Underneath the bluster of toll hikes, and the paltry $90 million or so that’ll bring in, (notice how small millions, and lately, even billions has become?) Governor Patrick’s plan is vividly silent as to who will assume the MTA’s debt of approximately $2.2 billion, including approximately $1.2 billion in senior lien debt and $953 million in subordinate lien debt.
With $16 billion in outstanding general obligation bonds and $29 billion in total net tax-supported debt, we respectively “enjoy” the first and second highest among the 50 states, on a per capita basis and as a percentage of personal income. That’s 9.8% of total personal income in 2008, which is 300% of the 50-state median of 2.6%, or $4,500 for each resident of the State.
On deck is (1) $6.0 billion of authorized borrowing through the Massachusetts School Building Authority (MSBA); (2) already the State has ‘guaranteed’ through January 2009, $800 Million of turnpike authority deb; (3) the $3.5 billion bond bill signed earlier in 2008 for bridges (4) the $1.35 billion 5 year plan to build affordable housing (5) the $2 billion higher education bill for capital for colleges and university and the (5) $1 billion for life sciences incentives and infrastructure.
With at least 25% of the State’s debt variable, a debt ratings downgrade would be calamitous considering that each 1 percentage point increase on 25% of the debt is at least $40 million per year added interest cost.
Who’s to know that the next rollout of bonds is the one that’ll be too much. To be safe, I suppose we could always check first with Wall Street and the ratings agencies; their reputation is so good this year.