MTA Maxed Out Its Fed Credit Line. So Now What?
Most states and cities avoided a fiscal doomsday in 2020. But New York’s transit agency is in uniquely serious peril heading into 2021.
Dire straits.
Photographer: Spencer Platt/Getty Images
Ever since the Federal Reserve unveiled its Municipal Liquidity Facility in April, it was blasted by myself and others for being too restrictive and demanding onerous terms for strapped states and cities to borrow money for the coming few years. It was so seldom used that Treasury Secretary Steven Mnuchin saw no reason to keep it open past the end of the year.
So it says a lot about the state of the Metropolitan Transportation Authority’s finances that the agency rushed to max out its credit line with the central bank before the MLF was shut down. It borrowed $2.9 billion last week, which would have easily been one of 2020’s largest municipal-bond deals if it had gone through the public market. When stacked on top of the $450.7 million it placed with the Fed in August, the MTA is at the debt limit set by the facility — 20% of gross revenue in fiscal year 2019 — almost to the last dollar.