Business Leaders ‘Furious’ at Hochul Reversal on Manhattan Congestion Charge

New York’s most prominent business leaders, longtime supporters of the congestion pricing proposal to raise money for the MTA and to reduce traffic, are angry at Gov. Kathy’s Hochul’s decision to postpone implementation of fees for vehicles entering Manhattan south of 60th Street.

They are now gearing up to fight an idea floated by the governor’s office to impose higher taxes on business to replace the lost revenue.

Statements from the Partnership for New York City, the Real Estate Board of New York and the business-funded fiscal watchdog Citizens Budget Commission all criticized the governor’s action, which she said she took because of the potential impact of the fee on the economy.

“No question that congestion pricing is a big change, and there rarely is a perfect time,” said Andrew Rein, president of the Citizens Budget Commission. “Congestion pricing is the transit trifecta — providing critical funding for transit, reducing emissions, and easing congestion. We should be staying the course.”

The Real Estate Board and the Partnership called on the governor to make the postponement temporary, and the Partnership called on the MTA to better show how the capital projects funded by the money would improve the transit system.

Privately, executives who are usually strong supporters of the governor say they were appalled by the decision, announced by the governor in a video clip Wednesday, and how they were blindsided by it. “I am furious,” said one very public supporter of the congestion pricing plan, who didn’t wanted to be quoted for fear of angering the governor.

Building Congress President Carlo Scissura, noted for his steady stream of statements praising the governor and mayor, attended the pro-congestion pricing rally outside Hochul’s office Thursday in a sign of how serious the break between business leaders and the governor has become.

“If you want a capital program, if you want extensions of subways, if you want accessibility, if you want trains and new stations, if you want signals from this century, we have got to get this done,” he said.

Worse from the perspective of business leaders is that the governor is considering raising the payroll tax paid by New York City businesses to make up for the lost revenue. Other revenue-raising ideas, such as speeding up the awarding of three promised downstate casino licenses , were also being floated in Albany Wednesday.

It was only last July 1 that the governor and the legislature raised the tax rate on New York City businesses to 0.6% of payroll. Self-employed individuals making more than $50,000 saw their rate increase to the same percentage beginning Jan. 1. Suburban businesses pay 0.34% of payroll and were not hit with any increases.

The tax provides about $3 billion a year to the MTA.

Corporate and real estate taxes already pay over 40% of MTA costs, according to Kathy Wylde, CEO of the Partnership and a member of the panel that drew up the toll scheme. Fares account for about 40% as well. By contrast, vehicle tolls on bridges and tunnels cover only 13%.

It is also possible the governor could use the state’s reserves to make up the funds until a permanent solution is found.

“All should be acutely aware that alternatives that raise New York’s already highest-in-the-nation business taxes or deplete the state’s precious reserves come with real consequences,” said Rein.

Under the proposed but now postponed congestion-fee system, the MTA would sell $15 billion in bonds to fund capital projects, using the $1 billion in projected annual revenue to pay the interest. Tolls for cars coming south of 60th Street would pay $15 once a day from 5 a.m. to 9 p.m. on weekdays and 9 a.m. to 9 p.m. on weekends. Trucks would be charged between $24 and $36 during those hours. The toll would be reduced at other hours.

While the toll would be a burden on commuters who drive, all but a tiny fraction of those coming to the central business district already use mass transit, notes Wylde.

Meanwhile, the city’s economy has recovered all the jobs lost in the pandemic recession, although other areas of the country have added more jobs than New York. A 2018 study by the Partnership claimed that traffic congestion costs the city’s economy $20 billion a year .

Additional reporting by Ella Napack.

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