(Bloomberg) -- New York City Comptroller Brad Lander accused Governor Kathy Hochul of violating state law when she halted a congestion pricing plan that would fund $15 billion of modernization projects for the city’s public transportation system.

Lander joined transit and environmental advocacy groups in opposing Hochul’s surprise decision announced last week. They are considering legal action if the plan isn’t reinstated by the end of the month, when it was originally set to begin, he told reporters Wednesday. A lawsuit will likely be filed in coming weeks in New York state court, according to Columbia Law School professor Michael Gerrard, who is working with Lander.

“Governor Hochul took a disastrously wrong turn,” Lander said. 

Hochul said she would indefinitely pause a $15 toll on most drivers entering Manhattan’s central business district, set to begin June 30. It would have been the first congestion pricing program in the US, with the goal of reducing traffic, improving air quality and raising money for a more than 100-year-old transit system.

Hochul, who had been a supporter of the initiative, said congestion pricing would hurt small businesses and families struggling to pay bills. The plan had also spurred fierce opposition, both from commuters and from neighboring New Jersey, which called it a “brazen money grab” and claimed in a lawsuit that the plan would create new traffic patterns and pollution across the Hudson River.

But her decision to delay the new toll violates a 2019 state law that directed the Metropolitan Transportation Authority, which oversees the city’s transit network, to implement a congestion pricing program, Gerrard said Wednesday. It was also in violation of the Americans with Disabilities Act, as well as laws related to environmental rights, he said. 

 

A representative for Hochul didn’t reply to a request for comment on potential legal challenges.

Without the new toll revenue or an alternative funding source, the MTA faces a $15 billion deficit in its 2020 — 2024 capital budget and will now begin to scale back that spending plan. Rehabilitating subway signals to reduce train delays, making stations accessible and expanding the Second Avenue subway to Harlem are projects at risk of being sidelined.

“It would be outrageous, it would be illegal, it would be unacceptable to delay subway accessibility one minute longer,” Lander said Wednesday.

Groups working with Lander include the Partnership for New York City, a coalition of business owners, as well as transit advocate the Riders Alliance and The Natural Resources Defense Council, an environmental advocacy group.

“Litigation will determine whether the governor has unilateral authority to impose an indefinite pause that effectively defunds the transit system,” Kathryn Wylde, president of the Partnership for New York City, said in a statement.

A long-term suspension of congestion pricing may hurt the MTA’s credit rating, which could lead to higher borrowing costs for the transit provider. Following Hochul’s announcement, the three major credit rating companies have said a prolonged delay would be a credit negative. MTA bondholders could be impacted by Hochul’s decision, Lander said.

“There’s concern about the MTA’s bond rating being downgraded as a result of this action,” Lander told reporters.

Congestion pricing was expected to bring in $1 billion a year for the MTA that it would borrow against to raise $15 billion for infrastructure needs. Motorists would pay to drive into the district, which runs from 60th Street to the southern tip of the island.

--With assistance from Laura Nahmias.

(Updates with potential impact to bondholders in the twelfth paragraph.)

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