NEW YORK (BLOOMBERG) -- While New York’s MTA needs state lawmakers to help fix a $35.4 billion hole in its multi-year capital spending plan, a rider advocacy group that advises the transit agency has some ideas on how to fill the gap, including raising taxes.
Boosting income taxes on the highest earners, raising the state’s capital gains levy, charging for New York City street parking, imposing a 0.25-cent fee for online packages, or establishing recurring state budget allocations to the MTA every year — are several of the proposals the Permanent Citizens Advisory Committee to the MTA has offered up as ways to raise money for New York City’s subway, bus and commuter rail lines.
PCAC’s funding recommendations come as Janno Lieber, the MTA’s chief executive officer, and other transit officials, are set to appear Thursday before lawmakers in Albany as part of the state’s yearly budget process. Lieber will stress the need to support the transit system and how it’s the backbone of the New York City area economy. MTA’s proposed $68.4 billion 2025—2029 capital plan will create an estimated $106 billion of economic activity, according to an Ernst & Young report.
That spending plan is focused on state-of-good-repair projects to rehabilitate the system and improve service. It will replace thousands of aging rail cars, update signals, renovate power substations and restore Grand Central Terminal’s more than 100-year-old train shed.
But the capital budget’s original $33.4 billion shortfall grew to $35.4 billion after Governor Kathy Hochul in January submitted a state budget proposal for fiscal 2026 that included smaller state and city funding commitments to the MTA. But if lawmakers find $2 billion to $3 billion of yearly recurring revenue, the MTA could borrow against that money to raise the $35.4 billion, according to the PCAC’s report.
Many of the PCAC’s recommendations come from pending legislation in Albany or suggestions made in New York City Council reports. Overall, the PCAC estimates the 24 potential funding options in its report would bring in $44.8 billion of recurring revenue that the MTA could borrow against to raise $747 billion, according to the report.
Boosting income taxes on individuals making more than $300,000 and households earning more than $450,000 could generate as much as $18 billion for the MTA; increasing the capital gains tax to between 7% and 17%, depending on income level, would bring in about $7 billion; directing 2% of the state’s annual budget to the MTA every year would mean about $5 billion for the transit agency, according to the report.
“Not all funding sources are created equally, and how the revenue raisers affect those least and most able to afford them must be weighed,” Lisa Daglian, PCAC’s executive director, said in a statement. “Regardless of their choice, the governor and legislature must find a way to fully fund the plan without delay, or risk subjecting riders to an increasingly unreliable system.”
A new revenue source began this year for the MTA when it implemented congestion pricing on Jan. 5, which charges motorists driving into Manhattan’s busiest streets. The initiative is expected to raise $15 billion for transit infrastructure projects within the agency’s 2020—2024 capital plan, including extending the Second Avenue subway to Harlem and making stations accessible.