New York governor shocks Manhattan with halt to congestion pricing

New York Governor Kathy Hochul halted a plan to charge motorists driving into Manhattan, upending an initiative years in the making that was finally set to kick in at the end of this month.

The governor cited inflation and financial pressures on working-class New Yorkers as reasons to not implement congestion pricing, but the initiative was shaping up to be a political albatross ahead of this year’s congressional elections.

“The decision is about doing what’s right for the people who make our city thrive,” she said Wednesday in a pre-taped statement posted to the state’s website. “My focus must be on putting more money back into people’s pockets.”

Hochul will look to replace the tolling plan with a tax on New York City businesses, according to a person familiar with the situation who requested anonymity because the proposal hasn’t been made public.

The new pricing system was set to begin June 30 and would have been the first of its kind in the US. It was expected to bring in $1 billion a year to help modernize a more than 100-year old transit system that’s been ravaged by episodes of heavy rain and severe flooding. The money was meant to finance subway signal upgrades to reduce train delays, new electric buses and extending the Second Avenue subway to Harlem. 

“This is a shocker,” said Andrew Albert, an MTA board member who voted in favor of congestion pricing. “It’s just unreal. The longer you wait, the more expensive things get.”

The shift away from the tolling initiative is a stunning reversal for Hochul, who just two weeks ago touted the plan as a way to reduce the city’s idle traffic. Virtually all of the tolling gantries are already installed on Manhattan streets and ready to charge drivers.

“It took a long time because people feared backlash from drivers set in their ways,” Hochul said at the time. “But, much like with housing, if we’re serious about making cities more livable, we must get over that.”

Unpopular policy

Hochul was facing the implementation of an unpopular policy that could have hurt Democrats in key congressional races in November. A Siena poll from April found 63% of New Yorkers disapproved of the plan, including majorities of Democrats, Republicans and independent voters. And although Hochul isn’t up for reelection until 2026, her own approval ratings have been suffering, with a May Siena poll finding her with a 38%-46% favorability rating among New Yorkers. 

In a statement, freshman Republican Congressman Mike Lawler, who represents a Hudson Valley swing district, blasted Hochul’s decision as “nothing more than an election-year stunt.”

“Almost five months to the day before Election Day, Governor Hochul has suddenly realized how bad congestion pricing is polling in the suburbs and in New York City,” Lawler said.

“I’m proud to say we’ve stopped congestion pricing in its tracks,” said New York Congressman Pat Ryan, a Democrat who represents parts of New York City’s suburbs. “Now it’s time to get to work on a plan that actually makes sense for the entire state, not just New York City.” 

Hochul’s decision to postpone it was reported earlier by Politico and the New York Times. Part of the consideration to delay stems from concern that the implementation would hurt Democrats in competitive House of Representatives races this year, according to Politico. Hochul was responding to worries raised by House Minority Leader Representative and New York Democrat Hakeem Jeffries, citing a person familiar with the matter, Politico also said. 

“To the extent immediate implementation of congestion pricing is being reconsidered, Leader Jeffries supports a temporary pause of limited duration to better understand the financial impact on working class New Yorkers who have confronted a challenging inflationary environment as a result of the pandemic,” said Andy Eichar, a spokesman for Jeffries. “We will continue to find ways to lower costs for everyday Americans and strengthen mass transportation in New York State.”

Transit upgrades

Former Mayor Michael Bloomberg pitched his congestion pricing plan in the mid-2000s, with the same goal of reducing traffic and improving air quality for most of Manhattan. Bloomberg is the majority owner of Bloomberg LP, the parent of Bloomberg News.

Transit advocates spoke out against the delay, as it will stall critical infrastructure upgrades and hurt the MTA’s ability to serve as an economic engine for the New York City area.

“Delaying congestion pricing will only hurt millions of transit riders relying on improvements and hinder the economic success of our broader region,” said Kate Slevin, executive vice president for the Regional Plan Association, a non-profit organization that promotes initiatives for the region’s economy. “This move is a total betrayal of New Yorkers and our climate.”

The decision comes as a federal judge overseeing a lawsuit by New Jersey was expected to rule on whether to put the plan on hold. 

New Jersey Governor Phil Murphy thanked Hochul on Wednesday for pausing the implementation. 

“We have always had a shared vision for growing our regional economy, investing in infrastructure, protecting our environment, and creating good-paying jobs on both sides of the Hudson River,” Murphy said in a statement. 

State lawmakers last year boosted the payroll tax on certain New York City businesses to help raise additional revenue for the MTA as subway ridership has yet to match pre-pandemic levels. Average weekday subway usage is about 70% of 2019 ridership.

It’s unclear if an alternative levy would raise an equal amount of money for the Metropolitan Transportation Authority, which runs New York City’s subways, buses and commuter rail lines. The plan was for the MTA to borrow against the $1 billion of congestion pricing revenue to sell $15 billion of debt to pay for necessary infrastructure needs to improve service and attract more riders. 

Delaying or canceling congestion pricing without another funding source would put a massive hole in the MTA’s current multi-year capital plan. The transit provider, the largest in the nation, will also need new funding in its next capital budget for 2025—2029.

Hochul said the state has set aside funding to backstop the agency’s capital plan and that officials are currently exploring other financing sources.