Amid seven pending lawsuits challenging the first-in-the-country “congestion toll,” New York Governor Kathy Hochul reversed course and directed the Metropolitan Transit Authority (MTA) to halt the congestion pricing just weeks before the planned implementation of the program. As initially drafted, the plan called for a charge of $15 on all vehicles traveling into the congested Manhattan area below 60th Street.
The proposed congestion toll generated challenges from the governor of New Jersey and seven other concerned taxpayer groups and individuals. The legal issues raised by the New York City congestion charge included the constitutionality of the toll, whether the MTA has the authority to assess this charge, and, if so, whether it is a fee or really a tax. In the midst of the lawsuits, MTA officials halted some capital construction projects that were to be funded by the tolling program and warned that critical modernization work on subway signals on the A and C lines had been delayed.
The congestion pricing program was established by a 2019 law, in an effort to reduce traffic in Manhattan’s central business corridor and raise revenue for New York City’s MTA, the largest public transit agency in the country. Proponents of the program are now concerned that delaying congestion pricing will hurt millions of transit riders, delay critical investments in the transit system, and increase traffic and pollution. Opponents of the congestion charge, including New Jersey Governor Phil Murphy, maintain that the success of Manhattan is connected to the prosperity of the entire tri-state area and warrants consideration of the impact on the adjoining states.
To fill the revenue gap created by delaying the implementation of congestion pricing, Governor Hochul initially floated raising the Payroll Mobility Tax on New York City businesses, but New York’s legislative leaders quickly signaled that this was a non-starter. To attempt to address funding for the MTA, the Legislature extended its session through June 7 but was unable to identify a solution. In addition, the MTA Board of Trustees is next scheduled to meet on June 24 and 26. The Board will need to decide whether it agrees with the governor to delay the implementation of congestion pricing.
Please contact the Ryan tax professionals listed below for additional information.
TECHNICAL INFORMATION CONTACTS:
Tony Gulotta
Principal
Ryan
212.871.3901
tony.gulotta@ryan.com
Argi O’Leary
Principal
Ryan
212.871.3901
argi.oleary@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.