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Thursday, June 20, 2024

Kathy Hochul Is Bad at Politics

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

Supposed to start June 30, the program would have charged drivers a $15 daily fee for entering Manhattan’s central business district, 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 Metropolitan Transportation Authority (MTA), which would finance capital investments. (Because the congestion-charge revenue could be used to support additional bond capacity, the $1 billion annual revenue stream has generally been described as sufficient to support $15 billion in capital spending over five years, though of course taxpayers or commuters would ultimately bear financing costs related to those bonds in later years.)

Hochul’s putative reason for “pausing” the program is a concern that the fee will hurt Manhattan’s economy by causing too few people to drive in. (Wasn’t less driving the point?) But her real reason seems to be that congestion pricing was unpopular. Politico reports that Hochul and U.S. House Minority Leader Hakeem Jeffries were afraid that 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 reelection prospects in 2026. I don’t think their fears were unwarranted—an April Siena poll found New York State voters opposed congestion pricing 63–25.

That opposition isn’t unwarranted, either. But Hochul still made the wrong call here, politics- and policy-wise.

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 although I personally support congestion pricing, I can’t really blame voters for siding against it. 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.

Consider another long-in-the-works New York transit project.

In January 2023, a huge new Long Island Rail Road (LIRR) 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—so long that it had been a pet project for Senator 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 ’80s, the MTA built a subway tunnel under the East River with an empty lower level that could someday be used to carry trains for the project. Only in the late ’90s—after decades of stalling—did D’Amato take 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, by the time service actually started, in 2023, the price tag had climbed to more than $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 megaprojects 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. When the MTA, the parent agency of the LIRR, built this very expensive new terminal, it didn’t buy new trains, which were needed to adequately service the terminal. As Nolan Hicks reported for the New York Post in 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 while adding another 24 to Grand Central. Instead, it’s 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 that it really needed to get on with ordering those new LIRR trains so the new terminal could be used properly, the agency still hasn’t ordered them. The latest explanation the MTA was 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.

Why should New Yorkers trust that the agency that took 16 years to spend $11 billion to build a new rail terminal that had languished as an idea for almost half a century prior—an agency that then neglected to buy trains for that new terminal—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, officials said that this time they were going to buy the trains for real. But this is a pattern 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—but those new revenues 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. The 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 ready to roll out; now the agency 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 hasn’t stopped Jeffries and other politicians from saying that 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 that lots of people’s reaction is just: Nah, I’d rather keep my money?

In spite of all this, as I mentioned, I actually favor the congestion-pricing program. In fact I favor it even though I live within the congestion zone and own a car. And I am mad at Hochul for canceling it.

I have two reasons for supporting the program. One is that, although I don’t believe that the program’s revenues would be well spent, I do believe that it would achieve its other major goal of reducing congestion and increasing travel speeds.

The other reason for my support is that, although the MTA has plenty of money and could provide New Yorkers with plenty of excellent transit if only its costs were in line with those of its international peers, I don’t believe that the agency’s response to the cancellation of the congestion charge will be to shape up and become more efficient. Instead, Hochul has already proposed raising payroll taxes again. State legislative leaders, annoyed over her killing the congestion fee without consulting them, aren’t willing yet. But the MTA will be far short of being able to finance its entire capital plan without the congestion-fee revenue, meaning those LIRR trains won’t materialize anytime soon. And eventually, I expect that lawmakers will decide to raise taxes to cover the cost, like they have in prior years.

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

This article was adapted from a post on Josh Barro’s Substack, Very Serious.

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