Three weeks ago, Governor Hochul released a pre-recorded video announcing that congestion pricing was being “indefinitely suspended.” This caught everyone by surprise, including local, state, and federal politicians, her own staff, and the MTA itself. After five years of preparing to implement the first-in the country congestion pricing program, Governor Hochul changed her mind just 25 days before the toll was set to go into effect. As a result, a $16.5 billion dollar hole has been blown in the MTA capital budget, and nobody knows what’s going to happen next. So, here’s an explainer to get you up to speed:
Note: As someone with an urban economics background, I am strongly biased - congestion pricing is a great policy (I wrote more about it here if you’re interested in learning more about the nuts and bolts of what congestion pricing is and why it’s such a good idea). Despite this bias, I will try to write as fairly on the issue as possible - this is meant to be an explainer of all of the factors involved and stakeholders’ motivations/perspectives.
Why did Governor Hochul do this?
Nobody really knows exactly what the Governor was thinking. While some politicians (like Eric Adams) have equivocated on their support for congestion pricing, Governor Hochul has spent years going around the state defending the merits of congestion pricing, and even leading rallies in support of the policy. As a result, her flip-flop was an especially shocking and unexpected one. While it’s impossible to know exactly what was going on in Hochul’s head, there has been reporting suggesting various theories:
Cost-of-living: This was the theme of Hochul’s pre-recorded speech announcing the “indefinite suspension” of congestion pricing - that inflation is hurting Americans and in light of this, we need to suspend congestion pricing. However, this reasoning feels weak for a few reasons:
Congestion pricing would only impact approximately ~280k car commuters to lower Manhattan, less than 2% of the entire metro area.
Congestion pricing would disproportionately tax wealthier drivers and benefit transit commuters who are generally less well-off.
Inflation has fallen significantly over the past three years - Inflation is currently at 3.4%, down significantly from 2022’s high of 9.1%. Why would Hochul defend congestion pricing back in 2022 when inflation was almost three times as high as it is today?
New Yorkers save tens of billions of dollars every year in averted costs of car ownership. A well-functioning transit system, funded by congestion pricing, would enable more people to ditch their cars and spend less on transportation overall.
Politics: A recent poll came out showing congestion pricing polling at 64-33% underwater favorability that reportedly played a major role in her decision to try and scrap the program. While there are reports that House Minority Leader Hakeem Jeffries played a role in lobbying the Governor, however, more recent reporting suggests that any role Jeffries played was at the request of Governor Hochul. Additionally, based on my sources in DC, the Biden Administration did not play a significant role in Hochul’s decision.
Diner Patrons from New Jersey: In a press conference after the decision, Hochul herself said that it was her conversations with New Jersey residents who had driven across the Hudson to eat at diners near Grand Central Station. This excuse seems to be more reflective of Hochul’s weak political instincts and has already been debunked.
Andrew Cuomo. A recent article from Nolan Hicks, one of the best transit reporters in New York, suggests that a Cuomo op-ed spooked the governor. In many ways, Hochul is an accidental governor who was only elevated because of Cuomo’s sexual-harassment fueled downfall. While Cuomo was a deeply problematic figure, he had a far better understanding of where power lies in Albany and how to wield it than Hochul does.
My personal take? I think that one bad poll on congestion pricing, along with Cuomo’s op-ed may have spooked the governor at the last minute, and she tried to back-fill that political concern with a range of anecdotes regarding high costs of living and New Jersey diners. What we do know is that this was a last-minute decision that was not-well planned out. This aligns with Hochul’s similarly poorly-thought-out decision to nominate a conservative judge to the state’s highest court that quickly morphed into a political quagmire, with many key State Senators opposing her plan. And when it was clear this plan was failing, she doubled down, forcing the Senate to vote on the nomination, even though she would end up losing that vote 39-20, an utter humiliation.
Why was this such a bad decision?
First off - that Hochul blindsided the MTA and went against the advice of (most of) her advisors. One of Hochul’s top advisors, Director of State Operations Kathryn Garcia, supported congestion pricing when she ran for Mayor and almost certainly opposed the Governor’s plan to suspend it. There are rumors that many members of Hochul’s staff are planning to resign in the coming weeks, and understandably so. Imagine if you are a senior MTA employee or adviser in the Governor’s office who had defended congestion pricing against countless frivolous lawsuits, or went to public hearings and suffered verbal abuse from angry motorists (I personally spoke at a public hearing in support of congestion pricing while an angry motorist was being dragged out of the room by cops while hurling obscenities at me). Having the rug pulled on something you spent years of your life working on really hurts. Even Janno Lieber, MTA CEO, who is well-known for being a loyal foot soldier for the Governor that appointed him was supposedly livid and considering resigning. Instead, he chose to give an incisive press conference, saying that the “MTA is not giving up at congestion pricing” and pointing the finger at the governor for forcing the MTA to cut back on a whole range of needed investments in the transit system.
Second off: Hochul didn’t have any strategy. By suspending congestion pricing, she blew a $15B hole in the MTA’s capital budget, a funding gap that needs to be replaced for a whole host of key projects from the Second Avenue Subway Phase 2 Extension to much-needed signal upgrades. Hochul’s plan B to plug this gap? A payroll tax that would effect every worker in New York City. This was especially nonsensical because it directly goes against the Governor’s stated reasoning for suspending congestion pricing in the first place: lowering costs in New York. Needless to say, the legislature almost immediately rejected this plan. Her plan C to plug the gap? A non-specified $1B “IOU” of cash transfers to the MTA. This was perhaps an even worse plan, as this would not be a stable revenue source and therefore unable to be bonded into the $15B cash infusion needed to execute the capital plan. Unsurprisingly, this was also rejected by the legislature, one day later. Now, Hochul has no plan D and is just flailing, throwing out ridiculous ideas left and right. Her latest proposal is “cracking down on fare evasion”. This is a particularly ridiculous idea to me for a few reasons:
Fare evasion is estimated to result in $690M in unpaid fares. This is ~$310M less than the revenue that congestion pricing would bring in annually. Additionally, many fare evaders would simply not ride transit at all if they were forced to pay, meaning the potential revenue that could be captured is even smaller.
“Cracking down on fare evasion” is an extremely speculative source of revenue that would be rejected by bond markets which would require a stable cash source to justify a $15B loan that the MTA needs.
“Cracking down on fare evasion” actually costs money up front, whether through increased law enforcement or investments in improved turnstiles that are harder to hop. The grand irony here? The MTA’s capital plan actually had funding for new modern turnstiles that would reduce fare evasion, but will now likely be de-prioritized due to congestion pricing being scrapped.
Finally: Hochul got the politics of this completely wrong. Yes, congestion pricing was not popular when polled as a discrete issue. But issue polling almost always shows new taxes or fees are unpopular, while more free stuff is popular. It’s much harder to accurately poll trade-offs, and the question Hochul should have asked “Is congestion pricing more popular than a broad payroll tax or letting the MTA fall into a state of disrepair?”. I’d wager the answer to that question is yes. As transit service continues to degrade and traffic/pollution keep getting worse, Hochul is now the one who owns the issue - it’s Hochul’s MTA and she will be the one getting the blame. Additionally, congestion pricing polls as being least popular right before it is implemented. This is because a new fee is unpopular and the benefits of congestion pricing are still speculative at this point. But a quick look at the trajectory of congestion pricing in Stockholm is instructive: it polled at below 40% right before it was implemented, similar to New York. But once it was implemented and residents saw the benefits of less traffic, less pollution, fewer kids with asthma, etc. it became extremely popular. By “indefinitely suspending” congestion pricing, Hochul is extending this unpopular period, preventing it from taking effect and becoming popular.
Furthermore, Hochul’s decision to do this at the very last minute makes her look weak and feckless, accordingly her overall approval rating hit an all-time low in the wake of this decision. Additionally, many political experts note that the salience of congestion pricing was relatively low for most voters, since such a small proportion of New Yorkers would have to pay the fee. As a result, Hochul isn’t swinging many voters in her favor, and has likely made far more voters view her as dishonest, incompetent, and weak. Republicans in NY are calling out her “incompetence”, and most conservative anti-congestion pricing voices are calling this a “political ploy”, assuming that Hochul will just reinstate congestion pricing after the election.
What happens now?
Nobody knows! The bad news keeps coming for the governor, from many angles including a federal judge rejecting an anti-congestion pricing lawsuit, construction work on the Second Avenue Subway extension being suspended, the MTA’s credit rating being put at risk, and new reports that subway service will significantly deteriorate due to the Governor’s decision.
I’ll be continuing to update you all with articles on the latest developments, so subscribe if you want to stay in the loop. However, I have outlined what I see as the four potential buckets of outcomes below:
Hochul works out a legislative deal for an alternative funding stream. While this initially seemed likely, there doesn’t seem to be much of an appetite in Albany to bail the governor out after her payroll tax and IOU plans went down in the legislature. Plus, the 2024 legislative session is over for the year, meaning Hochul would have to call a special session to attempt to get something passed before 2025. This seems unlikely, but you never know. Plus, $15B is a lot of money and it would be hard to find a popular and politically feasible substitute. Casino revenue or a sales tax increase have both been mentioned, but seem unlikely.
Hochul relents and allows congestion pricing to go through, potentially in a slightly modified form at a later date. This seems unlikely given the governor’s general stubbornness, but it’s worth remembering that, legally, she cannot unilaterally cancel congestion pricing which was signed into law back in 2019. While she may try to tweak the program by lowering the tolls or allowing new exceptions to try and claim a victory, by law, congestion pricing must raise $1B/year. As a result, excessively neutering the plan to the point that it significantly reduces revenues would not be legally permitted. This is where calling your elected officials matters - increasing the political pressure on Hochul, particularly from Jeffries and Schumer, could get her to relent, potentially with minor tweaks to save face. There are already reports that Hochul is being pressed by the legislature to bring a tweaked version of congestion pricing back, which is good, but it’s important that we don’t end up with a swiss cheese version of congestion pricing with tons of exemptions that ends up failing to actually reduce congestion.
The lawsuit is successful, congestion pricing is reinstated against the governor’s wishes. Congestion pricing is still the law, and Hochul’s legal standing to kill the program without any legislation is extremely dubious, especially without any sort of implementation plan or timeline. As a result, a group of legal experts, good government groups, climate organizations, business groups, and transit advocates are coming together to file a lawsuit to force the governor to allow congestion pricing to be implemented. It is unclear what the timeline and potential outcomes are here, but there is a shot that the courts save congestion pricing. Surely, there will be more news to come on this over the coming weeks.
Hochul does nothing, the MTA faces deep austerity, and traffic keeps getting worse. This is starting to seem like the extremely troubling outcome we are lurching towards. The MTA had a board meeting yesterday where they expressed anger at the Governor’s decision but acknowledged that they are unable to start congestion pricing without her approval or a legal order forcing her to sign off. Additionally, the MTA painted a “dire” picture of the impacts of the governor’s decision which can be found here and includes cancelling work on:
Second Avenue Subway Extension to East Harlem.
Accessibility plan to build elevators in over two dozen train stations.
Signal upgrades that would make the system more reliable and enable quicker, more frequent train trips.
Bus electrification and charging infrastructure.
Verrazano-Narrows Bridge repairs.
New, more reliable, subway cars.
Station improvements and structural repairs.
On top of this, traffic and pollution will continue to get worse. Meanwhile, the governor’s reaction to the MTA’s picture of deep austerity that they are being forced into? A whole lot of nothing, just a word salad saying that things are all going to sort themselves out, somehow. She is delusional, has alienated her best advisors, and her only allies left are feeding this absurd fiction that everything is going to be fine. I have never seen anything like it in politics: a Governor making a total flip-flop at the last minute in such a destructive manner with zero consideration of the consequences.
Another key thing to note here is that this lack of political leadership is one of the exact reasons the MTA has some of the highest infrastructure delivery costs in the world. I have wrote extensively on the topic here, but in this case the issue is that political decisions like Hochul’s last minute-decision to suspend congestion pricing inserts a high level of risk and uncertainty into all contracts. Look at the Second Avenue Subway extension - the MTA had to suspend all work on the project due to Hochul’s decision. As a result, the contractor they hired will probably have to lay off construction workers and completely change their business plan. No contractor wants to deal with this risk, and will increase the price at which they bid for MTA projects in the future to account for this. And with every day that congestion pricing is further delayed, the costs of inaction go up.
The saddest thing about this whole saga? It is very likely that I, a random blogger with a full-time day job, have thought more about the consequences and implications of this decision than the Governor herself.
What Can I Do?
At this point, the most important thing is keeping up the political pressure on Hochul. As the impacts of Hochul’s decision are increasingly felt, voters must remind elected officials that the status quo of worsening traffic and MTA austerity is unacceptable.
Join a pro-transit advocacy organization, particularly Riders Alliance, TransAlt, or Abundance NY. Additionally, consider joining Open New York, an urbanist pro-housing, pro-transit organization.
Donate to pro-transit candidates. While the 2024 primary just passed, the 2025 city council primary is fast approaching. Currently, I would recommend donating to Ben Wetzler, a strong supporter of congestion pricing. (Note: I will edit this page as more pro-transit candidates announce their candidacy)
Dedicate 5 minutes every day to call elected officials including:
Senator Schumer at 202-224-6542. Schumer claims to support congestion pricing but has been silent on the issue, even as the federal funds for the Second Avenue Subway that he fought so hard for are at risk. His silence has been extremely disappointing and voters should remind him of the stakes of the congestion pricing battle. As Majority Leader, he has massive sway in DC and could significantly raise pressure on Hochul to relent.
Senator Gillibrand at 202-224-4451. Gillibrand, is like Hochul, an upstate politician who does not rely on the MTA, and as a result has supported the Governor’s decision. She claimed that we can just have park-and-rides instead of congestion pricing, which was disappointingly incoherent. Call her office to let her know your disappointment on the lack of leadership from Gillibrand.
Congressman Hakeem Jeffries at 202-225-5936. As House Minority Leader, Jeffries has a lot of influence in Washington and has been disappointingly neutral on this whole fiasco.
Governor Hochul at 518-474-8390. Do not let the Governor off the hook. Keep calling her office every day to express your disappointment. She needs to realize that this isn’t an issue that people will just forgive and forget.
Your congressmember, state legislators, and city councilmembers (you can find their phone numbers here) Ask your congressmember to support congestion pricing and raise the pressure on Hochul. Remind your state legislators that they should not participate in any back-room deal to bail out the governor and that congestion pricing must be implemented as required by law. Ask your city councilmember for their stance on congestion pricing and ask them to push Mayor Eric Adams on other transit issues like building bus lanes.
Keep talking about the issue. Tell your friends, colleagues, family, etc. how bad this decision is. The salience of the issue needs to remain high, and who knows, maybe a colleague of yours has a friend working in DC that they can pass the message along to.
I will close this post with one of the most inspiring speeches I’ve read regarding congestion pricing in New York City.
Making cities more livable starts with getting more cars off the roads, reducing pollution, and making significant investments in our public transit systems.
Walk around many major cities and it won’t take long to encounter frustrated drivers caught in traffic jams, cars spewing exhaust on overpacked streets. We determined that the average New York City driver spends 102 hours a year stuck in traffic. Those hours add up to more than four days of your life – every year.
That’s four days sitting behind the wheel of a car instead of sitting by your kid’s bedside, reading them a book, sitting around the dinner table or reconnecting with a friend.
There has to be a better way. So, starting next month, New York City will become the first city in the U.S. to implement congestion pricing. We’ll charge people $15 every time they drive into New York’s Central Business District.
London, Milan, Stockholm, and Singapore have all implemented similar plans with great success. In New York City, the idea stalled for 60 years until we got it done earlier this year.
It took a long time because people feared backlash from drivers set in their ways. But, much like with housing, if we’re serious about making cities more livable, we must get over that.
We estimate congestion pricing will reduce the volume of vehicles in Manhattan’s central business district by 17 percent. Fewer cars mean less gridlock, traffic and pollution. Fewer cars means safer streets, cleaner air and more room to maneuver for pedestrians and bicyclists.
Congestion pricing will generate $1 billion every year, which will then fund large-scale projects that make public transit faster and more accessible. That’s key because we’ll never change people’s habits if we don’t offer safe, reliable alternatives to driving that work for everyone.
That means filling transit deserts that typically exist in poorer neighborhoods. In New York City, we’re rehabbing an old 14-mile freight line and turning it into a commuter rail service that will serve approximately 40 million riders a year.
When it’s done, the Interborough Express will link Brooklyn and Queens — New York’s most populous and largest boroughs, respectively, turning a 70-minute bus ride into a 40-minute train ride. That’s life-changing for people.
A similar project is underway in Harlem, where we’re extending our Second Avenue Subway and making life easier for 240,000 commuters each day. When cities invest in transformational transit projects in historically neglected communities, we connect people to school and job opportunities that were previously out of reach.
In that way, expanded train service or an extra subway stop can actually change the trajectory of someone’s life. That’s powerful. That’s what cities are meant to do.
Remarks as Prepared for the Global Economic Summit in Dublin, May 20th, 2024
The next best thing to writing a deep dive on congestion pricing & the related shenanigans is seeing that someone closer to the issue wrote one wayyyy better than you would have. Thanks for this, Sam!