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With congestion pricing paused, what’s MTA’s plan B to fund upgrades? Here’s what we know

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6 months ago

June 7, 2024

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With congestion pricing paused, what’s MTA’s plan B to fund upgrades? Here’s what we know

Now that congestion pricing is on the shelf, what’s Plan B?

Gov. Kathy Hochul’s eleventh-hour decision to pause the MTA’s plan to toll drivers who enter Manhattan’s Central Business district $15 was supposed to deliver billions of dollars in improvements to subways, buses and commuter rails in the years to come.

But without the $1 billion in annual revenue that congestion pricing would bring, will the money come from somewhere else? Or will badly needed upgrades be put on hold?

In a ten-minute statement Wednesday, Hochul said the state was already working to “backstop the MTA’s capital program” if legal challenges to congestion pricing from New Jersey, Rockland County and others succeeded.

The governor noted the state is “currently exploring other funding sources.”

What those are, she hasn’t said.

A $15M hole in the MTA’s capital plan

The information void has transit advocates, lawmakers and others fretting over what’s beginning to feel like a pick-your-poison moment.

The state watchdog group, Reinvent Albany, called the pause “an epic blunder” and urged state lawmakers to push back against Hochul for creating a $15 billion hole in the MTA’s capital plan over the next five years.

“The Legislature should fully understand that there is no alternative funding source to congestion pricing that can raise $15 billion for the 2020-2024 capital plan without destroying the viability of the 2025-29 capital plan, gutting state reserve funds or burdening MTA riders or all state taxpayers with debt,” the watchdog noted.

Could big businesses be called on to kick in even more than they are now to fund the nation’s largest transit system?

In 2009, then-Gov. David Paterson created a Payroll Mobility Tax at a time when the MTA was trying to head off service cuts and fare hikes.

It was revised in 2011 to exclude some 80% of the region’s small or medium sized businesses while taxing the largest (payroll of $1.25 million or more) 34 cents for every $100 of payroll.

Taxes on businesses and real estate contribute about 44% of total MTA revenue, according to the Partnership for New York City, a trade group representing more than 300 businesses.

Businesses don’t want to pay

And businesses don’t want to pay any more.

“Without congestion pricing tolls, the dependence on the PMT to fund all the MTA needs is unsustainable,” the partnership said.

Tolls from vehicles represent 13% of MTA funding, a disparity that congestion pricing was supposed to remedy.

“Congestion pricing spread the MTA funding burden equitably across all the constituencies that benefit from the mass transit system that supports the tri-state regional economy,” the partnership added. “The PMT burden is entirely on New York City, which is already the most highly taxed city in the country.”

The PMT, which covers businesses in the 12 New York counties in MTA territory, has long been a sore point, especially in the northern suburbs.

Through the years, Republican lawmakers have taken aim at the concept.

In 2017, former State Sen. Terrence Murphy introduced a bill that would have eliminated the tax for businesses in the Hudson Valley and Long Island, saying it was an impediment to economic growth.

The Yorktown Republican likened it to “the colonists in America paying for the king’s castle in England.”

Tolls: Hochul wants to delay congestion pricing days before start: What’s behind the about-face?

Hochul limits debate

By Friday, the idea of forcing businesses to share more of the MTA’s burden appeared to be losing steam amid pushback from lawmakers.

But the question of where the money will come from remains.

Officials at the MTA and the governor’s office were not offering up details on contingency plans and opponents were left swatting at rumors.

Reinvent Albany’s Rachael Fauss said Hochul’s announcement, coming at the end of the legislative session and less than a month before congestion tolling was slated to begin, was purposefully designed to limit debate.

“I think it’s intentional,” Fauss said. “It’s the same playbook that our former governor used to shove things through the last minute, sight unseen, because they might not survive the scrutiny under the light of day….I think that’s a problem for groups like ours that support congestion pricing. We’re being asked to evaluate alternatives that we can’t even see. It’s an information control tactic.”

Plan: MTA’s congestion pricing plan arrives in June. 5 burning questions about discounts, costs

Hochul delivered the announcement in a recorded message without taking questions from reporters.

The decision caught many off guard and angered environmental groups who’d worked on the issue for more than a decade.

Several claimed it was solely a political decision, geared to helping the election prospects of suburban Democrats.

Hochul cast it as an attempt to give struggling New Yorkers a break.

“Let’s be real,” she said Monday. “A $15 charge may not seem like a lot to someone who has the means but it can break the budget of a hard-working or middle class household. It puts the squeeze on the very people who make this city go.”

Tom Zambito is a veteran journalist covering transportation, energy and growth for the USA Today Network-New York. Reach him at Tzambito@lohud.com.