NY lawmakers won’t tackle Hochul-created congestion pricing budget hole, for now

New York lawmakers are planning to leave the state Capitol in Albany without taking action on a multi-billion-dollar hole in the MTA’s budget that resulted from Gov. Kathy Hochul’s abrupt decision this week to abandon a years-in-the-making toll on drivers entering parts of Manhattan.

Democrats who control wide majorities in the state Senate and Assembly spent much of the past two days huddled in closed-door meetings in a mad scramble to respond to Hochul’s about-face on congestion pricing. On Wednesday, the Democratic governor announced she was directing the MTA to abandon the congestion toll less than a month before it was set to take effect, leaving lawmakers juggling to find a solution to plug the funding hole.

But with the clock winding down on the Legislature’s 2024 session, state lawmakers were unable to reach a consensus on a tax or a legislative IOU to replace $1 billion in suddenly lost revenue. The MTA was counting on that money to borrow $15 billion to fund a wave of much-needed improvements to New York City subway stations and other transit infrastructure.

On Friday afternoon, Senate Majority Leader Andrea Stewart-Cousins said the Senate would wrap up later in the night without taking up an MTA funding plan.

“Our conference is reticent to commit a billion dollars annually for the next 15 years without having some understanding in place as to how we’re going to deal with congestion as well,” she said.

Now, without a revenue source in place, some of the MTA's planned improvements could be in peril. And some lawmakers have expressed anger over Hochul’s hastily announced decision that placed the transit funding crisis squarely in their lap with no notice.

“The governor is pointing an unloaded gun at us and asking to give her the ammunition to shoot us and our constituents,” said state Sen. Julia Salazar, a Brooklyn Democrat, in a statement read at a pro-congestion pricing rally at the Capitol on Friday morning.

Speaking on Friday evening for the first time since announcing a "pause" on the toll, Hochul downplayed the significance of failing to reach a consensus with lawmakers, saying the funding is "not essential" right now since it would have taken months for the toll revenue to accumulate anyway.

"We have a commitment to continue moving forward between now and the beginning of [the 2025 legislative] session, even coming back — we're going to be we're talking about this," she told reporters in the Capitol's Red Room. "But I will tell you that no one should question my commitment or the [legislative] leaders' commitment to ensuring that these projects are properly funded."

The Senate wrapped up on Friday evening, with the Assembly set to follow at some point in the early morning hours on Saturday. The Legislature isn't scheduled to return to the Capitol until January, though legislative leaders suggested they may be willing to bring lawmakers back to deal with the issue sometime before then during a special session.

Hochul unveiled her decision to “indefinitely pause" the congestion pricing program, which was supposed to take effect on June 30, after lawmakers first approved it in 2019. The toll to enter Manhattan below 60th Street was deeply unpopular in the city's suburbs, which will likely play a key role in the elections this November as Democrats and Republicans wrestle for control of Congress.

“The governor is right in saying circumstances are different than when we passed it in 2019,” said Stewart-Cousins.

In the 48 hours since Hochul’s announcement, she and legislative leaders scrambled to come up with a way to replace the revenue that will be lost from not implementing congestion pricing as planned. Initially, Hochul proposed hiking the existing payroll tax on New York City businesses that helps fund the MTA. But lawmakers were cool to the idea, particularly in the Senate.

By Friday, talks had shifted to a legislative IOU: a bill that would essentially promise that the state would put up $1 billion for the MTA — without identifying a specific funding source — so that the transit agency could still go to the bond market for cash. But that too was shot down by lawmakers.

Unless Hochul and lawmakers identify some sort of new revenue stream to make up for the absence of congestion pricing, the MTA could be forced to withdraw certain projects that the toll was supposed to fund. Those include things like buying electric buses, making stations wheelchair accessible and various repairs to keep the subway system functional.

“If congestion pricing at this moment is not going to be what funds it, you have to raise revenue,” Assembly Speaker Carl Heastie, a Democrat from the Bronx, told reporters on Friday afternoon. “So you have to make a decision on raising revenue. So you'd have to do that now, sometime between now and January, or [in] January.”

On Friday, Hochul said New Yorkers' anxiety over congestion pricing — which would have created a base toll of $15 for drivers entering Manhattan below 60th Street — was intensifying as the June 30 start date crept closer.

She said her office analyzed the law and found that the MTA's board of directors does not have to approve her "pause" on the toll because it is temporary and MTA leadership agreed to implement it.

"I encourage you to go to the next diner with me and ... sit with me and watch the people come over and thank me," the governor said. "That's all I need to know. That is all I need to know."

This story was updated to include remarks from Gov. Kathy Hochul.