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Hochul’s Reversal on Congestion Pricing Draws Blowback

Gov. Kathy Hochul’s decision to pull the plug on a congestion pricing plan for New York City was seen as a move calculated for advantage in the November elections, but it hasn’t made her many new friends.

New York Gov. Kathy Hochul standing behind a podium speaking.
Hochul’s decision to block congestion pricing in Manhattan may have been a political calculation but has prompted protests.
Susan Watts/Office of Governor Kathy Hochul/TNS
In Brief:
  • New York Gov. Kathy Hochul changed her position on congestion pricing for New York City just weeks before the program was set to start.

  • The plan would have charged drivers to enter the most gridlocked parts of Manhattan and generated billions for the city’s public transit system.

  • The move was a response to widespread opposition to the plan, but it has generated plenty of political backlash for the governor.

  • Politicians and journalists have long acted as though they consider diner patrons to be the truest Americans — a people whose tastes are unpretentious and opinions free of guile, tuned to the vagaries of the economy, uniquely fit to articulate the national mood.

    That made it less than surprising when New York Gov. Kathy Hochul invoked her conversations at diners last week, when explaining why she was pulling the plug on a years-in-the-making plan for congestion pricing in New York City.

    The plan — which was meant to alleviate traffic gridlock while raising money for public transit by charging drivers to enter the most-visited parts of Manhattan — was set to take effect at the end of the month. Seemingly everything was in place for it, including a state law passed back in 2019 and approval from the federal government in 2023. Hochul, a Democrat, was herself an outspoken supporter of the plan until recently.

    But last week, in a pre-taped statement, she said she was putting congestion pricing on an “indefinite pause” because she was concerned about how it would affect New York’s economic recovery. In a news conference two days later, she cited broad opposition to the plan around the state — and, of course, one-on-one conversations with diner customers and owners in New York City — to explain why she’d changed her mind. “Leaders sometimes need to listen more,” Hochul said during the news conference. “I as the governor have this ability to get a real pulse on what New Yorkers are thinking. I’ve always had that — 30 years as an elected official.”

    Hochul’s decision was widely seen as politically motivated. Under pressure from congressional leaders, Politico reported, she wanted to avoid sticking Democratic candidates in the New York area with an unpopular policy to defend in the November campaign. Her office circulated statements of support for the pause on the day she made the announcement, including some terse expressions of gratitude from Republican leaders who’d opposed the plan. Leaders in other jurisdictions, including New Jersey Democratic Gov. Phil Murphy, who supported a lawsuit against the plan, applauded the move as well.

    But the move drew swift and widespread backlash too from New York City leaders, environmental groups and transit advocates. It left the Metropolitan Transportation Authority (MTA), by far the country’s biggest and most important transit agency, with a $15 billion gash in its capital budget. The state Legislature refused to pass a last-minute replacement for the expected funding before its session ended, two days after Hochul’s announcement. Some elected officials and advocates are considering suing to keep the congestion pricing plan on track.

    Budget Troubles for Transit

    The MTA was expecting congestion pricing to provide $1 billion a year. It was planning to issue bonds against that revenue to raise $15 billion for its capital program, which includes plans to expand the Second Avenue Subway — a work in progress for nearly a century — and make many more of its stations accessible for people with disabilities.

    But most of the capital plan, accounting for at least 70 percent of the budget, is devoted to basic maintenance and upgrades to keep the system in a state of good repair, authority CEO Janno Lieber said in a news conference on Monday. Without congestion pricing taking effect as planned, the authority is working to slash its capital budget, and is “probably not going to be able to do all of the state of good repair work,” Lieber said.

    New York’s subway system carried about 3.5 million people every day last year, dwarfing every other transit system in the country. Combined with bus and commuter rail service, the MTA’s reach extends to most communities in the metropolitan area. It’s the only place in the U.S. where a majority of city residents commute by transit.

    Regionally, it has a much larger share of transit commuters than any other metro area. “One of the beauties of New York is that just about anybody who’s in congestion had a viable alternative,” says Rachel Weinberger, a transportation director at the Regional Plan Association, which supports congestion pricing.

    It’s not just future capital expansions that are threatened by the cancellation of congestion pricing, but the viability of the system in the short term as well. Maintenance work needs to be done. Lots of worker salaries are paid through the capital budget. And the way the MTA borrows for capital investments affects its operating budget as well, Lieber said.

    Beyond that, there could be indirect consequences that spread throughout the state. The MTA’s biggest economic impact is in New York City, but it supports jobs and manufacturing facilities upstate as well. “To run a manufacturing business, it’s not like you can just be building stuff one day and then not have work for five years,” says Dani Simons, a vice president for communications at Alstom, a railcar builder with plants in Plattsburgh and Hornell, N.Y. “Having a reliable funding source, where you know that for the next 15 years there’s going to be funding for projects, is a very important thing. It means you can sustain jobs.”
    A street gridlocked with traffic in Midtown Manhattan.
    Traffic along 42nd Street in Midtown Manhattan.
    Drew Angerer/TNS

    Riders Revolt

    Hochul said she was concerned about the effects of congestion pricing on working- and middle-class New Yorkers. But some studies found only a tiny fraction of people who drive to work in Manhattan are poor or working-class. The vast majority already commute by transit and would stand to benefit from the improvements that the new revenue would pay for.

    Hochul defended her record on public transit even as she announced she was pausing congestion pricing. She instructed reporters at a news conference to “recall all of your coverage” of her deal with state lawmakers last year to resolve the MTA’s looming fiscal cliff with increases to the payroll tax and other funds.

    But transit advocates are steaming mad. Danny Pearlstein, policy and communications director for the Riders Alliance in New York, called the move “a massive betrayal from the governor.” His group and others organized protests at the state Capitol in the days after the announcement, and pressured lawmakers not to approve Hochul’s plans for alternate MTA funding. The pressure campaign is only gaining steam, Pearlstein says.

    “What we’ve seen since then is the most public support for congestion pricing we’ve ever had,” he says.

    Legislature Rejects Alternatives

    New York state Sen. Liz Krueger knows the diner Hochul was talking about in her news conference. It’s in Krueger’s district, on 45th Street in Manhattan between 2nd and 3rd avenues. Hochul said she was responding partly to concerns that patrons, including residents of New Jersey, might no longer go to diners like that once congestion pricing is in place. Krueger finds that story a little bit “bizarre.”

    To get to that diner from New Jersey via car, a driver already has to pay a $15 toll to get through the Lincoln Tunnel, Krueger says. It takes about an hour in midtown traffic to get there. The parking lot next door costs $20 for the first hour. Plus, says Krueger, a New Jersey native, they’d pass about half a dozen better diners on the other side of the river before even entering New York. “Pricing and time and quality of food has nothing to do with their decision,” Krueger says.

    Krueger has been one of the most outspoken critics of Hochul’s decision to stop the congestion-pricing plan. She rejected the last-minute alternative plans for MTA funding, which included a proposal to raise the payroll tax on businesses in New York City.

    Krueger thought that was a bad idea for a few reasons. For one, the Legislature had already raised that tax recently to help plug the hole in MTA’s operating budget. For another, it’s a burden that would fall only on New Yorkers, including working-class commuters to Manhattan. By contrast, congestion pricing also would draw revenue from out-of-state commuters, delivery drivers and tourists.

    “[Hochul] keeps saying ‘If you’re imaginative, you can come up with answers.’ But they all require money. I don’t think there’s an imaginative way to get all this done without paying for it,” Krueger says. If the Legislature were to raise another $1 billion for the MTA by raising New York taxes, “all we’ve done is cut out the rest of the people from paying their fair share.”

    A Political Risk

    Hochul’s decision pleased many leaders, especially those representing outer boroughs and suburbs in New York and surrounding states. It has inflamed many others. How will it shake out for her politically?

    Her tenure has been a bit rocky already. In 2022, she narrowly won election to a full gubernatorial term, after serving a partial term when former Gov. Andrew Cuomo resigned. Her weakness in that election was blamed partly for the poor performance of down-ballot Democrats in the New York suburbs, whose losses affected partisan control of the U.S. House of Representatives.

    Hochul took a big swing at housing reform last year, only to watch the plan collapse from a lack of political support almost immediately, though this year she negotiated a suite of new housing policies with state legislators.

    “She hasn’t gathered a consensus view that she gets what she wants,” says Gerald Benjamin, a political scientist at SUNY New Paltz. “She hasn’t established the critical [perception] that if you oppose the governor, there’ll be consequences.”

    Governors “need to be predictable,” Benjamin says. Negotiating with other lawmakers requires a certain level of trust, and changing course suddenly has consequences for other people, including the state lawmakers who backed the law requiring a congestion pricing plan for New York in 2019. State and city workers, including those in the governor’s administration, may feel betrayed by the decision to abandon their efforts as well. “I think, on balance, it makes the political context generally more difficult,” Benjamin says.

    Election years are tough for controversial policies like congestion pricing, says Philip Plotch, a researcher at the Eno Center for Transportation. For a policy like that to move forward, all the stars have to align: a strong economy, political tailwinds, and a diverse coalition of supporters among business, labor, and environmental groups.

    Granted, most of those things were in place at one point or another for congestion pricing over the last several years. All Hochul had to do to get it across the finish line was nothing. Still, Plotch, a historian of the Second Avenue Subway, says he’s “always surprised when anything happens.” It wasn’t a shock that congestion pricing hasn’t been able to clear a final hurdle.

    Even if Hochul is genuine about only wanting to “pause” congestion pricing, which many people doubt, the political environment won’t get much easier in the short term for a policy that has been shown to be least popular right before it takes effect. “My guess is she can’t do it next year because then it looks like she’s flip-flopping,” Plotch says. “And she can’t do it in 2026 because she’s running for governor. So she could do it in 2027, unless she’s running for president.”

    Hochul’s reversal has reminded some, including Krueger, of a move by Albany Democrats a quarter-century ago to repeal a New York City commuter tax. That tax, if left in place, would have generated billions in additional funding for MTA over the last 25 years, Krueger says. Its repeal was calculated for political advantage in an election that Democrats later wound up losing.

    “I believe that is an important lesson that apparently someone has forgotten,” Krueger says. “I certainly urge the governor to say, ‘Oops, this wasn’t one of my better ideas. I change my mind.’”
    Listen to the companion episode to this story on the player below or subscribe to the series for free on YouTube or the podcast app of your choice — Apple Podcasts, Spotify, Audacy and Audible.

    Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.
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