MTA stays afloat in budget deal

Beat Memo

State lawmakers have hammered out a budget deal to save the Metropolitan Transportation Authority, which has suffered significant revenue losses since the pandemic upended commuting habits.

The move is a significant win for MTA Chair and CEO Janno Lieber, who has called for new forms of revenue to make up for the loss of riders and maintain existing service. But it doesn’t avoid a fare and toll increase, a politically tenuous prospect as the city grapples with a deepening affordability crisis. Here are three of the biggest takeaways:

Suburban lawmakers get their wish

Gov. Kathy Hochul initially planned to raise the bulk of the money for the MTA by raising the payroll tax on large businesses that are served by the public transit system. But it will only apply to the city, after facing significant pushback from suburban lawmakers. It’s expected to generate $1.1 billion.

The move underscores heightened anxiety ahead of the 2024 election, after Republicans picked up four House seats in the midterms across the Hudson Valley and Long Island. The payroll tax has been deeply unpopular in the suburbs since the state legislature passed it in 2009, and it was already pared back once.

The state will commit $300 million in one-time aid and the city will cover paratransit services for $165 million.

Buses have a moment

The deal includes a pilot program for five, free bus routes in New York City. The idea was championed by Assemblymember Zohran Mamdani, a democratic socialist, and other left-leaning lawmakers as a way to provide relief to low-income New Yorkers. Boston operates a similar program.

The final budget agreement is also expected to include an expansion of the MTA’s bus camera enforcement program, but those details have yet to be finalized, said a Hochul spokesperson. The MTA has said the ability to ticket for more violations that block bus lanes is essential to speed up its notoriously sluggish buses.

Fare hike still on the table

The MTA’s budget plan includes a 5.5 percent fare increase to balance its budget. Putting it into effect requires public hearings and formal board approval, a process that’s been delayed by the uncertainty over the ongoing state budget.

The budget deal includes $65 million to reduce the proposed increase, but it doesn’t eliminate it entirely.

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Driving The Day

STATE BUDGET A DUD FOR HOUSING — Commercial Observer’s Aaron Short: “New housing development will have to wait in much of New York state. Gov. Kathy Hochul announced Thursday night that state leaders reached a tentative $229 billion budget deal nearly one month after it was due and without a plan to address the state’s affordable housing crisis.

Instead of the 800,000 new homes Hochul at the beginning of the year had promised to create, the spending plan includes revisions to the state’s bail laws that give judges more discretion over setting bail, increases funding for the state’s transit agencies, hikes the minimum wage to $16 an hour, and adds about a dozen new charter schools.”

— The New York Times reported that “the disintegration underscored Albany’s often dysfunctional policymaking process and marked a significant setback for a new governor who had made housing a top focus.”

MSG KEEPS ITS TAX BREAK — Crain’s Nick Garber: “Madison Square Garden’s $42 million-a-year tax break will stay put after Senate Democrats failed to get their desired repeal into the state budget, said state Sen. Brad Hoylman-Sigal, who had pushed for the change.

The Garden has paid no property taxes on its prime Midtown location since 1982, when the Legislature enacted the abatement to prevent the Knicks and Rangers from moving to New Jersey. That perpetual arrangement has cost the city $916 million in lost revenue in those four decades, according to the Independent Budget Office.”

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Odds and Ends

VORNADO SUSPENDS DIVIDEND — Crain’s Aaron Elstein: “Vornado Realty Trust has suspended its dividend for the rest of this year, a surprise move shared Wednesday evening that indicates deepening financial problems for the New York office landlord.

‘A complete suspension this early in the year suggests more going on inside 888 Seventh Ave. than the Street appreciates,’ said Piper Sandler analyst Alexander Goldfarb in a client report that referred to the address of Vornado’s Midtown headquarters.”

LUXURY RETAIL BOOM — New York Post’s Lois Weiss: “The opening of the new Tiffany flagship this month at 727 Fifth Ave., and the upcoming new Rolex tower at 645 Fifth Ave., are part of a Manhattan retail revival. Leading the way, LVMH is planning an entirely new building for the northeast corner of Fifth Avenue and East 57th Street, which will become a glamorous new Louis Vuitton flagship.”

Quick Links

— Jasmine Blake, a top city housing official, has been appointed the city’s new lead czar.

— The MTA said it would have to pay Twitter $50,000 to continue making service alerts and will no longer provide the updates.

— The Council passed a bill requiring visibility upgrades at 100 intersections a year starting in 2025.