Congestion Pricing, A Good Idea, Died Because Our Government Doesn’t Deserve the Money

And because Gov. Kathy Hochul is weak and inept.

Dear readers,

In January 2023, a huge new Long Island Rail Road terminal opened on the east side of Manhattan, 120 feet below Grand Central Terminal. This project, called East Side Access, was decades in the making — in the works so long that it was a pet project for Sen. Alfonse D’Amato, a Republican who lost his seat to Chuck Schumer in 1998. But the idea of East Side Access is even older than that. Lawmakers started talking about building it in the early 1960s, and in the 1980s the Metropolitan Transportation Authority built a subway tunnel under the East River with an empty lower level that could someday be used to carry trains for the project. But it was only in the late 1990s — after decades of stalling — that D’Amato took up the project and money started moving for the rest of it to finally be built.

The rationale for the project was that a majority of Midtown office jobs are on the east side of Manhattan, close to Grand Central and far away from the LIRR’s existing west side terminal at Penn Station. Adding a second terminal would “not only increase the rail capacity into Manhattan by nearly 50 percent, but it will also save East Side-bound travelers 30 to 40 minutes a day,” said a typical report from New York’s PBS station WNET back in 2012 — yes, 2012: almost 50 years after lawmakers started saying they would build this thing. The 2012 report also noted that, unfortunately, the project’s completion was delayed again (we would have to wait until 2019, it said) and the price tag had gone up again (to $8.2 billion). Of course, as I note above, service didn’t actually start until 2023, by which time the price tag had climbed over $11 billion, making it by far the world’s most expensive urban railway project on a per-mile basis.

But then, who’s counting? New York mega-projects always take way too long and cost way too much. At least, now that it’s open, commuters from Long Island must be really happy with their shorter commutes? Right?

Unfortunately not.

Here’s the thing: the MTA, the parent agency of the LIRR, built this very expensive new terminal. But they didn’t buy new trains, which were needed to adequately service the terminal. As Nolan Hicks reported for the New York Post last September:

The feds began warning the Long Island Rail Road as early as July 2017 that it was falling behind schedule to order and receive the roughly 20 eight-car trains it needed to run the promised schedules at its new $11 billion terminal beneath Grand Central, according to reports from the Federal Transit Administration obtained by The Post…

LIRR officials eventually told the FTA in 2020 that they would find the trains from “the existing LIRR fleet” — which meant taking trains that already served Penn Station or Brooklyn’s Atlantic Terminal and moving them to the new Grand Central Madison site.

During environmental reviews, the LIRR said it would continue running 37 trains per peak commuting hour to Penn Station plus add another 24 to Grand Central. Instead, they’ve been running just 37 hourly trains at the peak combined across the two terminals. It’s quite an indignity: We waited all this time and spent all this money, and what many LIRR commuters have to show for it is a longer commute, because the direct trains they once took to Penn Station or Brooklyn got canceled, and now they have to connect.

And seven years after the Federal Transit Administration warned the MTA they really need to get on with ordering those new LIRR trains so their new terminal could be used properly, the agency still hasn’t ordered them! The latest explanation the MTA had been giving for why it hadn’t ordered the trains yet was that it would need to rely on in-place revenue from congestion pricing to finance them.

---

I bring up this very frustrating, very New York history as we consider the apparent death of congestion pricing. This program, which was supposed to start June 30, would have charged drivers a $15 daily fee for entering the core area of Manhattan below 60th Street. Congestion pricing was supposed to provide two major benefits: It would reduce the number of vehicles in Manhattan, thus increasing traffic speeds, improving air quality, and reducing noise; and it would generate $1 billion in annual revenue to the MTA, which would finance capital investments like buying those LIRR trains.¹

As recently as two and a half weeks ago, Gov. Kathy Hochul was bragging about her conviction to stand up to “set in their ways” drivers in order to implement a plan that would improve New Yorkers’ lives and save them a lot of time stuck in traffic. But yesterday, Hochul suddenly announced the program would be “paused indefinitely.”

A taxi cab passes under congestion pricing toll readers hanging above Broadway in Columbus Circle on December 20, 2023, in New York City. The readers have never been used. (Photo by Gary Hershorn/Getty Images)

Her putative reason is a concern that the fee will hurt Manhattan’s economy by causing too few people to drive in. (Wasn’t less driving in the point?) But her real reason seems to be that congestion pricing was unpopular. Politico reports that Hochul and Minority Leader Hakeem Jeffries were afraid congestion pricing, if implemented, would hurt Democrats’ efforts to pick up three congressional seats in the New York suburbs in November’s elections, and perhaps would impair Hochul’s own re-election prospects in 2026. I don’t think their fears were unwarranted — an April Siena poll found New York State voters opposed congestion pricing by a 63-25 margin.²

As a matter of pure politics, I would have more respect for Hochul’s move if she had announced that the congestion charge was dead, dead, dead, instead of this “indefinitely paused” nonsense that doesn’t even take the issue off the table — Republicans will still campaign this November by saying Democrats will impose this toll sooner or later, even though I’m now pretty sure it’s never actually coming. I’d also have more respect for the politics of her flip-flop if she’d done it before plastering the variable message signs on suburban interstates for weeks with messages about how the congestion charge is coming and you’d better make sure your E-ZPass is up to date — literal government billboards advertising one of her least popular policy issues that she then didn’t even follow through with. Hochul wasn’t just weak here; she waited way too long to be weak, therefore missing all the political benefits of throwing one of her party’s unpopular plans under the bus.

And while I personally support congestion pricing, I can’t really blame voters for their opposition. Contrary to the protestations of transit advocates, I don’t think you need to have a car-centric perspective to think the charge was a bad idea — you just have to have a basic awareness of how easy it is for the MTA to waste $1 billion in new revenue. After all, why should New Yorkers trust that the agency that took 16 years to spend $11 billion to build a new rail terminal that took almost half a century to go from idea to construction site — and then neglected to buy trains for it — was actually going to take all their $15 tolls and use them to build a better, more reliable, more extensive transit system?

I know, I know, they say this time they’re going to buy the trains for real. But there’s a pattern here with the MTA. There have been lots of new revenue sources over the years — just last year, Albany lawmakers raised the payroll tax on New York City businesses so they could stuff more cash into the gaping maw of the MTA — and those new revenues often have a way of getting eaten up by ever-rising “state of good repair” expenses before expansions and improvements can be financed. And of course, if the MTA hadn’t managed to somehow spend seven times the typical global cost per mile to build East Side Access, it would have had money left over to buy trains without new revenue.

Even the high cost of the congestion pricing program itself provides an argument against devoting more revenue to new capital programs. Urban Institute fellow Yonah Freemark lamented yesterday that the MTA spent hundreds of millions of dollars to develop the congestion pricing system and get it rollout-ready; now, they won’t have any revenue to cover that cost. That waste is certainly regrettable. But the number itself is also appalling. We spent hundreds of millions of dollars to “build” a system that requires almost no actual physical capital — it’s just a bunch of cameras and transponders on gantries strategically placed over various Manhattan streets. As is typical in America, most of that money got spent on bureaucrats and paperwork, producing endless studies (which of course hasn’t stopped politicians like Jeffries from saying the reason we need this “indefinite pause” is so we can do more studies). Given how little our government agencies build for us despite the immense amount of time and money we afford them to do so, is it any wonder lots of people’s reaction is just: “nah, I’d rather keep my money”?

In spite of all this, you might be surprised to hear that I actually favor the congestion pricing program, and I am mad at Gov. Hochul for canceling it.³ I have two reasons for supporting the program. One is that, while I don’t believe the program’s revenues would be well spent, I do believe it would achieve its other major goal of reducing congestion and increasing travel speeds. The other is that, while the MTA of course has plenty of money and could provide New Yorkers with plenty of excellent transit if only its costs were in line with its international peers, I don’t believe the agency’s response to the cancellation of the congestion charge will be to shape up and become more efficient. Instead, I expect lawmakers will raise some other tax to throw more money at the MTA. Gov. Hochul has already proposed to do this — she wants to raise some sort of tax on Manhattan businesses or their payrolls, which is a little puzzling since her putative reason for “pausing” the congestion fee program is that it would harm Manhattan businesses. Whatever tax increase they do impose will be significantly worse for our local economy than a congestion fee that would at least produce some positive side effects.

It’s all very depressing. But I don’t expect it to get any better even if we elect a stronger governor in the future.

Very seriously,

Josh

1. Because the congestion charge revenue could be used to support additional bonding capacity, the $1 billion annual revenue stream has generally been described as sufficient to support $15 billion in capital spending over a five-year capital plan, though of course taxpayers or commuters would ultimately bear financing costs related to those bonds in later years.

2. Matt Yglesias says it’s especially regrettable that Hochul killed congestion pricing at this stage because, in London and elsewhere, these programs have tended to get more popular once they’re in effect and voters see that traffic really has gotten lighter. I think that would have proved true to a significant extent in New York. But London’s government has continually added new transit infrastructure that provides an increasingly compelling alternative to driving; a key part of the political problem with congestion pricing over here is that New York’s transit agencies have no similar record to brag about.

3. Indeed, I favor the program even though I live within the congestion zone and own a car. I would have paid this fee!