MTA Advances Plan to Charge Drivers on Busiest Manhattan Streets

New York’s Metropolitan Transportation Authority is moving forward with congestion pricing and is restarting its record $51.5 billion capital plan as new leadership in Washington may bring the largest U.S. transit system more federal aid.

After stalling under the Trump administration, the new program to charge motorists going into midtown Manhattan could bring in $1 billion a year to the MTA, backing $15 billion of debt to help finance the agency’s multi-year capital program. The federal government has indicated it will fast track the environmental process for congestion pricing, Janno Lieber, the MTA’s president of construction and development, said during a board meeting Thursday.

“In recent weeks we’ve heard from the Federal Highway Administration that they are going to fast track our environmental process, which will certainly put us moving forward toward being able to realize on this expected source of funds,” Lieber said.

The decision to fast track the congestion pricing program illustrates how the change in Washington may help the MTA. The Trump administration failed to give necessary environmental guidance on the plan, forcing the MTA to miss a January 2020 start date to implement the new congestion charges. The agency is also confident the Biden administration will respond to a $2.9 billion grant application to expand the Second Avenue subway, Lieber said.

The MTA is facing financial stresses as ridership has plunged during the coronavirus outbreak. The agency is seeking additional federal help to cover an estimated $8 billion deficit in 2022 through 2024. Even in a best-case scenario, MTA ridership will only reach approximately 90% of pre-pandemic levels by 2024, according to a McKinsey & Co. analysis.

The transit system will need to build the infrastructure to implement the congestion pricing plan, once it gets federal approval. The board Thursday authorized borrowing up to $506 million repaid in part with revenue from the congestion pricing program.

The MTA board Thursday also boosted bridge and tunnel tolls by 7.1% beginning in April, bringing an additional $62 million in 2021 and $116 million annually. The agency raises fares and tolls every two years. Officials last month postponed raising subway and bus fares as residents cope with the coronavirus pandemic. It will revisit such a hike “in several months,” Pat Foye, the MTA’s chief executive officer, told reporters following Thursday’s board meeting.

“Given the pandemic’s devastating impact on our finances, it’s all the more important that we move forward with consideration to toll increases this year,” Foye said during the meeting.

Even with its financial challenges, the MTA is able to avoid drastic service reductions and layoffs in 2022 because of better-than-expected revenue collections in 2020 and a decrease in expenses, Foye said during the meeting. Federal funds helped the MTA push off service cuts and workforce reductions in 2021. Those changes are still possible in 2023 and 2024 absent additional federal aid, Foye said.

The transit system faces other stresses as crime on the MTA’s subway system has spiked. While the New York Police Department has deployed 500 additional officers to patrol the subways, the MTA is seeking to double that amount. The agency is also getting closer to returning to its 24-hour service, with the subways to be closed for two hours overnight for sanitation and deep cleaning, rather than four hours.

The MTA is restarting its capital plan after the coronavirus pandemic forced the agency last year to hold off on infrastructure spending beyond state of good repair projects. It now anticipates completing $7.2 billion of capital projects in 2021, the most ever for the agency, Lieber said. It will finance signal upgrades, track replacements and make subway stations more accessible.

“We’re planning this year to have the biggest completion year in MTA history,” Lieber said.

Still, the agency has yet to catch up to pre-pandemic goals for infrastructure spending. The MTA is behind by nearly $8 billion for new commitments, Lieber said.

©2021 Bloomberg L.P.

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