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New York City’s congestion pricing program is scheduled to begin charging tolls to drive into the busiest parts of Manhattan next month, with the aim of generating a $15 billion windfall for the mass transit system.
That money would not translate into lower fares or a huge subway expansion. Instead, with a few notable exceptions, it would largely support the unglamorous but critical work of maintaining the century-old infrastructure that millions of New Yorkers rely on — repairing and upgrading aging equipment, modernizing signals and technology and making subway stations more accessible.
The Metropolitan Transportation Authority, which oversees congestion pricing, has already earmarked the entire $15 billion for long-planned projects. But now the money is in jeopardy as legal challenges to the plan threaten to blow a significant hole in the M.T.A.’s budget.
Congestion pricing, which is due to begin on June 30, is the single largest source of funding of the transit agency’s $51.5 billion capital program, accounting for nearly 30 percent of the total. Since congestion pricing has yet to get off the ground, the M.T.A. used other funding first for its capital program. And now that $15 billion accounts for half the money the authority is expecting to finance its remaining projects.
“The point is, this is the money they are counting on right now,” said Andrew Rein, president of the Citizens Budget Commission, a watchdog group, who sees these repairs and improvements as essential.
In addition to the infrastructure work, the more notable upgrades would include shiny new cars on the subway and commuter train lines, and the funding would also mean progress on extending the Second Avenue subway to East Harlem.
Seven lawsuits have been brought in federal courts in New York and New Jersey by opponents — including New Jersey’s governor, Philip D. Murphy — over the cost of the new tolls as well as concerns that, as drivers skirt around them, traffic and pollution could shift to other areas. The courts could rule before the tolls begin and possibly delay or upend the program at the last minute.
Amid the legal uncertainty, M.T.A. officials have temporarily halted new contracts for all but the most urgent construction: Of $12 billion in projects that had been planned for this year, officials now expect to commit to just $2.9 billion in contracts.
Jamie Torres-Springer, the M.T.A.’s construction and development president, said at a recent committee meeting that unless investments continued to be made in the capital program, “we can return to the bad old days and see service decline.”
M.T.A. officials said they would have to delay or scale back projects if the congestion pricing money does not come through.
A $15 billion ‘shot in the arm’
There are many benefits of congestion pricing — including reducing traffic. But it was the billions that it would pour into mass transit that pushed state lawmakers to approve it in 2019 after a series of subway meltdowns underscored the need for repairs.
The M.T.A., which runs the largest transit system in North America, providing more than 5 million paid weekday rides, has increasingly grappled with aging infrastructure. The current capital program is far larger than previous plans, so new revenue sources had to be tapped, including a tax on high-end New York City homes and a portion of state and city sales taxes.
The congestion pricing money, by law, can be used only for capital projects, like fixing infrastructure and buying equipment, and not to support daily operations or subsidize fares. The program aims to collect around $1 billion annually in tolls, which will be used to secure $15 billion through bond financing to help pay for the capital improvements. But that comes at a price.
“The result is that they’ll get one shot in the arm and they’ll be collecting revenue for decades to pay back that shot in the arm,” said Yonah Freemark, a researcher at the Urban Institute. He has criticized the growing debt of the M.T.A. and other transit agencies, which have to pay for improvements yet lack adequate federal and state funding.
The M.T.A. has about $44 billion in debt, which has increased in recent years as the agency has issued more bonds against the new revenue sources that were approved along with congestion pricing in 2019 to help pay for its capital program.
Under the final toll rates approved by the M.T.A., most passenger cars will pay $15 a day to enter Manhattan at 60th Street or below during peak traffic hours. Trucks will pay $24 or $36, depending on their size.
The city’s subway and bus network is slated to receive 80 percent of the congestion pricing money, or $12 billion, and the Long Island Rail Road and Metro-North Railroad will each receive 10 percent, or $1.5 billion.
Reduce congestion or raise revenue?
Some urban planning and fiscal experts have questioned whether congestion pricing money should have been included in the M.T.A.’s capital program.
Zakhary Mallett, a fellow in city and regional planning at Cornell University, said that New York’s use of congestion pricing primarily to generate revenue for mass transit had established conflicting goals.
“Once you budget it and expect it, you create this conflict of wanting to alleviate congestion yet depending on the congestion being there in order to raise money,” he said.
Instead, he added, the congestion pricing money should be set aside as an extra source of funding that could be used to ease congestion specifically along corridors where the tolling revenue was being generated.
But Tom Wright, president of the Regional Plan Association, which supports congestion pricing, said the program could achieve both goals in New York because even though it would reduce some congestion, there would still be plenty of traffic left to generate revenue.
The tolls are projected to reduce the number of vehicles that enter Lower Manhattan by about 17 percent, according to a report by an advisory committee to the M.T.A.
Critics see ‘cash-grabbing scheme’
Opponents of congestion pricing have called it a “cash-grabbing scheme” at the expense of drivers. Many have also criticized the M.T.A. for what they see as its inefficient and costly operations and its spending on capital projects that routinely go over budget and are among the most expensive in the world.
“We’d get a better return on investment lighting our money on fire than putting it into this black box of mismanagement here at the M.T.A.,” Josh Gottheimer, a congressman from New Jersey, said at a recent news conference outside the M.T.A.’s office in Manhattan. He says the tolls will raise far more than required — more than $3 billion annually — and has demanded to see the M.T.A.’s calculations.
In response, Janno Lieber, the M.T.A.’s chairman and chief executive, said that the $1 billion in projected revenue had taken into account all exemptions and discounts. Mr. Gottheimer was engaging in “stunts,” he added, saying, “This is not a guy who’s done a lot for transit.”
M.T.A. officials said they had overhauled their contracting and construction process in recent years to improve efficiency, including on some of their biggest projects, like an expansion of the Long Island Rail Road in 2022 that was completed $100 million under budget.
There is nothing new about charging drivers to help support transit systems in New York and around the country, said Nicholas Dagen Bloom, a professor of urban policy and planning at Hunter College. The M.T.A., which also operates seven bridges and two tunnels, has relied on so-called rubber-to-rail revenues from tolls since the 1960s.
And a previous congestion surcharge added in 2019 to the fares of taxis and for-hire vehicles, including Ubers and Lyfts, south of 96th Street now raises $300 million annually for subway improvements in the current capital program, and up to $50 million for transportation improvements in boroughs outside Manhattan.
Still, even supporters of congestion pricing said they would be watching how the M.T.A. spends the $15 billion infusion.
Jake Berman, author of “The Lost Subways of North America,” said there had been “stacks and stacks of plans” to improve the subway since the 1950s, including a crosstown line on 48th Street from Second Avenue to 11th Avenue in Manhattan and an extension of the E, F, M and R lines in southeastern Queens. They never got done in part because the money ran out.
“Congestion pricing is a one-time windfall that needs to be spent wisely,” he said. “Otherwise it runs the risk of being like winning a lottery ticket and squandering it.”
What’s at stake for transit riders
Congestion pricing would pay for a lot of work that may not be immediately obvious to riders but would improve the system’s reliability, including $3 billion to upgrade signals on a stretch of the A and C lines in Brooklyn and on the B, D, F and M lines in Manhattan, which operate with switches dating back to the 1930s.
There would be $2 billion for infrastructure repairs, including work to keep elevated subway lines structurally sound and maintain substations that supply power. Broken emergency exits and fans would be fixed, and shops and yards that support the transit system would be overhauled.
Another $2 billion would be used to make stations more accessible to riders, including by adding elevators and updated public announcement systems.
There would also be $1 billion for new subway cars like the ones with an open gangway. Another $1 billion would pay for more than 250 new electric buses, along with charging equipment for 11 existing bus depots, where bus fleets are maintained, in historically underserved communities.
The Long Island Rail Road and Metro-North Railroad would together receive $3 billion for new train cars, locomotives, and repairs and improvements.
And $3 billion would be used to advance the second phase of the Second Avenue subway, which would extend service north from 96th Street to 125th Street and add three new stations.
All this is at stake in the legal battle over congestion pricing. The lawsuit filed by New Jersey officials was argued in April before a federal judge who is expected to issue a ruling before the tolls start. A related lawsuit has been filed by the mayor of Fort Lee, N.J.
Three other lawsuits — one filed by the United Federation of Teachers and Borough President Vito Fossella of Staten Island and two by separate groups of New York City residents — are scheduled for a hearing in federal court in Manhattan on May 17. And two more lawsuits have been brought, by Rockland County, and, last week, by the Town of Hempstead on Long Island.
Even a small delay in congestion pricing could have a big ripple effect on the transit system and push back the next generation of transit investments.
“It will lead to a series of very painful decisions for the M.T.A.,” Mr. Wright said. “Service will be impacted and riders will notice.”
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