Congestion Pricing in New York: Beware the Even Years

Even-numbered years are not an auspicious time to advance a congestion pricing program in New York because these are election years with campaigns for every U.S. House of Representative, State Assembly, and State Senate seat. The calendar explains why the prospects for congestion pricing were more promising in the odd years of 2017 and 2023 rather than the politically charged atmosphere of even years like 2024.

Poised for Implementation

On Wednesday June 4, New York was ready to start the nation’s first congestion pricing program at the end of this month.

New York’s Metropolitan Transportation Authority (MTA) had spent hundreds of millions of dollars preparing for congestion pricing’s implementation, including erecting 110 gantries to detect motorists entering Manhattan south of 60th Street in Manhattan. Depending upon the day and time, drivers entering this area would have paid up to $22.50 and large trucks as much as $54. (Drivers with E-ZPass tags would have been charged less.)

A map of this area, which the MTA refers to as a “congestion relief zone,” is shown below.

The program’s start date was not set in stone though, because numerous lawsuits had been filed trying to halt it. Judges were weighing lawsuits against both the MTA and U.S. DOT, by among others, a trucking association, teachers union, and elected officials from both New York City and its suburbs.

Most notably, the state of New Jersey urged a U.S. District Court to halt the program, claiming that the Federal Highway Administration rubber stamped an environmental review which did not thoroughly consider all the program’s s environmental impacts. If New Jersey lost the suit, its governor, Phil Murphy, had threatened to retaliate against its neighbor across the Hudson River. Murphy was especially irate because many of his constituents already pay more than $15 to cross the river during peak periods.

The congestion program was expected to have widespread benefits including reducing traffic, improving air quality, providing approximately $1 billion annually for transit improvements, and reducing vehicle travel time.

A Two-Decade Effort

New York environmentalists, transportation organizations, and business leaders have been trying to implement congestion pricing for two decades.

In 2007 (an odd year), New York’s mayor, Michael Bloomberg generated support for a congestion pricing program, but the Republican mayor was unable to bring the State Assembly’s leading Democratic members on board. City officials and advocates were inspired by London’s program that had been introduced in 2003, where motor vehicles entering the city center during peak periods pay a charge that is now approximately $19. Today, other cities, including Stockholm, Singapore, and Milan, have their own congestion programs.

In 2017 (another odd year), New York’s Democratic governor, Andrew Cuomo, announced, “Congestion pricing is an idea whose time has come.” In 2019, with the Democrats controlling both the State Senate and State Assembly, the governor signed a congestion pricing program into law. All the funds would be used to support the MTA’s capital program.

The legislation empowered a six member panel to recommend the exact tolling charges, but the panel, by law, would have to wait until right after the November 2020 elections before it could do so. The congestion program could have started in the beginning of 2021 (odd year).

With the federal environmental review taking much longer than expected and the program lacking a strong political champion, final approvals and implementation were delayed and delayed.

In 2022 (even year), New York’s governor, Kathy Hochul, was in no rush to push the program while she was running for a full term in office. In 2023 (odd year), however, Hochul praised congestion pricing because “it will reduce traffic in our crowded downtown, improve air quality and provide critical resources to the MTA.” She explained how it would create a more equitable and accessible transit system for a healthier and more sustainable future. The governor cited the support it had received from environmentalists, business leaders, and elected officials.

Governor “Pauses the Program”

On June 5 in this even year, Governor Hochul announced a “pause” to the program and cited support for doing so from a wide range of state senators and assembly members. The governor had jumped ship and joined the skeptics, naysayers, and congestion pricing enemies.

In 2024, congestion pricing had become an albatross for Democrats in several state legislative and U.S. Congressional races. With Republicans holding onto a slim majority in the U.S. House of Representatives, congestion pricing could have determined which party controls the House next year.

What Happens Next?

Influential business and civic groups such as the Real Estate Board, Partnership for New York City, Regional Plan Association, Citizens Budget Commission, and the Riders Alliance are hoping the governor has only paused and not canceled the program.

The MTA was relying on the funds available from the congestion pricing program. The transportation agency’s current five-year capital program assumes that $15 billion from the program would help pay for a wide range of projects such as replacing obsolete signaling equipment, making more subway stations accessible, and moving towards an all-electric bus fleet. Although congestion pricing was expected to generate about $1 billion a year, New York’s elected officials decided that the MTA would borrow $15 billion up front and then use the congestion pricing proceeds to pay off this new debt.

A Series of Difficult Choices

Eno has written how numerous cities have been facing a fiscal cliff — daunting operating budget shortfalls caused by the depletion of COVID-19 federal relief funds, rising operating costs, and reduced fare revenues. Last summer, New York climbed down from this cliff because the governor and the legislature raised the tax rate on New York City businesses.

Now, New York finds itself in a financial problem of its own making and facing a series of very difficult choices.
– Will the state legislature raise taxes again, this time to fill a massive hole in its capital budget?
– Does the MTA cut back on projects to replace its aging equipment and facilities which are becoming increasingly unreliable and expensive to maintain?
– Should New York postpone the long-delayed second phase of the Second Avenue subway that will cost about $8 billion, nearly half of which is expected to be paid with federal funding?
– Does the MTA continue to borrow more money? Its outstanding debt is already approaching an eye-popping $50 billion, an amount greater than the level of debt issued by most states in the U.S.

With Governor Hochul expected to run for reelection in 2026, she may very well decide that the odd year of 2027 will be an auspicious time to start a congestion pricing program.

For more information, see the following Eno articles:
Eno’s interviews with U.S. Congressmen Jerry Nadler and Josh Gottheimer about their positions on congestion pricing (May 2023).
Eno’s Congestion Pricing report with information about key concepts, challenges, and emerging best practices (May 2020).
Climbing Down from the Fiscal Cliff in California, Illinois, Minnesota, and New York (November 2023).
Are Transportation Agencies Taking on Too Much Debt? (February 2024).

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