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New York City’s mass transit system is in rough shape — and the MTA is asking Albany lawmakers to cover more than half the cost of its $65 billion, five-year construction plan to modernize aging infrastructure.
So how will Gov. Kathy Hochul and legislative leaders pay for the upgrades?
The governor included some money to fund the MTA’s construction program in her $250 billion state budget proposal earlier this month, but not enough to cover the whole thing. And the leaders of the state Senate and Assembly haven’t been eager to stand behind a specific source of revenue, either.
I hit the halls of the state Capitol this week to learn what options lawmakers are considering behind closed doors to upgrade New York’s crumbling mass transit system.
1 ) Taxing the rich
A tax hike on high-income earners is popular among rank-and-file progressive lawmakers — not to mention labor unions that carry huge sway in Albany. But could such an increase be used to pay for the MTA’s plan?
“The question is whether we have the political will to collect that [tax] and ensure that it’s used to transform the lives of working-class New Yorkers,” said Assemblymember Zohran Mamdani of Queens, who’s running for mayor with the backing of the Democratic Socialists of America.
Standing in the way of the tax-the-rich push is Hochul, who has taken a hardline stance against hiking income taxes since she took office.
2) Hiking the MTA payroll tax
Businesses in the region served by the MTA already pay a tax on their payroll to help fund the transit system. An increase would generate more money.
In 2023, Hochul convinced lawmakers to hike that tax for certain New York City businesses to balance the MTA’s annual operating budget, which is separate from the one that funds its construction program. And last year, she floated hiking the tax again, but lawmakers weren’t on board.
Senate Democrats, in particular, are wary. Many were in power in 2009, when the MTA payroll tax was created and fueled outrage in the suburbs. A few Democrats were voted out the next year, and the GOP regained control of the Senate.
3) Increasing the congestion toll
The $9 base toll on drivers entering Manhattan below 60th Street was originally supposed to be $15, until Hochul stepped in and slashed it 40%. It’s still supposed to increase to $15 in 2031.
If the MTA immediately boosted the toll back up to $15, it would create more revenue.
That’s something Assemblymember Robert Carroll, a Democrat from Brooklyn, says he supports to raise more revenue for the MTA.
But it comes with significant technical challenges. For one, state law requires the toll to first go toward $15 billion in bonds for the MTA’s previous construction program. Then there’s the future of congestion pricing altogether. Congestion pricing critics are leaning on President Donald Trump to put a stop to the toll. He is expected to name former Rep. Marc Molinaro, who is no fan of congestion pricing, to lead the Federal Transit Administration.
And there’s Hochul, too. Think she’d be eager to boost the toll she just cut? Probably not.
4) The vice taxes
Three full-scale casinos are coming to the New York City area. Legal marijuana and mobile sports gambling are already here. What about the possibility of taking some of that tax revenue and sliding it over to the MTA?
The casino license fees have already been promised to fill holes in the MTA’s annual operating budget, which pull from separate pots of money than the agency’s construction budget. But NYU urban policy professor Mitchell Moss said the state could go a step further and put at least some of the casinos’ expected tax revenue toward the MTA’s capital plan.
Assembly Majority Leader Crystal Peoples-Stokes, a Democrat from Buffalo, said she’s open to the idea of putting cannabis tax revenue toward public transit — but she made sure to note there are public transit needs statewide, not just in New York City.
Hochul and lawmakers would need to tweak state law to divert cannabis, casino or mobile sports betting tax revenues to the MTA. As it stands, the biggest chunk of each goes toward education.
5) A fee on Amazon packages, other online deliveries
Carroll has spent five years pushing for a $3 fee on many online deliveries to help fund the MTA. If you were to buy something on, say, Amazon, you’d pay the fee. (It wouldn’t apply to essentials like food and medical supplies.)
While he still supports that proposal, he says increasing the congestion toll should come first.
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Question from Alexis in Brooklyn
Shouldn’t the MTA be focusing on new signals, cars and fundamental repairs, versus expansion of lines, given all the funding concerns due to the possible repeal of congestion pricing?
Answer
That’s exactly what MTA Chair Janno Lieber told us in an interview for our series on the aging state of the subway infrastructure. Lieber says new lines are nice, but they’re far less important than upgrading the agency’s shockingly old electrical systems. Still, new projects are key to a politician’s legacy. Gov. Kathy Hochul wants to include funding for Brooklyn-Queens Interborough Express light rail project in the MTA’s next construction plan.