Transit officials in New York City are counting on congestion pricing to generate billions of dollars to pay for urgent upgrades to the region’s subways and buses.
The money collected from drivers will be used by the Metropolitan Transportation Authority, which runs the mass transit system, to obtain $15 billion in bond financing that will be paid back with tolling revenue.
Perpetually in search of funding, the M.T.A. has put off essential infrastructure repairs for decades, allowing century-old subway tunnels and tracks to crumble.
The subway was also not built to withstand climate change, and more intense weather patterns have taken a toll on the system, especially when temperatures soar or flooding occurs with storms.
Those conditions led to a crisis eight years ago, when a series of subway failures became so severe that a stretch of 2017 came to be known as the Summer of Hell. Transportation experts have warned that another emergency is imminent if the M.T.A. does not get the money needed to fix the system.
Even so, Gov. Kathy Hochul canceled the congestion pricing program in June because she said the tolls were too expensive. In November, nine days after the election, she revived the program and slashed fees across the board by 40 percent, lowering the cost for most drivers to $9 from $15 during peak hours.
Because Governor Hochul reduced the cost of the tolls, the authority is now collecting less money than it had initially expected to, and will most likely take longer to borrow the full $15 billion and to pay off the bonds.
The tolls will increase to $12 by 2028, and to $15 by 2031. The new plan is set to generate about $500 million per year during its first three years, and then $700 million when fees first go up, then close to $1 billion when the original toll is restored.
The possibility of rising borrowing costs has stirred concerns about the agency’s history of ballooning debt. In the early 1980s, state officials let the agency issue bonds to save it from decline, and debt has since surged. The state comptroller said in a report in October that the authority’s long-term debt grew from $11.4 billion in 2000 to $42.4 billion in 2023.
But state officials said any risks from the revised plan were outweighed by the potential consequences if congestion pricing did not go into effect at all. After Governor Hochul halted the program, the authority deferred $16.5 billion in projects that had already been delayed for decades.
The money generated by congestion pricing is a key part of the authority’s previous spending plan, making up about 29 percent of its $51.5 billion capital program. Projects under that plan are still ongoing.
But last month, a pair of lawmakers rejected the authority’s most recent spending plan, creating financial uncertainty for the transit system.
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