Understanding New York’s Congestion Pricing Mess

How did congestion become law?

The policy to charge cars to enter Manhattan 60th Street and below, long desired by transit advocates as a means of raising money for the subways while reducing automobile traffic, was part of New York State’s 2019 budget. The legislative language broadly authorized “a program to establish tolls for vehicles entering or remaining in the most congested area of the state,” saying it would start “no sooner than Dec. 31, 2020.” 

While the law said congestion pricing “shall” be established — meaning it wasn’t optional — neither did it set an effective date by which the policy must be implemented.

Between the passage of the law and the planned implementation date, which later wound up set for June 30, 2024, the program had to get over the following hurdles:

• Completion of a federal comprehensive environmental review (June 2023)
• The Traffic Mobility Review Board, a six-member panel set up by the law with members chosen by the mayor and governor, made recommendations (end of 2023)
• Public comment to the Metropolitan Transportation Authority, decisions by MTA board on program design, exemptions (2023-2024)
• A vote of approval by the MTA board (March 2024)
• Formal entry into the Value Pricing Pilot Program, via signature of state commissioner of transportation (yet to happen; see below)

Does Hochul really have the power to pause the program?

It’s unclear. On June 5, just 25 days before the planned start date, Hochul said she was putting an “indefinite pause” on the program, citing “too many unintended consequences,” including undermining what she considers a fragile post-pandemic economic recovery. Many political observers suspect the real reason is that congestion pricing remains broadly unpopular, especially in suburbs that Democrats consider must-win swing districts in the November House elections.

Hochul’s “indefinite pause” rests on the state Department of Transportation refusing to sign federally required paperwork for what’s known as the Value Pricing Pilot Program — a move that many experts say is supposed to be a mere formality at this stage.

Congressman Ritchie Torres summarizes the “she can’t do that” view: “The Legislative Branch makes the law and the Executive Branch executes it. If the State Legislature had merely authorized congestion pricing, then NYSDOT would have the discretion not to sign the Value Pricing Pilot Program (VPPP). But since the State Legislature mandated it, DOT has a duty to sign it. If DOT refuses to sign, it should be ordered by a court to do so. DOT’s decision to defy the State Legislature is grounds for a lawsuit.”

Wednesday, City Comptroller Brad Lander and transit advocates announced they are exploring legal action, citing a number of different laws arguably violated by the pause. As the New York Times wrote, “The coalition of organizations exploring potential legal efforts includes transportation groups like the Riders Alliance and the Tri-State Transportation Campaign; environmental groups including the Natural Resources Defense Council and the New York League of Conservation Voters, and watchdog groups like Reinvent Albany and NYPIRG. The Partnership for New York City, which represents major businesses, is also backing the effort.”

The MTA board, which authorized the plan and which answers mostly to Hochul — she appoints and therefore holds sway over six of 14 votes (other members are appointed by the mayor and county executives) — also has a role to play here. It could change course itself. Or it could hold the line. Though MTA board members are appointed by elected officials, they have independent responsibilities and an independent fiduciary duty to the agency.

What are the consequences if the program is delayed or even canceled?

Expecting $15 billion in new capital funding, the MTA had already budgeted capital projects dependent on the anticipated revenue — from wheelchair-accessibility improvements to expansion of the Second Avenue Subway to signal upgrades to station modernization and more. 

Late Friday, the MTA’s chief financial officer and its general counsel issued a joint statement saying, “Until there is a commitment for funding the balance of the 2020-2024 Capital Program, the MTA will need to reorganize the Program to prioritize the most basic and urgent needs.” Monday, MTA Chair and CEO Janno Lieber said the loss of congestion pricing revenue would force the agency to “reprioritize, rethink and shrink the capital plan.”

Meanwhile, the sudden disappearance of a major revenue source could well imperil the MTA’s credit rating.

Who would pay and who would benefit from congestion pricing as designed?

Details of the congestion pricing program are laid out in detail in our explainer, but here are the basics: Cars would pay a total of $15 at peak times to enter Manhattan’s Central Business District (trucks more, motorcycles less). Those entering via tolled tunnels would get credit for the money they paid to use the crossings, and a few types of drivers would be exempt. 

It was all projected to yield a projected 100,000-vehicle decline in traffic while generating enough revenue to back $15 billion in bonds for improvements to the MTA’s networks of subways, railroads and buses. Eighty percent of the new funding would go to fund subway and bus improvements, with the balance to commuter rail.

In New York City, a majority of households, and an even higher share of low-income households, rely on public transportation. Just 4% of outer-borough residents — which works out to around 128,000 people — drive into Manhattan to work, according to the Community Service Society. Subway ridership tops 4 million people on many weekdays. 

What are some alternatives for generating revenue?

After she asserted that she was pausing the program, Hochul’s first legislative move was to attempt, in partnership with allies in the state Senate and Assembly, to plug the newly created revenue hole. The end of the legislative session in Albany saw a flurry of attempts to find replacement revenue sources to fund the MTA’s capital plan, from an increase in the state’s payroll mobility tax to moving money from the state’s general fund. 

The Fiscal Policy Institute pointed out that the average annual income of those affected by an increase in the payroll tax was $91,663 — while the average income of those impacted by congestion pricing was $130,140. Further, congestion pricing would primarily impact less than 300,000 people who routinely drive into Manhattan, while all 4 million-plus New York City workers would pay the payroll tax.

An increase in the payroll mobility tax would impact over 4.3 million NYC workers — while congestion pricing would only affect 284,000 regular car commuters into Manhattan. pic.twitter.com/SC86Vu3KMs

— Fiscal Policy Institute (@NYFiscalPolicy) June 7, 2024

However, the Legislature ended the session without authorizing any alternative revenue source and with the future of the program very much in doubt.