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Gov. Kathy Hochul’s about-face on congestion pricing Wednesday kicked off a firestorm of criticism among transit users, business groups and city leaders. It is also unwelcome news for members of the MTA’s board, who must now determine whether to go along with the indefinite pause or potentially vote to overrule the governor.
Some members of the MTA’s 21-person board (six of who are non-voting) are wary of the financial ramifications of a pause on charging most motorists $15 to enter Manhattan below 60th Street. Congestion pricing, after all, is expected to raise $15 billion to support key infrastructure work on the city’s subway, buses and commuter rail, and the board has a fiduciary obligation to the authority. Even a months-long delay to the program hugely complicates the MTA’s capital plan and upgrades to improve service for riders. The majority of the board is appointed by the governor, with four posts selected by the city’s mayor.
At least one prominent legal expert told Crain’s New York Business that Hochul may not have the unilateral authority to defer a program that is mandated by state law. Indeed, Hochul’s decision to postpone congestion pricing undermines the MTA’s board chair and CEO, Janno Lieber, who for years has publicly touted the importance of congestion pricing revenue for the MTA’s finances. Sources close to the matter say that Lieber, a Hochul appointee who has been conspicuously quiet since the announcement, is strategizing over the fate of congestion pricing, and if the tolling program is set aside entirely, rather than delayed, he may resign.
Other members of the MTA board have spoken out forcefully in favor of congestion pricing in the wake of Hochul’s announcement.
Congestion pricing was approved by the state legislature in a 2019 law that states that the Triborough Bridge and Tunnel Authority (an MTA entity) “shall establish the central business district tolling program.” The law’s language of “shall” could be fodder for legal challenges against Hochul’s decision to postpone congestion pricing.
Midori Valdivia, a voting member who was appointed to the MTA board by Mayor Eric Adams, believes it is within the MTA board’s authority to vote on whether to move forward with a pause on the long-anticipated tolling program: “As I understand it, the MTA board members have a purview on the future of congestion pricing, including any significant delays or pauses,” Valdivia told Crain’s Thursday morning.
Valdivia added that “there has been no plan B to fund the MTA” and postponing congestion pricing without having a sustainable funding stream in place would be risky. Such a move could also be in violation of the 2009 Public Authorities Reform Act, which states that the MTA board is an independent body and must make decisions with the MTA’s financial stability in mind.
“We are fiduciaries, how can we vote to canceling this program without really filling the capital plan budget gap?” Valdivia said. “I’m really not sure how that would work.”
Dan Garodnick, director of the Department of City Planning and also an Adams appointee to the MTA’s board, emphasized on X Wednesday evening his continued support for congestion pricing, and his grave concerns about the MTA’s financial stability.
“I voted for congestion pricing in 2008 and still support it today, but even those who don’t should be very worried about the significant — really significant — hole in the MTA 2020-2024 capital budget created by changing course right now,” Garodnick said.
Deputy Mayor of Operations Meera Joshi, yet another Adams appointee to the MTA board, told a crowd at a Wednesday evening Transportation Alternatives event that “[congestion pricing] needs to happen now.”
As of Thursday morning, none of the MTA board’s governor-appointed members had issued public statements on congestion pricing’s deferral. That includes Lieber. The board has a total of 14 votes, but a vacancy brings the current total of votes down to 13. One of the board’s non-voting seats is also vacant.
The power dynamic of the MTA board’s structure puts members in a difficult position, said Lisa Daglian, executive director of the Permanent Citizens Advisory Committee to the MTA.
“I think the board is between a rock and a hard place,” said Daglian. “They have a very clear fiduciary responsibility to the MTA.”
One legal expert said that Hochul may not have the authority to halt congestion pricing, which was approved by the Legislature in 2019.
Michael Gerrard, an environmental lawyer and the founder and faculty director of Columbia University’s Sabin Center for Climate Change Law, said it’s possible opponents to Hochul’s reversal could challenge her decision through a process known as an Article 78 proceeding, a type of lawsuit used to challenge the action (or inaction) of agencies.
“I think it could be a potential violation [of state law],” said Gerrard, who said he has received multiple calls regarding possible legal challenges against Hochul’s postponement. “It’s not clear that the governor can unilaterally cancel a legislatively mandated program.”
Hochul, in a pre-recorded video on Wednesday, said as a revenue alternative to congestion pricing that she has “set aside funding to backstop the MTA Capital Plan,” and is “currently exploring other funding sources.”
State Sen. Liz Krueger cast doubt on the governor’s backup plan, noting in a statement that “as the Chair of the Senate Finance Committee, I am not aware of what she is referring to or where she believes that money will come from.”
Later in the day, Krueger told reporters in Albany that she was urging MTA board members to vote no on Hochul’s congestion pricing delay. By Thursday evening Rep. Jerry Nadler also urged the board to resist the governor: “I join the chorus of voices calling on the MTA Board to reject the Governor’s plan as it is clear there is no plan B to congestion pricing,” he wrote on X.
One alternative the governor has floated behind closed doors is a potential increase to the payroll mobility tax on New York City businesses, but the Legislature would have to approve such an increase, and the proposal so far is not proving popular with progressive lawmakers and the business community, according to people with knowledge of the ongoing discussions.
In a forceful Thursday statement, the influential Partnership for New York City said it “opposes any increase” to the payroll mobility tax on New York City businesses to replace the $1 billion in annual revenue congestion pricing was meant to generate.
“Without congestion pricing tolls, the dependence on the PMT to fund all the MTA needs is unsustainable,” the Partnership said in the statement. The proposed increase is targeted specifically at employers within the five boroughs, which the Partnership says unfairly places a financial “burden” entirely on New York City.
Transportation observers find the lack of a firm funding alternative hugely worrying for the MTA’s finances and the future of mass transit in the New York metro region.
“If there is a sense that, okay, we can take a billion here, a billion there maybe from state reserves, unless it’s a sustainable multi-year funding stream, to me, it would be very difficult for the MTA to effectively manage capital projects,” said Valdivia. “How can we approve a multi-year contract if we only have funding for year one?”
Contact reporter Caroline Spivack at caroline.spivack@crainsnewyork.com.
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Caroline Spivack , 2024-06-06 19:50:21
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