NY Lawmakers Scramble to Find Funding Source for MTA Hole

(Bloomberg) -- New York lawmakers are scrambling to come up with a funding source to help plug a $1 billion-a-year hole created by Governor Kathy Hochul’s surprise decision Wednesday to halt a congestion pricing plan that would have funded vital transit infrastructure improvements.

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Lawmakers late Thursday scrapped a last-ditch plan to raise taxes on New York City businesses through a hike on the payroll-mobility tax, according to people familiar with the matter. Instead, Democrats are working on a proposal to use undetermined funding sources to ensure the Metropolitan Transportation Authority can secure bonds that would finance its capital program.

“It’s very simply something that just says there will be a billion dollars for the MTA in the following year’s budget, but without any specifics as to what that means,” Michael Gianaris, state senate deputy majority Leader, told reporters Thursday.

Democrats don’t yet have the votes to pass it, according to people with knowledge of the matter, who asked not to be named discussing internal deliberations. The tax-hike plan was killed due to concerns about the political implications of increasing taxes on businesses in an election year, people said. This was also said to be a reason for Hochul’s surprise decision to indefinitely stall congestion pricing.

The current legislative session was scheduled to end Thursday, but lawmakers are now expected to finish sometime this weekend.

The rush underscores the haphazard nature of Hochul’s decision, which left the MTA in the lurch by putting a pause on the initiative mere weeks before it was set to begin. That plan would have charged most motorists $15 to drive into Manhattan’s central business district, helping to reduce traffic, improve air quality and fund vital transit infrastructure needs.

Hochul said her decision was driven by the goal of shielding New Yorkers from inflation, and it followed conversations with commuters who expressed growing anxiety about paying an additional $15 fee just to get to work.

The MTA, which operates the city’s subways, buses and commuter rail lines, was planning to borrow against the $1 billion in yearly congestion pricing revenue to help raise $15 billion to upgrade subway signals and tracks, make the system more accessible and extend the Second Avenue subway into Harlem.

“We want to make sure that the MTA capital plan is in place,” Assemblyman David Weprin, a Queens Democrat, said Thursday. “So we will be working diligently to get substitute revenue for the billion dollars over the next couple of days. And I’m optimistic that’s going to happen.”

At a press conference on Friday evening, Hochul pledged to find alternative funding to backstop the MTA’s capital plan during the pause, though she didn’t outline a specific plan of action. Hochul also defended her legal authority to halt the scheme’s rollout without the consent of the MTA board, a move that has sparked debate over the governor’s executive powers.

“My job is not to make it harder or more expensive for New Yorkers to live in our state,” she said.

--With assistance from Danielle Muoio Dunn.

(Updates with comments from Hochul in penultimate paragraph.)

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