NY: Hochul’s congestion pricing bombshell throws MTA into disarray as Gov decries lack of “imagination”

June 12, 2024
Hochul pushed back on a claim a rework of MTA's capital plan was needed, insisting that she remained committed to funding the MTA’s capital plans — but without any details as to where the missing $15 billion might be found.

NEW YORK — Gov. Hochul’s decision to pull the plug on congestion pricing has plunged the future of the MTA’s ability to maintain and upgrade the region’s transit system into disarray, but Hochul said Monday that those who insist the work can’t go forward “lack imagination.”

Hochul’s abrupt about-face on the congestion pricing plan that was the underpinning of future development sparked the agency to announce it would have to go back to the drawing board on virtually all transits projects and triage major maintenance.

But Hochul pushed back on that claim Monday, insisting that she remained committed to funding the MTA’s capital plans — but without any details as to where the missing $15 billion might be found.

“To assume that the only funding source had to be congestion pricing shows a lack of imagination about understanding other opportunities to fund these projects,” Hochul said at an unrelated press conference in the Bronx. “I am committed to these projects. I have told everybody — I am committed to these projects.”

The congestion tolling plan would have charged drivers a base rate of $15 a day for driving on surface streets at 60th street or below in Manhattan. Tolls would scale up for larger vehicles, and overnight discounts would apply across the board.

The controversial plan, adopted into law in 2019 and subjected to multiple rounds of federal approval and public comments, was designed to raise $1 billion per year in tolling revenue, against which the MTA was supposed to borrow $15 billion to fund specific projects across the agency’s five-year capital plan.

Following Hochul’s hasty retreat from congestion pricing last week, the MTA said it would be undergoing a re-prioritization of the still-outstanding projects in the $55.4 billion 2020-2024 capital plan, $15 billion of which was supposed to come from congestion tolls.

“The MTA cannot award contracts that do not have a committed, identified funding source. Until there is a commitment for funding the balance of the 2020-2024 Capital Program, the MTA will need to reorganize the Program to prioritize the most basic and urgent needs,” read the statement, attributed to MTA CFO Kevin Willens and MTA General Counsel Paige Graves.

“Modernization and improvement projects like electric buses, accessible stations and new signals will likely need to be de-prioritized to protect and preserve the basic operation and functionality of this 100+ year old system,” the statement read.

The governor Monday maintained that the MTA was not in such dire straits.

“There is no missing billion today that means everything stops tomorrow,” Hochul said. “That is not accurate.”

Hochul hinted that legislatures may be “coming back” for a special session to figure out how to fill the gaping $15 billion hole in MTA capital spending that congestion pricing had been intended to fill.

“I understand the level of concern at this time, but I as the governor of the state of New York, have committed to continuing those projects with alternative funding.”

Hochul said she gave legislators “a number of options” to fund the MTA, and that “those conversations are very much alive and ongoing.” The legislative calendar ended on Friday, however, with lawmakers headed home after rejecting both a Hochul proposal to raise payroll taxes inside the five boroughs, as well as a plan she floated to pull $1 billion out of the state’s general fund.

While it is true that the MTA was only expected to raise $400 million in congestion tolls this calendar year, that money was already late. The lack of congestion funding has already waylaid plans to install modern signalling systems on the Fulton Ave. line of the A and C trains.

MTA leadership is expected to present a stripped down, bare bones capital budget to the MTA’s board at its upcoming June meeting.

Transit sources tell the News that a strippeddown budget would focus primarily on “state of good repair” work — repairs to existing signal infrastructure, track replacement, and repairs to the system’s aging rail yards and bus depots.

As previously reported by The News, big-ticket projects like signal modernization or the “phase 2” extension of the Second Ave. subway remain in jeopardy.

Some $3.4 billion in federal funding earmarked for the Second Ave. subway project goes away if the MTA can’t come up with it’s own $4.3 billion to complete the project — money that was included in the $15 billion to be bonded from tolling.

Hochul’s move could also damage the confidence of those bond buyers the MTA was counting on to turn $1 billion into $15.

Analysts with S&P said Monday that Hochul’s abrupt about-face could ding the MTA’s credit rating, Bloomberg reported.

“This development adds to the uncertainty regarding where the MTA’s post-pandemic ridership will ultimately settle, and could potentially constrain the MTA transportation revenue bonds rating,” S&P said in a statement.

Despite a lack of details, Hochul sought to assure New Yorkers Monday that funding would come through — though it was unclear whether that funding would be a one-time-lump-sum, or a recurring payment that the MTA could borrow against.

Hochul said she was not canceling congestion pricing, but it was unclear what a toll acceptable to the governor would look like.

“There’s a big difference between a pause and elimination,” she said. “Elimination was an option.

“I said I’m committed to congestion pricing — some way to bring in measures to ensure that we reduce congestion in our city,” she continued.

“I’m very sensitive to the passion behind a lot of people who worked hard on this and thought this was the only answer,” she said, adding, “I am of the perspective that says there are other ways to deal with this.”

Hochul later attempted to clarify that she was not directly accusing MTA leadership of a “lack of imagination.”

“I did not say there’s a lack of imagination at the MTA,” she said. “I said we do not suffer from a lack of imagination to be able to solve the funding issue.”

“I support what they’re doing. I spoke to [MTA chairman] Janno Lieber yesterday, and he has been working hard with me, particularly since this announcement,” Hochul said.

The MTA big has remained silent since the Governor — at whose pleasure he serves as the head of the transit agency — axed what many close to Lieber say he considered a legacy-defining policy that would set the oft-fraught MTA on solid financial footing for years.

In a line that, intentionally or otherwise, reflected the gravity of the situation facing the region’s transit network, Hochul painted herself Monday as the MTA’s champion — someone who would find the money that other administrations decided could only be raised through congestion pricing.

“I am joined at the hip with the MTA on all of their projects going forward,” she said.

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