Daily Tax Report: State

De Blasio Joins Cuomo Backing Congestion Pricing to Help MTA (1)

Feb. 26, 2019, 4:38 PMUpdated: Feb. 26, 2019, 6:20 PM

New York City Mayor Bill de Blasio agreed to support Governor Andrew Cuomo’s push for congestion pricing in midtown Manhattan as part of a sweeping overhaul of the cash-strapped Metropolitan Transportation Authority, which manages the subway and bus system.

Under the plan, to be instituted by 2020, electronic-tolling devices would be installed around Manhattan’s central business core south of 61st Street. It would take into account motorists who already paid bridge and tunnel tolls, and exclude the FDR Drive running north and south along the east side. Tolls would be variable, providing discounts for off-peak travel, and will also exempt emergency vehicles and transportation of disabled passengers.

Previous congestion pricing studies estimated that it could raise about $1 billion a year, to be leveraged into about $15 billion through municipal-bond sales for subway improvements. Under the Cuomo-de Blasio agreement, more revenue for the agency will be raised through a new Internet sales tax in the city, and a portion of any money derived through taxes on the sale of yet-to-be-legalized marijuana.

The plan, which also contains sweeping management changes, was announced one day before an MTA board meeting where members are scheduled to decide on proposed fare increases. Shams Tarek, a spokesman for the agency, said it’s unknown whether today’s announcement will affect their decision. The New York Daily News reported yesterday that board members may eliminate a 5 percent discount on Metrocard sales for individual rides, without increasing the $2.75 base fare. The agency had no comment on that report, Tarek said.

In future years, fares would be controlled through “cost containment actions and improved management,” Cuomo and de Blasio said Feb. 26 in a joint statement. All aspects of the plan, from funding to management, must be approved by the state legislature.

De Blasio and Cuomo, Democrats who seldom agree, have feuded over MTA funding, with the mayor favoring a city-resident millionaire’s tax, and questioning whether congestion pricing would be fair to motorists traveling from outside Manhattan with special needs.

The mayor, who continues to advocate for such a tax to fund mass transit, said he signed on to the congestion pricing plan after deciding it was fair, and because it would dedicate all the revenue to mass transit.

“Working New Yorkers struggle every day to get around our city. We cannot let another year pass without action that makes people’s lives easier,” de Blasio said in a prepared statement. “This crisis runs deeper than ever before, and it’s now clear there is no way to address it without congestion pricing and other dedicated revenue streams. The time to act is now.”

Subways will be given spending priority for the new, dedicated revenue. It will be used to install new signaling technology, purchase new subway cars, track and car repair, and elevators and other accessibility enhancement. Buses and bus system improvements to boroughs outside Manhattan will also benefit from the new funds.

Kathryn Wylde, president of the Partnership for New York City, a civic organization made up of corporate chief executives, praised the agreement as an important step.

“Nothing is more important to the region’s future economic health than modernizing our transportation system, including elimination of excess traffic congestion,” she said. “Agreement between the governor and mayor on a path forward is a tremendous breakthrough and hopefully the state legislature will give their approval to complete this package.”

In November, Cuomo said changing the MTA would be his top priority in 2019. The authority needs a cultural and bureaucratic overhaul to reduce costs to the point where the state can afford it, he said then.

The management revamp for the largest U.S. mass-transit agency, with planning to be completed by June, will include centralization of six separate units that operate city subways and buses, regional commuter trains and commuter buses, the Staten Island railway and capital construction. This will consolidate construction management, legal departments, engineering, procurement, human resources and advertising, while retaining individual operating authority for day-to-day management of each division. Board-appointment terms will change so they coincide with the tenure of the elected officials appointing them.

The agency’s capital plan, which is now subject to a veto by any of the voting members, will be reviewed by an independent committee of transportation, engineering and government experts who have no financial relationship with the MTA. This committee will be appointed by the governor, mayor, state Assembly and Senate, and organizations representing subway riders and commuters. It will also review toll and fare increases that raise money for the capital plan.

The governor and mayor expressed skepticism about the MTA’s ability to manage its construction projects and finances. The agreement calls for the MTA to undergo an independent audit, with its initial work to be completed by January 2020. The agency’s previous forecasts, projections and capital plans “strain financial credibility,” the statement said.

In December, Moody’s Investors Service revised its credit-rating outlook on the MTA to negative from stable, noting how deteriorating service has produced lower-than-expected revenue as subway and bus ridership declined.

©2019 Bloomberg L.P. All rights reserved. Used with permission.

(Updates with revenue estimates in third paragraph)

To contact the reporter on this story: Henry Goldman in New York at hgoldman@bloomberg.net

To contact the editors responsible for this story: Flynn McRoberts at fmcroberts1@bloomberg.net Stacie Sherman

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