New York Governor Kathy Hochul’s recent decision to indefinitely pause congestion pricing has cast a cloud of uncertainty over Metropolitan Transportation Authority’s (MTA) funding for its large-scale projects. In the absence of a firm plan, questions are mounting regarding how the MTA will fund its ambitious capital projects.
MTA Funding Conundrum Deepens
A day after Hochul disrupted the MTA’s capital budget, she asserted that funds had been reserved to backstop the MTA’s capital plan. The governor also disclosed that their administration is searching for other revenue sources. Yet, no information was provided about the specifics of the set-aside funding or the other potential revenue infusion.
As the state legislative session ended, it remains unclear how Hochul’s administration plans to get hold of these “other funding sources.” When prodded for clarification, Governor Hochul’s office pointed journalists to her previous statement, shedding no further light on the matter.
Echoing Economic Complications
The abandonment of congestion pricing, expected to bring in $1 billion a year in tolling revenue, has complicated the MTA’s projected $15 billion borrowing plan against this revenue for capital projects. Despite the funding uncertainties, Hochul reassured that the projects—including subway track maintenance, new buses and train cars, and Second Ave subway extension—are still on the table.
Yet, the sources of funding for these projects remain elusive. State Sen. Brad Hoylman-Sigal referred to some reluctance to make any quick decisions following the Governor’s announcement.
Potential Tax Hikes on Large Employers?
One probable solution is hiking the payroll mobility tax on big employers in the MTA’s operating region. However, scepticism over this solution skyrockets as the payroll tax for New York City businesses was already increased last year during MTA budget talks. This increment added $1.1 billion to the MTA operations funds. Given this, doubts were raised about the city’s willingness to face another hike.
“The payroll mobility tax is an inverse proposition to what congestion pricing aimed to sort out — a shared responsibility for the regional transit system,” commented Hoylman-Sigal.
Questions Around MTA’s Future Persist
Insiders revealed that the MTA’s higher-ups, caught off guard by Hochul’s announcement, are concerned about the absence of a concrete plan to plug the funding hole. An evident lack of funding stands to jeopardise a gamut of MTA projects including system expansion and much-needed repair work.
Federal funding worth $3.4 billion for the extension of the delayed Second Ave subway may be withdrawn should the MTA fail to meet its $4.3 billion “local match” obligation. This financing was dependent on tolling congestion. Furthermore, signaling system modernisation in multiple subway lines citywide, scheduled to be funded by the toll, hangs in the balance.
Presently, a lack of funds might even hinder the planned purchase of 437 new R211 subway cars. As stated by an MTA official, “Any alternative funding sources need to ensure the sustainable fiscal health of the MTA.”
As the MTA projects, impacting millions of New York commuters, await fresh funding directions, the big question remains – what does the future hold for MTA’s capital plans?