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Comment by melling | Hacker News Reader

“17% of the budget is to pay down debt”

That's almost entirely just to pay the interest on the debt, they're not actually trying to reduce the debt itself.

See the first NYT article:

> Every second of every day, the M.T.A. pays $83 in interest. That’s $7.1 million in 24 hours; for the year, a total of $2.603 billion. Those costs consume 16 percent of the transit agency’s budget, nearly three times as much as in 2002, according to the state comptroller, Thomas P. DiNapoli.

https://mobile.nytimes.com/2017/11/16/nyregion/subway-new-yo...

Is that bad? The real problem is when you're stuck only paying the interest, and the debt increases. If you were to buy something on your credit card, you're spending most of your money to pay down the debt - but that's not particularly a problem unless you're living above your means.

The alternative - to wait until you've accumulated enough cash to build a bus depot - seems kind of a bad idea.

> The real problem is when you're stuck only paying the interest, and the debt increases.

That is what is happening at the MTA.

One reason it's bad that MTA is only paying interest is that the transportation world is changing. Autonomy, Uber/Lyft, and other technologies may mean that subways systems like the MTA is in a death spiral where fewer riders means less fare revenue and less ability to even meet interest payments. In places like Washington, DC it looks like the death spiral is well underway.

I guarantee no amount of self-driving cars, Uber, or any other car-related technology will make people stop taking the subway in New York.

The car bridges and tunnels into and out of Manhattan are at full capacity all day long. It is vastly faster to take the subway in most normal cases.

I've often wondered though why companies like the MTA don't transform their networks into things like Elon Musk's boring company type network

Because the passengers per hour is far lower under musk's scheme.

We're talking 25k to 45k passengers an hour on a train versus ~1000 people per hour with Elon Musk's Boring company. It isn't even vaguely competitive.

There is absolutely no way any of this will replace the subway ever. All you need to do to see this is come to NYC when transit is on strike. The city is immobilized. There is nowhere in the USA that even approaches the density and mass transit usage as NY metro area. 8.8 million people plus the literal millions that commute to the city cannot possibly get around via surface transit alone.

It's not necessarily so bad. If the MTA were a private company, it's optimal capital structure would likely have a substantial portion of debt and some equity.

That being said, it isn't a public enterprise, and its not immediately clear (to me) what the cost of capital for a government enterprise is.

It depends what interest rate the debt is. Borrowing at the scale of NYC probably gets rates lower than inflation.

> Borrowing at the scale of NYC probably gets rates lower than inflation.

hah. vanguard's VNYTX (NY long term bonds) has historically done better than inflation, and that's after costs and such.

spot checking MTA bonds available on etrade, i'm not seeing anything nearly as low as inflation. (looks like ~4.5%? not a rigorously computed mean.)

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