State Assembly and Senate leaders have rejected the MTA’s $65 billion capital plan, forcing negotiations with the Legislature when it reconvenes in January.

A letter from Senate Leader Andrea Stewart-Cousins and Assembly Leader Carl Heastie sent to MTA Chair and CEO Janno Lieber on Tuesday, two days before the plan would have lapsed into approval.

Lawmakers cite “a significant funding deficit” as the reason for their rejection.

“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 CPRB approval, which is a specific concern that needs to be addressed before we can approve the Program,” the letter read.

The letter also comes just as the authority cleared some major legal hurdles in the lawsuits against congestion pricing, which is slated to begin on Jan. 5.

This next capital plan was approved by the MTA board in September. The capital plan is separate from the operating budget, which pays for salaries, benefits and debt service and is funded by fares and subsidies.

The capital plan is aimed at funding major projects, keeping infrastructure in a state of good repair and fixing elevated train structures and power systems.

The proposal was formally rejected by the Capital Program Review Board, which is made up of representatives appointed by the two state legislative leaders, the mayor and governor, who are supposed to approve or reject the plan before it heads to the Legislature.

The board rarely meets, and these plans normally lapse into approval.

The MTA tells NY1 that they had heard no concerns or objections from the Legislature since it was approved by the MTA board.

In a statement, the MTA wrote the capital plan “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.”

Some legislators say they were taken off-guard. Meanwhile, others say the MTA can’t just have a blank check.

“They came up with a plan that is a good plan, no question, but more than half of the plan lacked a funding source,” Queens state Sen. John Liu said. 

Gov. Kathy Hochul’s office, in a statement, said it looks forward to seeing the Legislature’s recommendations on what projects should be deprioritized but that “the MTA has laid out a comprehensive plan to improve subway service, support suburban commuter rail, improve safety, crack down on fare evasion and fund new projects like the Interborough Express.”

The governor, when she unpaused congestion pricing, also stated her support for the capital plan.

“To say that it’s now upon the legislature to figure out which projects to deprioritize when the executive budget hasn’t even come out to discuss how the governor plans to fund the MTA budget, that’s beyond the pale,” Liu said.

Liu and others agree that all the projects in the capital program are needed.

MTA leadership said if they had to cut, the first thing that would go is expansion projects.