“The Mayor has always said we would be open to any proposal, which gave the same amount of relief to the City that the legislature provided; the guaranteed funding of the outstanding debt service on MAC bonds at $500 million per year until City Fiscal Year 2008. Although, we appreciate this evening’s proposal from the Governor and are willing to continue discussions with the Governor, the proposal nevertheless raises the following questions and concerns.

“The Governor’s alternative proposal to relieve the City of the cost of MAC debt service does not provide New York City with a benefit comparable to the $2.5 billion assured in the currently legally mandated structure for a MAC debt refinancing.

“A higher annual payment could shorten the life and lower the cost of a MAC debt refinancing.  His proposal does not increase the state payment above the annual $170 million already committed by the legislature over the governor’s veto.  The Governor’s payment, if it ever materialized, would start in State Fiscal Year 2005 and would end in 2018-- 12 years instead of the 30 authorized by the legislature. 

“How would this shorter period of the same annual payment achieve the same refinancing impact?  By having New York City pay an additional billion dollars in MAC debt service over the life of the MAC refinancing out of its own sales tax revenues.  In addition, the Governor’s proposal would take credit for a City annual cost saving resulting from the MTA taking over the remaining private bus service in New York City.  But the City’s budget and financial plan are already counting on these savings. There is no new benefit to the City.

“As the Governor has pointed out, any State payment in a future year is subject to appropriation by the State in that year.  The MAC refinancing enacted last spring addressed this problem by mandating an annual payment from LGAC.  If the State fails to pay, because they would rely on MAC as the financing vehicle, the full cost of debt service would automatically be taken from the City’s sales tax to cover any future shortfall in the state’s contribution. Instead of a savings of $2.5 billion, the City would be at risk for the entire cost of the refinancing. This risk would be eliminated if the Governor’s proposal had taken advantage of the LGAC structure the Legislature had enacted.”