New York City congestion pricing pause: DiNapoli report cautions of implications for the MTA

There are major drawbacks to all the choices in front of the MTA to address the $15 billion funding shortfall created by Gov. Kathy Hochul’s decision to nix congestion pricing, including the potential for service cuts, increased debt, and higher construction costs for projects that are delayed, a new report said.

The report by the office of state Comptroller Thomas DiNapoli outlines some of the options ahead of the Metropolitan Transportation Authority as it looks to mitigate the fallout from Hochul’s “indefinite pause” of congestion pricing. The plan would have charged most vehicles $15 for driving below 60th Street in Manhattan — generating $1 billion in annual toll revenue that the MTA planned to use to finance $15 billion worth of capital projects.

After years of support for congestion pricing, Hochul earlier this month ordered a stop to the plan, three weeks before it was set to take effect. The MTA Board is scheduled to meet Wednesday to discuss its plans to cut $15 billion out of its 2020-2024 $55 billion capital budget.

Deferring some projects to future capital programs, as MTA officials have suggested they will do, will “have cost implications, as much of the capital construction work will become more costly over time,” according to the report.

Asked for comment on the report, MTA spokesperson David Steckel said, "An update on the MTA capital program following the pause on congestion pricing will be presented to the MTA Board this Wednesday."

Hochul has said she’s working to find alternative funding sources for the MTA. Hochul spokesman Anthony Hogrebe said Tuesday that the governor "fully understands the fiscal ramifications of pausing congestion pricing, which is why she has repeatedly made clear she remains committed to delivering the funding needed for the MTA's capital plan."  

Among the projects most likely to be pushed off to the future are subway signal modernization efforts that have proven to improve timeliness and reliability where implemented, the report said. Also on the chopping block is “over $190 million on LIRR station accessibility” projects, including two efforts that had already gotten started at Forest Hills and Hollis stations, the report noted.

Pushing those projects into the next five-year capital program, running from 2025-2029, would mean deferring projects originally planned to be included in that budget into a future one, at least a decade away, the report noted.

“If the MTA were to pause construction, or cancel, in-flight projects, the costs of such projects are likely to rise when they are restarted,” the report said.

Shelving projects also could jeopardize federal matching funds, including $2 billion for the Second Avenue Subway, the report said.

Other options to make up for the $1 billion annual funding shortfall also would come with consequences, according to the report. Issuing more debt without the toll revenue to secure it could hurt the MTA’s bond rating and also impact the agency’s operating budget, which helps pay debt costs.

“The MTA could also choose to reduce service in response, which may lower costs, but also comes at a cost of ridership revenue,” the report said.

At an MTA finance committee meeting Monday, officials discussed the potential for the congestion pricing pause to impact other revenue streams, including from fares. The MTA was counting on congestion pricing boosting transit ridership, as more commuters would have opted to use public transportation, rather than their cars, to get to work.

Finance committee chairman Neal Zuckerman said he expects the impact of Hochul’s decision on the MTA daily operating costs “will show up in the not too distant future.”

“That change, led outside of the MTA, is something we’re going to have to work on,” Zuckerman said.

Congestion pricing supporters announced Tuesday plans for a rally outside the MTA’s Manhattan headquarters just before its Wednesday meeting. Danny Pearlstein, of the Riders Alliance, said in a statement that organizers will urge MTA Board members “to stand strong and the governor to reverse course and once again embrace the policy.”

By Alfonso A. Castillo

alfonso.castillo@newsday.com@alfonsoreports

Alfonso Castillo has been reporting for Newsday since 1999 and covering the transportation beat since 2008. He grew up in the Bronx and Queens and now lives in Valley Stream with his wife and two sons.