Congestion pricing fallout continues

Jun 10, 2024

Traffic is steady as vehicles approach Hugh Carey tunnel linking Brooklyn to Manhattan, Feb. 7, 2024, in New York. New York Gov. Kathy Hochul is trying to raise taxes on businesses in the city to close a big budget gap that emerged after she halted a plan to charge drivers a toll to enter the center of Manhattan.

The decision to indefinitely halt a congestion pricing plan has created a multibillion problem for the MTA, which was counting on toll revenue to fund a slew of improvements to its run-down trains. | AP

The congestion pricing fallout is getting personal.

State Sen. Liz Krueger, a Manhattan legislator who chairs the powerful finance committee, dished on some of the bitterness forming between a group of Albany Democrats and Gov. Kathy Hochul, the party’s embattled leader.

“Based on what I'm hearing, the governor is blaming me for the fiasco that is the congestion pricing blow back,” Krueger said in an interview today. “I don't mind being blamed because it's sort of an honor to imagine I'm actually powerful enough to have orchestrated every newspaper, think tank, organization in environment, transportation and business to take my side.”

It is another sign of the political tempest swirling on Hochul’s left flank following last week’s stunning decision to indefinitely halt a congestion tolling plan that would have been the nation’s first.

Krueger — one of the fiercest critics of Hochul’s decision — said ill will toward the governor extends to administration staffers.

“A lot of people on the second floor are furious at what she did on congestion pricing,” Krueger said, referring to the governor’s own staff. “They were not notified, or they were notified and begged her not to do it and she did it anyway.”

In response to Krueger’s comments, a Hochul rep said the call to nix the tolling plan has broad support.

“Like overwhelming majorities of New Yorkers, Gov. Hochul believes now is not the right time to implement congestion pricing,” spokesperson Avi Small said in a statement. “The governor made this decision after consulting with experts and everyday New Yorkers, and will continue fighting to make New York affordable for all.”

Indeed, polling has shown congestion pricing to be deeply unpopular. But the governor has created a multibillion problem for the MTA, which was counting on toll revenue to fund a slew of improvements to its run-down trains. And in addition to imperiling other congestion pricing initiatives across the country, according to an E&E News report, the collapse of the plan may have put the MTA’s credit rating at risk.

While Hochul’s office blasted out statements from 25 lawmakers supportive of her decision last week, a source told POLITICO that chief of staff Stacy Lynch is looking for additional public validators.

Hochul continued to insist Monday her decision was rooted in New Yorkers’ cost of living concerns.

“We thought that this year inflation was going to be lower, more people were going to be back on the subways,” she told reporters.

But her about face has created an immediate political headache for the governor. She distanced herself from a fundraiser advertised for a car dealer industry group, the Greater New York Automobile Dealers Association. “I will not be attending a fundraiser with auto dealers,” Hochul said. “I’ve been very supportive of (mass) transit.”

She was certain a deal would emerge with lawmakers to find an alternative funding source for the MTA’s planned capital projects — even though lawmakers left Albany over the weekend and aren’t due back until January. (Hochul could call them back in the interim for an emergency session.)

The Legislature concluded its session last week without a funding plan to replace the $1 billion annually that the tolls were due to bring in and leveraged for $15 billion in municipal bonds.

“Those projects will go forward, but to assume the only funding source had to be congestion pricing shows a lack of imagination,” she said. “I’m committed to these projects.” — Joe Anuta and Nick Reisman

THE GOLD STANDARD OF POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. Throughout the election and the legislative and regulatory pushes that will follow, POLITICO Pro is indispensable to those who need to make informed decisions fast. The Pro platform dives deeper into critical and quickly evolving sectors and industries—finance, defense, technology, healthcare, energy—equipping policymakers and those who shape legislation and regulation with essential news and intelligence from the world’s best politics and policy journalists.

Our newsroom is deeper, more experienced, and better sourced than any other—with teams embedded in the world’s most active legislative and regulatory power centers. From Brussels to Washington, New York to London, Sacramento to Paris, we bring subscribers inside the conversations that determine policy outcomes and the future of industries, providing insight that cannot be found anywhere else. Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY.

From the Capitol

Assemblymember Marjorie Byrnes

Assemblymember Marjorie Byrnes brought the lawsuit that resulted in a lower-level court tossing the Equal Rights Amendment from the ballot last month. | Nick Reisman/POLITICO

WHAT’S NEXT FOR THE EQUAL RIGHTS AMENDMENT SUIT: A Rochester-based appellate court will hear oral arguments next Monday in a case that will determine whether the state Equal Rights Amendment will remain on the ballot this November.

“I’m actually pretty optimistic,” said Assemblymember Marjorie Byrnes, a Republican who brought the suit that resulted in a lower-level court tossing the ERA from the ballot last month.

The judge’s decision “was very thorough,” Byrnes said. “He went through every legal issue raised by the attorney general, articulated with case law why they were wrong, laid it all out, issue by issue by issue, and said they were wrong on every score.”

The case isn’t technically an election law case — Byrnes’ suit argued that the Democratic-dominated Legislature didn’t follow the proper steps before voting the amendment in 2022. But she and others believe that since it involves a question over this year’s ballot, the courts will keep it on the fast track that election cases usually receive. That makes it likely that regardless of what the appellate court decides, the Court of Appeals will consider the matter before the end of the summer. — Bill Mahoney

SHORT-TERM RENTALS: One of the final deals struck this session was on a measure to require owners of short-term rental properties to register them with the state. Outside of New York City, registration is done on a scattershot basis by municipalities, driving up the costs of tracking such properties.

The bill that passed centralizes this registration and makes it easier for local governments to tax the properties and limit their number.

Short-term rentals are “now, outside of New York City, an annual $1 billion industry, and growing by the minute,” Assembly sponsor Pat Fahy said. “My bill, which I’ve had for seven years, just tries to level the playing field with hotels and motels. It says pay your taxes — you’re running a business, pay your taxes, which is your sales tax, your occupancy tax, as any hotel or motel would do.” — Bill Mahoney

IN OTHER NEWS

— CAP AND GOWN: New York is one step closer to revamping its graduation requirements with a new diploma that would not mandate students take the Regents exam. The state Education Department presented its updated measures Monday. (POLITICO Pro)

— NEW WEED REGULATORS: The governor appointed three new leaders to the state’s Office of Cannabis Management. (POLITICO Pro)

— JUDGE ICES ETHICS CASE: The state ethics commission must halt its prosecution of former state Sen. Jeff Klein, per a new court order. (Times Union)

— CUOMO FACES HOUSE PANEL: A congressional panel investigating Covid-19 is getting ready to question former Gov. Andrew Cuomo. (New York Post)

— CLIMATE CRISIS: A new bill in New York aims to ban insurers from backing new fossil fuel projects. (New York Focus)

Missed this morning’s New York Playbook? Read it here.

Follow us on Twitter