ADVERTISEMENT

Investing

Hochul Plans to Revive NYC Congestion Pricing With $9 Toll

Traffic on 10th Avenue in New York, on June 5, 2024. (Jeenah Moon/Photographer: Jeenah Moon/Bloomb)

(Bloomberg) -- New York Governor Kathy Hochul plans to revive congestion pricing for drivers entering large parts of Manhattan, months after abruptly pulling the plug on a $15 charge just before it was set to start, arguing it would have strained working families and small businesses.

Hochul is expected to announce the initiative on Thursday, this time with a $9 charge for most motorists driving into Manhattan’s central business district, according to people familiar with the plans.

President-elect Donald Trump opposes the plan and with his inauguration scheduled for Jan. 20, the governor has limited time to implement the new charge and avoid the incoming administration stalling the program, as it did during his first term. The $9 toll could bring in revenue that the Metropolitan Transportation Authority, which runs the city’s transit network, would borrow against to modernize a more than 100-year-old system.

“Governor Hochul paused congestion pricing because a daily $15 toll was too much for hard-working New Yorkers in this economic climate,” Avi Small, a spokesperson for the governor, said in a statement. “Tomorrow, the Governor will announce the path forward to fund mass transit, unclog our streets and improve public health by reducing air pollution.”

Pausing congestion pricing opened up a $15 billion deficit in the MTA’s current capital plan and deferred signal upgrades, subway renovations, accessibility projects and purchasing 250 electric buses. The MTA’s next five-year $65.4 billion capital budget is also at risk as nearly half of it is unfunded. The transit provider is seeking to rehabilitate aging structures after years of neglect and improve service to attract more riders to its system of subways, buses and commuter rail lines.

Hochul’s revised plan would initially slash the prior tolling structure by 40%, with E-ZPass motorists paying $9 rather than $15 to drive south of 60th Street during peak hours, according to the people familiar. 

To begin the program, Hochul needs the federal government to approve the revised tolling structure and to also sign a value pricing pilot program agreement with New York. It’s doubtful the incoming administration would make those authorizations after Trump said he would terminate congestion pricing in his first week back in the White House.

Even if Hochul gets federal approval, congestion pricing faces several lawsuits, including from New Jersey Governor Phil Murphy, who says the environmental review of the tolling program was insufficient and doesn’t show the potential impacts to some Garden State neighborhoods. A lower fee fails to make up for the failures of that review, lawyers for Murphy wrote in a letter dated Wednesday and filed to the court.

“Merely lowering the toll amount would not cure the defects in the National Environmental Policy Act review process conducted by the defendants when the Federal Highway Administration issued its Finding of No Significant Impact,” the lawyers wrote in the letter, which urges the court to make a ruling in the case.

If implemented, the toll would apply to motorists entering Manhattan’s central business district, which runs from 60th Street to the southern end of the island. New York City is the world’s most-congested urban area, according to INRIX Inc., a traffic-data analysis firm.

The goal of congestion pricing is to reduce the number of the vehicles in the district by 17% and improve air quality. It may be difficult to hit those targets with a lower $9 toll because it may fail to persuade commuters and visitors to use public transportation rather than cars to get into Manhattan.

The tolling program could still face risks even after Trump takes office. Brad Lander, New York City’s comptroller — who supports congestion pricing and has been push Hochul to restart it — warned that the incoming administration could try to end the program through litigation or administrative action.

“Theoretically in the same way that New Jersey sued, the federal government could turn around and sue to say it was done improperly,” Lander said Wednesday, speaking about the environmental review process.

(Updates story with New Jersey’s lawsuit in the eighth paragraph.)

©2024 Bloomberg L.P.