Riders got coal this past Christmas Eve when legislative leaders rejected the MTA’s 2025-29 Capital Plan, citing funding concerns. Primarily comprised of State-of-Good-Repair, accessibility, and essential upgrades around the transit system, the $68.4 billion 2025-29 Capital Plan is critical to maintaining reliability and safety, as well as improving the rider experience. Albany agrees: the Capital Plan was rejected only based on funding challenges, not on the merits or contents of the plan itself. As outlined in detail in the MTA’s comprehensive 20-Year Needs Assessment, the MTA system is a $1.5 trillion asset with repairs long overdue. It’s up to Albany to find ways to invest in current and future transit riders – and our region’s economy – through the Capital Plan.
The Executive Budget lays out $3 billion each from the City and State — notably $1 billion less from each than was anticipated in the development of the plan. That $6 billion adds to the $14 billion expected from the federal government, which is currently in a precarious place due to volatility in the new Administration. Coupled with $13 billion to be bonded from the MTA and MTA Bridges and Tunnels revenue, this leaves an actual $35.4 billion funding gap in the $68.4 billion Capital Plan. Governor Hochul has committed to funding the Plan, but did not propose specific funding sources to fill this gap.
Riders are counting on Governor Hochul and the Legislature to deliver steady, long-term funding sources that the MTA can depend on. Without a fully funded Capital Plan, projects can’t get started, shovels aren’t in the ground, and riders are left stranded.
The good news? PCAC did some of the homework for Albany. We came up with two dozen potential funding sources totaling $747 billion in long-term revenue that could be used to invest in the Capital Plan. All the proposed taxes, budget line items, and closed loopholes are bondable, recurring, sustainable funding options that could be dedicated and remitted directly to the MTA’s 2025-29 Capital Plan – and future plans. While the MTA’s Capital Plan funding gap is $35.4 billion, the actual amount of revenue needed from Albany is much smaller – $2 or $3 billion could be allocated to the MTA as long as its funding source can be bonded to raise the entire $35.4 billion over time.
PCAC evaluated two dozen funding proposals based on whether the option impacts wealthier or lower income people on a scale of “progressive” versus “regressive;” whether the proposal has positive or negative climate impacts; and whether the proposal has overall positive or negative equity implications. We encourage legislators, advocates, and Governor Hochul to use this chart as a tool for considering which funding mechanisms can benefit New Yorkers most, while also achieving the goal of funding the MTA’s 2025-29 Capital Plan.
Our findings:
- The 24 funding sources listed total $44.8 billion in recurring revenue sources that can be bonded by the MTA for a total of $747 billion, or more than 21 times the required amount to fully fund the plan. For a funding stream to be bondable, it is necessary for it to be continuous and predictable, not a one-time infusion of cash.
- 21 of the 24 options have positive equity evaluations due to either being a progressive revenue raiser or additional positive societal impacts
- Two-thirds of the options have either direct (7 options) or indirect (9 options) climate benefits, which will help the state meet its ambitious climate goals
- The funds suggested would come from a variety of geographies: including 12 exclusively on the city, 3 on the 12 county MTA region and 9 for all of New York State
- Ten sources would be levied on individuals, eight on businesses, while six sources would apply to a combination of both individuals and businesses.
- 15 funding streams are progressive, three have nuanced effects depending on the structure of the revenue, while four are likely regressive
- 19 of the sources represent funds that are less than 1% of the state’s overall budget
Recommendations:
- First and foremost, Albany must fully fund the MTA’s 2025-29 Capital Plan using long-term, dedicated, bondable funding sources.
- Legislators and Governor Hochul should prioritize funding sources that could have positive equity and climate benefits in addition to funding the MTA transit system, which is already a downpayment on equity, sustainability, and resiliency around the region.
- Funding streams should not disproportionately be raised from low-income New Yorkers or fall solely on the backs of businesses or individuals in New York City. The MTA is the backbone of our entire state’s economy, so the entire MTA region and state should invest their fair share into transit.
Methodology:
PCAC compiled funding sources based on proposals that have been suggested by elected officials, advocacy groups including PCAC, and past MTA leadership. All funding sources are bondable and recurring—the chart uses the New York State Office of the Comptroller projection of 16.67% to estimate bondable revenue, and the percent of total state budget by source was estimated using the FY26 Executive Budget figure of $252 billion. The actual bonding rate may vary depending on characteristics of funding streams and the funding guarantees agreed upon.
PCAC evaluated funding sources as “progressive” if they primarily are paid by wealthier New Yorkers or larger businesses, or tax a service or good that wealthier residents disproportionately use. We deemed funding sources “regressive” if they disproportionately come from everyday working New Yorkers, or would apply to all residents rather than just the wealthiest.
PCAC designated funding sources as having a direct positive benefit for climate if they directly reduce emissions through discouraging driving, closing loopholes or tax incentives for fossil fuels, or other clear climate-focused policies. We designated a funding source as having an indirect benefit if the policy has the potential to positively affect climate through encouraging better business practices, increasing corporate taxes, or other policies that could ultimately lead to a more sustainable state.
PCAC deemed funding sources to have a positive effect on equity if they directly apply to the wealthiest New Yorkers through corporate tax increases, real estate transfer fees, or other proposals that require large companies to pay their fair share, and money raised is used to invest in all New Yorkers through funding the Capital Plan. Options listed as negatively affecting equity fall on the backs of lower-income New Yorkers, including raising the Sales Tax. Some options are listed as “nuanced” if they could disproportionately affect everyday New Yorkers but have positive health benefits, such as a tax on alcohol or sugar-sweetened beverages.