As congestion pricing makes a comeback, there is a lot at stake for New York City’s aging mass transit system.
Subways that need modern signals to run on time. Stations that lack elevators. A long-awaited expansion of the Second Avenue subway line into Harlem.
The Metropolitan Transportation Authority is counting on the tolling program to raise $15 billion to fund a host of crucial repairs and upgrades. But a revised plan announced last week by Gov. Kathy Hochul would slash the tolls across the board by 40 percent, with most drivers paying $9 to enter the busiest section of Manhattan at peak periods, down from the original charge of $15.
Would that still bring in enough to help maintain and modernize the transit system? Governor Hochul and transit officials say yes, but some who have been monitoring the tolling program’s evolution — both supporters and opponents — are not so sure.
“I think they may well be able to fully plug the $15 billion hole,” said Andrew Rein, president of the Citizens Budget Commission, a watchdog group that supports the revised program. “But until we see the details, we won’t know if there’s any risk to the timing of critical projects and whether it would cost any extra money.”
Ms. Hochul resurrected congestion pricing last week after abruptly canceling it in June just weeks before its start date. By reducing the tolls, she attempted to reach a compromise between the transit authority’s vast needs and the many critics who complained that the plan’s original tolls were too high. The agency’s board will vote Monday on the new plan, which is expected to start in January.
“We’re still getting the $15 billion to fund the M.T.A. and drivers are paying $6 less,” Ms. Hochul, a Democrat, said during a news conference on Thursday. “This lower toll will still allow us to accomplish all — and I mean all — of the goals of congestion pricing: new, modern signals; the long-awaited Second Avenue subway; new electric buses; elevators.”
The agency still plans to secure the $15 billion through bond financing, which would be paid back with tolling revenue. But since the authority would collect less in tolls to start, it would most likely take longer to borrow the full $15 billion, and to pay off the debt.
The original tolls were projected to yield roughly $1 billion annually. The new plan would generate only about $500 million per year during its first three years, according to transit officials.
After that, state officials have suggested that the peak toll would be raised to $12, and revenue would increase to $700 million per year. By 2031, the authority would expect to restore a $15 toll and collect close to the $1 billion mark in annual receipts.
The state comptroller’s office, which closely studies how the M. T. A., a state agency, is financed, expects that the toll reductions would most likely slow progress on improvements to the mass transit system.
Kevin Willens, the transit authority’s chief financial officer, said in a statement that starting with a lower toll could mean that “we may manage the schedule of projects differently,” but also noted that funding made available in the next capital plan would allow “flexibility to advance the most urgent work.”
Tinkering with the borrowing terms attached to the $15 billion in bond financing could also yield higher costs for the authority, fiscal experts said.
Mr. Willens said that the agency was confident that it could “manage borrowing to limit impacts on the agency’s operating costs.”
The possibility of rising borrowing costs raises the specter of the agency’s history of ballooning debt. State officials let the agency issue bonds in the early 1980s to save it from decline, and its debt has since surged. The state comptroller said in a report last month that the authority’s long-term debt grew from $11.4 billion in 2000 to $42.4 billion in 2023.
State officials said any risks from the revised plan are outweighed by the potential consequences if congestion pricing does not go into effect at all. After Ms. Hochul halted the program, the transit authority deferred $16.5 billion in projects that had already been delayed for decades.
Already, some of that work is set to resume. During Thursday’s news conference, Janno Lieber, the agency’s chief executive, said that “as a result of the actions taken by the governor,” the authority would begin searching for contractors to carry out tunnel-boring work for the Second Avenue subway extension.
Josh Gottheimer, a Republican congressman from New Jersey who opposes congestion pricing, said the program was being adopted because the transit authority had failed to manage its finances.
“I’m convinced that the M.T.A. is just making up these numbers, but it all points back to the same thing,” he said. “The M.T.A. is trying to fix their problems and years of mismanagement on the backs of hardworking Jersey families.”
The congestion pricing plan is far from a done deal. President-elect Donald J. Trump said that he would kill the program when he takes office in January, and at least nine lawsuits have been filed by critics who are trying to block it in the courts.
Last week, plaintiffs in some of those cases said they would keep fighting, including possibly by seeking an injunction to stop the plan from moving forward. They have argued that the program would shift traffic and pollution to other parts of the city and region, including some disadvantaged neighborhoods, and would hurt small businesses.
Elizabeth Chan, a Battery Park City resident who is a plaintiff in one of the lawsuits, said “the fundamental issues and harm from congestion pricing cannot be remedied by making the toll a few dollars cheaper.”
Rachael Fauss, a senior policy adviser for Reinvent Albany, another watchdog group, said that no one knows exactly how much the new tolls will raise. If more drivers are willing to pay the toll at $9 than $15, she said, “it’s very possible the revenue will be robust and come in pretty strongly even though it’s a lower toll rate.”
Ms. Fauss said the tolling program would open up an important long-term revenue source for the transit agency that is more reliable than other sources, such as passenger fares, since Manhattan streets have been gridlocked for decades.
“Congestion pricing is a very good way of raising money for the M.T.A.,” she said. “It’s a revenue source that isn’t tied to ridership. This is exactly the type of financing you want because it’s a stable, proven revenue source.”
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