By Kim Ghattas
BBC News, New York
New York City Mayor Michael Bloomberg has all but conceded defeat on his plans to introduce a congestion charge on traffic into Manhattan.
New York's long-suffering drivers were divided on the charge
The plan, similar to the one introduced in London in 2003, did not get approval in the New York State Assembly.
But despite the setback, Mr Bloomberg vowed to go ahead with other proposals to help improve life in New York.
The mayor is a potential presidential candidate and earlier announced a 127-point environmental plan.
Michael Bloomberg did not mince his words when he reacted to the lack of backing for his plan - introduced three months ago.
He said it was a disgrace. He added that it was a major setback mostly for the people who breathe the air in New York city, especially the children.
'Once in a lifetime'
The state assembly failed to meet a Monday deadline to apply for federal aid of up to $500m for the plan as part of a pilot programme to combat pollution and traffic congestion.
The mayor said it was a once-in-a-lifetime opportunity to do something with someone else's money.
Mr Bloomberg proposed the charge as part of his environment plan
Mr Bloomberg pointed out that his plan had also been about the economy and about making New York City more competitive by reducing travel time and improving public transportation, thanks to the income generated by the congestion charge.
Car drivers would have had to pay $4 and lorry drivers $21. But critics of the proposal worried it might penalise lower-income residents and commuters.
Others wondered why a Sports Utility Vehicle would be charged the same as a small car.
A recent poll found that 61% of residents in New York City and its surrounding suburbs were opposed to the plan, while residents of Manhattan were almost split down the middle.
A critical editorial in the New York Sun tabloid newspaper wondered how the mayor, whose plan was so easily thwarted at the state level, would cope with a much larger Washington, DC legislature.