New York state legislative leaders have rejected the MTA’s $65.4 billion plan to revitalize the state's mass transit system, delivering a significant blow to an initiative that transit officials say is essential to prevent the subway, bus, and commuter rail services from deteriorating. The decision, announced on Christmas Eve, came a day before the construction plan would have automatically gone into effect.

State Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie informed MTA Chair Janno Lieber in a letter that the plan was rejected, citing a significant funding gap as the primary reason. As a result, the MTA now faces delays in moving forward with contracts for new train cars and upgrades to the subway’s outdated electrical systems. Both Stewart-Cousins and Heastie serve on the MTA Capital Plan Review Board, a state body responsible for approving the MTA’s construction plans every five years.

The MTA has 10 days to respond to the rejection. If the legislative leaders do not withdraw their opposition after receiving the MTA's response, the agency must submit a completely new plan, according to state law. The rejection follows earlier delays in funding due to Gov. Kathy Hochul's temporary “pause” of congestion pricing earlier this year.

MTA officials approved the new construction plan in September, acknowledging the need for at least $33 billion in new revenue to fully fund the proposal. "The proposed program currently faces a significant funding deficit, generally recognized to be at least $33 billion of the $65 billion proposed total subject to [Capital Plan Review Board] approval, which is a specific concern that needs to be addressed before we can approve the program,” the letter from Stewart-Cousins and Heastie reads.

The lawmakers also noted that they plan to negotiate over funding in the state budget, due at the end of March. “Now that the Legislature has raised these objections to the capital plan, we look forward to seeing their recommendations on which of those projects should be deprioritized and which revenue streams they are willing to propose," Gov. Hochul's spokesperson Avi Small said in a statement.

Despite the rejection, MTA officials remain optimistic. "This Capital Program was grounded in our 20 Year Needs Assessment, and we haven’t heard any concerns or objections from the legislature since it was approved by the MTA Board in September," MTA spokesperson John McCarthy stated. "It will unlock dozens of transformative projects – many of which are funded and ready to go on January 1st. We remain optimistic that the legislature will join the governor in supporting safer, more reliable, and expanded transit."

However, the legislative veto allows lawmakers to exert some influence over the budget process, which is typically dominated by the governor. Rachael Fauss, senior policy adviser with the good government group Reinvent Albany, noted, “They don’t have a lot of tools in the toolbox to influence the MTA capital plan and spending.” Fauss also pointed out that the rejection creates significant pressure on the MTA to find alternative funding, potentially leading to fare increases. “That puts so much pressure on them to raise fares and to make it a much less affordable transit system,” she said.

Danny Pearlstein, policy and communications director of Riders Alliance, emphasized the need for collaboration between the governor and the legislature to ensure adequate funding for future projects. "Millions of riders are depending on Albany leaders to put together a capital program that fixes and upgrades the subway from all of the deferred maintenance of past decades and to anticipate all of the new challenges associated with climate change," he said. "And we need our public transit system to be reliable and available to us all the time, not just some of the time."