New York City, January 4, 2026
The Trump administration has suspended nearly $18 billion in federal funding for two major infrastructure projects in New York City, citing unconstitutional DEI practices. This decision has significant implications for the Second Avenue Subway Phase 2 and Hudson Tunnel Gateway project, raising concerns about delays and economic impacts in the city. New York officials are harshly opposing the suspension, emphasizing the critical nature of these projects for job creation and transit improvement.
New York City Faces Halt in $18 Billion Infrastructure Funding Amid Federal Review
New York City – The Trump administration has suspended nearly $18 billion in federal funding allocated for two major New York City infrastructure projects—the Second Avenue Subway Phase 2 and the Hudson Tunnel Gateway project—citing concerns over “unconstitutional” diversity, equity, and inclusion (DEI) practices. This decision has raised significant concerns about potential delays and economic impacts on the city.
Funding Suspension Details
On October 1, 2025, Russell Vought, Director of the Office of Management and Budget, announced the withholding of funds for the Second Avenue Subway Phase 2 and the Hudson Tunnel Gateway project. The suspension was attributed to reports of DEI practices deemed unconstitutional. Vought stated that the funding freeze would remain until an administrative review was completed to ensure compliance with federal standards. This move coincided with the onset of a federal government shutdown, further complicating the situation.
Project Implications
The Second Avenue Subway Phase 2 aims to extend subway service along Second Avenue in Manhattan, providing improved transit options for East Harlem residents. The Hudson Tunnel Gateway project seeks to construct a new tunnel under the Hudson River to enhance Amtrak rail service between Newark, New Jersey, and New York City. Both projects are critical to addressing transportation needs and economic development in the region.
Political and Legal Responses
New York officials have expressed strong opposition to the funding suspension. Senator Kirsten Gillibrand criticized the decision, emphasizing the importance of these projects for job creation and economic growth. Mayor Eric Adams announced legal action to protect $12 million in federal counterterrorism funding for the city’s subway system, which was also affected by the funding freeze.
Ongoing Construction and Future Prospects
Despite the funding suspension, construction on the Hudson Tunnel Gateway project has continued, with contractors reporting no significant disruptions. The Metropolitan Transportation Authority (MTA) remains optimistic about the Second Avenue Subway Phase 2, expressing confidence that the funding will be restored once the administrative review is completed.
Background Context
The Second Avenue Subway Phase 2 and the Hudson Tunnel Gateway project are part of a broader effort to modernize and expand New York City’s transportation infrastructure. These initiatives aim to alleviate congestion, improve service reliability, and support economic growth. The funding suspension has highlighted the challenges of balancing federal oversight with local development needs, particularly concerning DEI practices in federal contracting.
Frequently Asked Questions (FAQ)
What is the reason for the suspension of funding for the Second Avenue Subway Phase 2 and the Hudson Tunnel Gateway project?
The Trump administration suspended nearly $18 billion in federal funding for these projects due to concerns over “unconstitutional” diversity, equity, and inclusion (DEI) practices.
How have New York officials responded to the funding suspension?
New York officials, including Senator Kirsten Gillibrand and Mayor Eric Adams, have criticized the decision and announced legal action to protect federal counterterrorism funding for the city’s subway system.
Is construction on the affected projects continuing?
Yes, construction on the Hudson Tunnel Gateway project has continued without significant disruptions. The Metropolitan Transportation Authority (MTA) remains optimistic about the Second Avenue Subway Phase 2, expressing confidence that the funding will be restored once the administrative review is completed.
What are the broader implications of this funding suspension?
The suspension has raised concerns about potential delays and economic impacts on New York City. It also highlights the challenges of balancing federal oversight with local development needs, particularly concerning DEI practices in federal contracting.
Key Features of the Funding Suspension
| Feature | Details |
|---|---|
| Amount Suspended | Nearly $18 billion in federal funding |
| Projects Affected | Second Avenue Subway Phase 2 and Hudson Tunnel Gateway project |
| Reason for Suspension | Concerns over “unconstitutional” diversity, equity, and inclusion (DEI) practices |
| Political Response | Criticism from New York officials; legal action to protect federal counterterrorism funding |
| Construction Status | Continued without significant disruptions; optimism for funding restoration |
Now Happening on X
- @RickyDoggin (October 5, 2025): Breaking news on $8 billion in New York funding frozen, impacting the Hudson Tunnel project and Second Avenue Subway extension, seen as a major blow to key infrastructure initiatives. View on X
- @2AvSagas (June 18, 2024): Major update on the pause of Phase 2 of the Second Avenue Subway due to Governor Hochul’s congestion pricing halt, leaving the MTA without funding to proceed. View on X
- @tysonbrody (June 6, 2024): Discussion on how pausing congestion pricing risks $5 billion in federal matching funds for the Second Avenue Subway and Penn Station Access projects unless an alternative local share is found. View on X
- @bdgcongress (June 18, 2024): Statement criticizing the MTA’s decision to stop work on the Second Avenue Subway expansion as a direct result of the congestion pricing postponement, endangering NYC’s future. View on X
- @simko_bednarski (June 27, 2024): Report on MTA cutting back $16.5 billion in projects, including Second Avenue Subway and station elevators, to maintain basic operations after the congestion pricing pause. View on X
- @RussMurphNY (September 10, 2024): Highlighting the underappreciated impact of congestion pricing cancellation on upstate manufacturing jobs tied to MTA subway and rail cars, potentially killing $16 billion in investment. View on X
- @zainisaari (December 29, 2025): Note on construction stalls due to cost overruns, lawsuits, and federal funding withdrawals of $4 billion for high-speed rail projects, echoing broader infrastructure challenges. View on X
- @SarkerNotParker (December 30, 2025): Commentary on ballooning costs for MTA’s Second Avenue Subway Phase 2, rising to potentially $6 billion per mile, and questioning the need for external narratives on project feasibility. View on X
Deeper Dive: News & Info About This Topic
HERE Resources
MTA Board Approves $21 Billion Budget Amid Fare Hike Concerns
Moto Finance Inc. Raises $1.8 Million to Revolutionize Banking
New York City Plans Three Casinos to Fund Transit Upgrades
Exploring the Top Public High Schools in New York State
Avdoo Partners Invests in Hudson Square for Luxury Housing
West Palm Beach Emerges as America’s Next Big Boomtown
New York City Commercial Real Estate Outlook for 2026
JPMorgan Chase Unveils New Global Headquarters in Manhattan
Governor Hochul’s Congestion Pricing Advice Sparks Business Concerns
Long Island Seeks $50 Million for Startup Manufacturing Hub
Author: STAFF HERE NEW YORK WRITER
The NEW YORK STAFF WRITER represents the experienced team at HERENewYork.com, your go-to source for actionable local news and information in New York, the five boroughs, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as New York Fashion Week, Macy's Thanksgiving Day Parade, and Tribeca Film Festival. Our coverage extends to key organizations like the Greater New York Chamber of Commerce and United Way of New York, plus leading businesses in finance and media that power the local economy such as JPMorgan Chase, Goldman Sachs, and Bloomberg. As part of the broader HERE network, including HEREBuffalo.com, we provide comprehensive, credible insights into New York's dynamic landscape.
