Lawmakers rejected Hochul’s proposed increase in the payroll tax

According to sources Governor Kathy Hochul’s plan to raise taxes on New York City corporations was swiftly shelved by state lawmakers. The goal of the plan was to recoup funds that would have come from tolls used for congestion pricing.

According to four sources who spoke with POLITICO on Thursday, the payroll mobility tax increase was virtually certain to fail in the Democratic-led state Senate.

Following a gathering of Democratic politicians behind closed doors, state senator from Long Island, Kevin Thomas, declared, “It’s insane to do that right now.”

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Additionally, there is not much time left to strike a deal: the state Legislature is scheduled to conclude its session on Friday and not convene again until January.

Legislators claimed that Hochul’s most recent idea would be even more divisive politically than the congestion pricing scheme she unexpectedly abandoned earlier.

The future of capital investments for mass transit is made less clear by the rejection of a payroll tax hike intended to offset lost revenue.

Following her withdrawal of support for the toll plan, which would have cost drivers $15 to enter Manhattan below 60th Street, Hochul proposed raising the tax, according to three individuals briefed on the idea who were given anonymity to openly discuss delicate discussions.

It was anticipated that congestion pricing will provide approximately $1 billion to the $15 billion capital plan of the Metropolitan Transportation Authority, thereby funding infrastructure enhancements. Lawmakers briefed on the plan stated that the proposal to raise the payroll tax would have brought in an additional $1 billion.

The governor’s unexpected decision to withdraw from the congestion pricing proposal, which was made to support Democrats in competitive House contests, puts hundreds of MTA service area enhancement projects in jeopardy.

Over the past two days, lawmakers have been rushing to explore a number of alternatives to replace the toll revenue, one of which would have combined an increase in the payroll tax with a number of laws with an environmental focus.

Liz Krueger, the chair of the Senate Finance Committee, criticized Hochul’s reversal and stated, “We had a funding stream for the MTA.”

Business leaders that had previously backed congestion pricing criticized the anticipated increase in the payroll tax.

Typically a Hochul ally, the Partnership for New York City said in a statement that “congestion pricing spread the MTA funding burden equitably across all the constituencies that benefit from the mass transit system that supports the tri-state regional economy.” “New York City, already the most taxed city in the nation, bears the full burden of the payroll tax.” The governor ought to approve the implementation of congestion pricing.

Furthermore, it’s unclear if any alternatives can generate income in a different way.

Delaying congestion pricing indefinitely, according to a statement released on Thursday by the New York City Independent Budget Office, “halts decades of policy and implementation work representing unquantifiable amounts of time, money, and other resources.”