Improved Credit Rating Highlights Preliminary Success of the Congestion Relief Zone Tolling Program, MTA’s Economic Importance to the Region and Continued Support from New York State
Report Also Noted Improved Farebox Revenue Due to Ongoing Ridership Growth and Progress Reducing Fare Evasion
The Metropolitan Transportation Authority (MTA) today received an upgraded credit rating from Standard & Poor’s Global Ratings, which improved the MTA’s Transportation Revenue Bonds rating from “A-” to “A” with a “stable” rating outlook.
“S&P’s upgrade demonstrates continued growth in confidence in the MTA’s financial stability while recognizing the early success of the Congestion Relief tolling program, ongoing ridership recovery and dedicated State support to maintain a strong financial position,” said MTA Chief Financial Officer Jai Patel. “To further support the MTA’s financial profile, we’ll continue to focus on operating budget savings while delivering reliable service.”
S&P took this rating action based on the six-month success of the Congestion Relief Zone tolling program with net revenues 8% favorable to budget, along with the state’s new funding source to support the MTA’s 2025-2029 Capital Plan by increasing the maximum rate of the Payroll Mobility Tax (PMT) projected to generate an additional $1.4 billion in recurring annual revenues, and the MTA’s balanced budget through 2026 with baseline increases in farebox revenue, toll revenue, dedicated taxes, and state and local subsidies, allowing the MTA to maintain a sufficiently strong financial profile.
The MTA is also managing expenses by achieving operating efficiencies and reducing outyear deficits, which contributed to the upgrade of the credit rating. Per S&P’s report, these deficits are manageable due to the Authority’s financial planning and strategic adjustments, including the baseline increases from previously mentioned sources. Over the last year, the MTA has reduced the outyear deficit by $198 million, and overall operating expenses remain below budgeted levels. The July Financial Plan reaffirms the Authority’s previously forecasted $500 million in annual cost savings beginning in 2025.
S&P also cited an increase in paid ridership, due in part to growing ridership and progress in reducing fare evasion and expects this positive trend to continue based on the expectation of more employees returning to office, contributing to an increase in revenue through transit or the Congestion Relief Zone tolling program.
This upgrade follows Moody’s Investors Service earlier upgrade of the Transportation Revenue Bonds credit to “A2” this summer and comes ahead of the planned issuance of the Transportation Revenue Bonds this fall. The Transportation Revenue Bonds are also rated “AA” by both Fitch Ratings, Inc. and Kroll Bond Rating Agency, LLC.