labor savings, particularly on health care, in the next round of contracts.
Without wage freezes, new and bigger worker healthcare contributions, and other measures that the MTA wants to take, labor costs are going up 3.7 percent a year, to $8.3 billion in 2015, up from $6.9 billion now. The drivers are “significant increases in health … costs as well as pension benefits.”
Fitch is also worried that fare hikes scheduled for 2013 may not yield as much as the MTA thinks.