The stunning announcement by New York Governor Kathy Hochul two days ago that she would indefinitely delay the implementation of New York City’s long-awaited congestion pricing program (set to begin June 30) was immediately followed by an urgent question: without the congestion pricing receipts, how do you fill the hole in the city’s mass transit budget?

The state legislature in Albany huddled and may vote on some short-term revenue replacement as early as today. But the funding hole that would be created by the short-term absence of the congestion pricing is much bigger than it looks.

For starters, the receipts from the congestion pricing tolls, as well as the receipts from the other taxes levied as part of the state’s latest MTA rescue plan post-COVID, are put in a “lockbox” and are not fungible with the rest of the capital budget. The state anticipates that, if implemented on June 30, the congestion pricing would bring in $400 million cash to the lockbox in calendar 2024 and $1 billion per year thereafter.

The primary use of lockbox money is to allow bonds to be issued against the lockbox revenue stream.

A delay of a year or two, by this cash basis accounting (from the February 2024 MTA Financial Plan), would only cost $1.4 to $2.5 billion. The legislature could beg, borrow, or tax to fill this gap on a one-time basis.

But this isn’t just one-time operating money, it’s a revenue stream. The MTA uses a five-year capital plan, and we are currently in the fifth year of the 2020-2024 capital plan. That plan assumed $15 billion in bonds supported by congestion pricing, out of a total $55.4 billion capital plan. (This is Table 2 from Amendment #3 to the plan, approved last fall):

If you take out the $15 billion from the bonds supported by congestion pricing, that’s not just 27 percent of your total capital program (15/55.442). $13.1 billion of that plan is federal money, and that will not be increased to replace the lack of the $15 billion from congestion pricing.

The congestion pricing bonds are really 35 percent of the state/local funding for the five-year capital plan.

And we are in year five of the five-year plan, so these bonds are already being issued. Check out the estimated debt issuance schedule from the latest budget:

Those bonds can’t be securitized by one-time general fund transfers or other non-permanent gimmicks that aren’t a real revenue stream.

One final note: the revenue stream has to last a long time. Here is the MTA’s long-term plan for using congestion pricing and the other “lockbox” revenues to pay the interest on debt, some of which has already been issued: