New York City was on the cusp of (finally) implementing a congestion pricing program when Governor Kathy Hochul announced earlier this month that it would be “indefinitely delayed.” In this episode, NY State Sen. Liz Krueger and Evergreen Action’s Justin Balik, both with deep history in New York’s congestion pricing drama, discuss Hochul’s mysterious and possibly illegal move, the apocalyptic budget implications, and what might happen next.
Text transcript:
David Roberts
Congestion pricing — the somewhat wonky name for the practice of tolling people who drive into a central urban area — has been the subject of contention in New York politics since the early 2000s. People pushed for congestion pricing in Manhattan, campaigned and organized around it, and eventually got it passed into law in 2019. After finally clearing the many layers of bureaucracy, it was set to go into effect on June 30 of this year.
Then, earlier this month, New York Governor Kathy Hochul announced that she was “indefinitely delaying” the program, which seems to have blindsided everyone — the board of the Metropolitan Transportation Authority, her allies in the legislature, and her constituents. Among other things, it blows a $1 billion a year hole in the MTA’s budget, money that had already been committed to improvement projects that were in some cases already underway.
No one, least of all Hochul herself, has a plan for how to fill that budget gap. No one seems entirely certain whether her decision was legal. Yet the legislature has ended its session and gone home, leaving the entire matter in a fog of uncertainty.
To get the inside scoop on this drama and where it might be going. I contacted two people intimately familiar with this fight. For over 20 years, Liz Krueger has represented a big chunk of Manhattan in the New York State Senate, where she is chair of the powerful Senate Finance Committee. And Justin Balik worked extensively on congestion pricing at the New York City Department of Transportation under Mayor Bill DeBlasio back when it passed in 2019. Now he is the state campaign director for Evergreen Action, where he works on sustainable transportation.
We're going to get into the many mysteries of Hochul’s decision, the legality of it, how the budget hole might be filled, and what the future might hold for congestion pricing.
All right then, with no further ado, Senator Liz Krueger, Justin Balik, welcome to Volts. Thank you so much for coming.
Senator Liz Krueger
Thank you for having me.
Justin Balik
Thanks for having me, David. Appreciate it.
David Roberts
Justin, I would like to give you the somewhat unenviable task of giving us, let's call it, a two- to three-minute history of the fight over congestion pricing in New York City. Let's just hit the highlights here so listeners have a sense of the sort of epic scope of this thing.
Justin Balik
Sure. And Senator Krueger should chime in here, too, because she's, you know, in many ways lived this battle and worked in the trenches of this far longer than I. But I think New York, having the most dense and robust mass transit network in the United States and also some of the most congested streets, congestion pricing is something that folks have talked about quite literally for decades, and it really starts with kind of wonky urban planners. One of the organizations that's worked on this the longest is a group called Regional Plan Association. They work across the tri-state area and put together — alongside advocates, the business community, the construction industry, lots of kind of the civic fabric of New York, fair to say — they pull together these regional plans for New York, New Jersey, and Connecticut that are well studied and kind of a blueprint and template for policymakers.
They've been calling for congestion pricing for years and years. I think it's fair to say that the first real push with policymakers leading the charge and politicians really getting behind it, you have to go to Mayor Bloomberg's administration in 2009, and he put forward a plan that's a little bit different than what was scheduled to go live on June 30. Under the Mayor Bloomberg construct the city was really going to run the congestion pricing program and then allocate a lot of the revenue to the MTA and then other urban transportation improvements.
One of the intricacies here is that if you're tolling for congestion pricing, you're tolling on city streets. But the MTA, the main transportation agency, subways, buses, commuter rail, etcetera, is really a creature of the state. So that opens up a lot of both substantive governance questions, and political morass, potentially around governance funding — who's in charge of what? So, Bloomberg really pushed this. It did not end up coming to a vote in the legislature. It didn't really have sufficient political support at the time. Really, how we got to where we are now is in 2017. The subways were really in crisis.
There was "The Summer of Hell." That was the nomenclature of the day.
David Roberts
That was 2017. The summer of 2017.
Justin Balik
Yeah, exactly. So, subways were collapsing all over the place. It became a real substantive and political problem. Rightly. The advocates worked to then pin that on the governor. There was, at the time, I think, less understanding than there is today. As I said before, MTA, being a creature of the state, and a group called the Riders Alliance in particular, got this viral hashtag going every time there was a subway failure. #CuomosMTA was the hashtag every time. Simple but brilliant and effective. And then there became kind of a race between the city and the state over what the solutions were going to be.
Mayor DeBlasio proposed a millionaire's tax, and then Mayor DeBlasio and Governor Cuomo were known for their lack of ability to agree on pretty much anything. And so the governor said, "I'll see your millionaire's tax and I'll raise you a congestion pricing." I think it was the day after the millionaire's tax was proposed by the mayor, Cuomo started saying to reporters, congestion pricing is "an idea whose time has come." And then over the next couple of years, lots of commissions, consultant reports. Kathy Wylde, the head of the Partnership for New York City, one of the leading business associations, gets very involved.
And then that gets you to the legislative push in 2019, where the governor and a number of legislative champions, including Senator Krueger here, really were responsible for getting it over the finish line. And I think one of the things that I would just say about the legislative process and going back several decades is really, this has become, in New York, more than just a pet cause of transit advocates and the climate movement, although it is very important to those constituencies. But one of the things that's really significant about New York is that the business community, real estate interests, and the construction industry, there's been a really broad spectrum of support for this and as broad of a coalition, frankly, as anything I've seen in my career, both in New York and elsewhere. And that is the reason it got over the finish line.
And part of the reason that there's been such a big backlash to the governor's pause — which I'm sure we'll get to — and the recent announcement is because of this broad coalition that has been working on this for decades and decades and kind of got this to, you know, less than the 1 yard line before the governor did what she did.
David Roberts
Yeah, so then a bill passed in 2019 establishing congestion pricing. Listeners will be aware that it is now 2024, five years after that. So, what went on? Why was this only now going into effect five years after the law passed?
Justin Balik
So, a few things. One is the law was outlined, a broad process for how this was going to be implemented. There was, you know, in government, it is the nature of the beast that things take a while to implement. Everybody remembers the Affordable Care Act, and it took four years to stand up from 2010 to 2014 fully at the federal level. So, it's complicated. State policy is no different. And so, the tolling infrastructure has to be built out. The legislation, by design, did not set the specific rates. And so, a whole bunch of policy decisions around tolling rates and exemptions had to be set.
And there were commissions called for in the legislation that had to meet and make recommendations. So, there was a lot of the actual program design that was left to the MTA and, by extension, the governor's team to actually figure out once the legislation passed. I think the biggest reason, though, that it took such a long time to get from where we were in 2019 to where we are today is congestion pricing also had to go through the NEPA process. And so, the environmental assessment, which is not as rigorous, which is not as onerous, I should say, as an environmental impact statement, when you really feel like there's going to be some kind of negative impacts on the environment, potentially.
Obviously, that's not the case here, and it's kind of a no-brainer that this is going to be good for the environment. But nevertheless, this had to go through the federal NEPA process, and the Trump folks were in charge of the US DOT and Federal Highway Administration back in 2019 when we first passed this. One of the more surreal things I've been a part of, we had a train full of De Blasio appointees and Cuomo appointees tracking down to the Trump run US DOT at the time to talk to folks about their role in the process. Unsurprisingly, the Trump folks were not interested in being helpful and getting that process underway. And so —
David Roberts
Did they understand, I just have to know, like, this is, you know, this is not that important, but I just have to know, did they understand the policy? Did you get a sense that they, like, had assessed it on its merits and rejected it, or was this just like, "This is something a blue city wants, ergo, we hate it"?
Justin Balik
It was definitely skewed more towards the latter, I will say. If you'll remember at the time, the big transportation drama of the day was Trump holding Gateway hostage and refusing to help New York move forward with funding for the Gateway project. And so, literally, the first question they asked us in these meetings was, "Can we just have the congestion pricing revenue pay for Gateway instead? And therefore, the federal government doesn't have to pay for Gateway." So, were there a few appointees, part of those rounds of discussions, that understood what we were trying to do and understood the policy?
Sure. But it was pretty evident from the first, I think, of three or four conversations that we had that this was going to go nowhere fast. And the MTA did all that they could behind the scenes, traffic modeling, a whole bunch of other studies to get ready, drafting documents for the day when President Biden took over the reins. And then, no surprise, had a very smart group of transportation officials that moved on this pretty quickly. So, MTA does all it can behind the scenes, but it's fair to say that the Trump folks sat on this largely despite entertaining a few rounds of pretty pointless conversations.
David Roberts
All right, so Biden comes in, NEPA gets done. Everything is prepared. It's ready to go into effect on June 30. And then Hochul comes in and says, "Actually, never mind." So, Senator Krueger, I have for you what it seems like ought to be a simple question, but turns out is not a simple question, which is, was this legal for her to do this? So I've read some of your writing on this, and it appears that there are at least three laws that she may or may not be violating here. Can you talk through a little bit the legal questions?
Senator Liz Krueger
I can do my best, but understand, I am not a lawyer, so I often refer people with those kinds of questions to actual lawyers. Now, the fact is, since the governor announced this, suddenly and shockingly, quite a few lawyers have come forward to say, "We think we're suing," on a number of different grounds that I hadn't even thought about. And even today, as we're chatting, it was just announced that the New York City Controller, Brad Lander, has filed a request under the open records laws for the governor to come forward with what analysis she used to make the determination to do this, because no one knows.
David Roberts
Let's hope she recorded that diner conversation. Because —
Senator Liz Krueger
Oh, yes, that was quite entertaining. So, I believe that, first of all, I believe this was a terrible decision at a terrible time. It's not just the loss of money to the MTA capital plan, which is crucial, and I'd be happy to explain that. It's not just putting a halt to the desperately needed Congestion Reduction Plan for my parts of Manhattan and other parts of Manhattan. I don't know where you live, but the average speed of traffic in midtown Manhattan is four and a half miles per hour. Okay. It's more congestion than has ever been recorded in history before.
We desperately need to address congestion. We also desperately need to address the environmental damage that is being done to all of us who have to breathe this air with so much oil and gas congestion caused by all of these vehicles. And that is actually one of the legal issues that all the deals, language, and requirements that we went through with the federal government were really about addressing environmental damage, not really the tolling to raise money for the MTA. But in fact, another legal challenge, I believe, is that we passed this into law in 2019, as was just explained in detail.
It's not clear that the governor has the right to individually and singularly say, "Yeah, we're not doing that. Never mind."
David Roberts
Yeah, I know the law says, just to be clear here, the law — t he phrase in the law is "MTA shall establish a congestion pricing system," and like so, "shall establish" is not ambiguous. And this is, like, the first thing that occurred to me. If the law says it shall establish, how can an executive just say "no" like that? To me, that just seems straightforwardly to run afoul of separation of powers.
Senator Liz Krueger
And also, just note, she's been the governor now for several years. Up until two weeks ago, she was a cheerleader for this law, for getting us going, for hitting that June 30 date and starting the tolling. She was party to a series of lawsuits against the state and the MTA, trying to stop us, even though I believe that what we passed into law was totally legal and also important. And so, she was, you know, on the other side, so to speak, of lawsuits, trying to stop it. And now she's the one who's decided we're not going forward.
So, that's a little confusing. And I think it legally also highlights the difference between what you can and cannot do. We've gone through, you know, endless process issues with the federal government, the state government, the city government, sign-offs by all levels of government. We were at the starting gate. We spent $600 million, I believe, on putting the equipment in that is there, ready to be turned on to start collecting money. And we are also now, I believe, in violation of agreements we had made that were dependent on the congestion pricing money. For example, a major lawsuit that the state settled was with the disability advocacy community that we were obligated legally to expand subway sites that were accessible to people who needed elevators and escalators.
One of the things that the MTA has made clear since the governor said she's not going to go forward with congestion pricing is that they won't have the capital money to move forward with the agreement that was signed to move towards at least 75% of our subway exits and entrances being disability accessible. We move forward with the expansion of the Second Avenue subway north from 96th Street, a project, by the way, you talked about the number of years we started the Second Avenue subway in 1929, but who's counting? All right, we got 96th to 63rd done during the years I have been a senator, and I'm very glad we did.
The minute it opened, it was the busiest subway in the country. But we need to go north and south. We made a deal with the federal government to match funding for our efforts. I am told that if we stop the contracts to go forward with the Second Avenue subway, we lose all that federal matching money. So the costs are going to be so much more for trying to do anything. I have a meeting set up with the company that makes subway cars in upstate New York — we're their only client. They say if we're not doing the contracts for the new subway cars, they go out of business.
So, I don't know whether legally that's an issue, but it's a horrendous situation. Same story for moving to the less polluting, energy-efficient buses. Those contracts also, I'm told, will be put on hold. There's just so much damage being done. And again, we know this can work and will work because it's worked in other parts of the world. In fact, every day I'm reading articles about how other cities in this country were waiting to see what happened when we turned ours on because they were interested in going down the same road, specifically San Francisco and Boston.
David Roberts
Can you talk a little bit about the law? There was a law passed, I think it was 2010. But correct me if I'm wrong. They basically established that the MTA is supposed to make independent decisions, basically. It's not supposed to be a political extension of the governor. Can you talk about what that law says?
Senator Liz Krueger
That was actually a 2009 law, and it was specific to the powers and responsibility of board members of public authorities. The MTA is a New York state public authority. Its board members are almost all appointed by the governor, or the New York City mayor, or the counties surrounding New York City, five counties that are also included. So, they're all appointed by executives. But this law makes clear: You have an independent fiduciary responsibility to base your votes and decisions on what you know is needed and what is fiduciarily possible. So, we believe that just because she appointed these board members, they are not required to follow her instructions about any votes they take.
And in fact, just the opposite. If her instructions are not in the fiduciary right direction for the MTA as an entity or will do damage to the goals of the MTA. What's not clear is whether there is actually a vote to be taken right now on congestion pricing. Because we already saw the board vote approval of congestion pricing, and the governor is saying she doesn't need the board not to turn the tolling on, she just needs not to sign a specific piece of paper with the federal government. I don't know if that's true. That's another legal question that people are looking into.
But for now, the MTA board, I think, believes they won't be asked to take a vote to end congestion pricing. But you know what they have to take a vote on? Whether they have the money to go forward with all the contracts and all the projects that this money was supposed to be used to bond to pay for. And I believe that they have to determine, "No, we don't have the money for the bonds and to pay them back. And so we can't go forward with these legal obligations and contracts that had been carefully worked out over years and years and years."
David Roberts
And then finally, there's also — I wrote the acronym here, though I'm not going to venture to try to recreate the actual name, the CLCPA.
Senator Liz Krueger
Yes.
David Roberts
Basically, New York's climate law, which says public agencies have to consider climate change in their actions, basically. Like, you can't purposefully do something that makes climate change worse.
Senator Liz Krueger
Exactly. And I thank you for mentioning that, because I did mention that so many of the agreements we got to with the federal government for this were all around the environmental concerns and issues. And yes, we believe that it also would violate the CLCPA for the MTA to reverse its plan and its congestion pricing plan. Because congestion pricing was intended to reduce the number of cars entering Manhattan every day. I believe it was the MTA's 100,000 fewer cars would enter Manhattan with congestion pricing, which will have a significant impact on the environmental impact on the city of New York and specifically areas of Manhattan.
Drivers stuck in traffic, also creating more unnecessary air quality pollution, is projected to be $20 billion of economic activity lost every year because of the amount of traffic congestion going through the "zone" in Manhattan. So, we think there are many environmental legal issues that are raised by this. And if you just check pretty much any environmental group you've ever heard of locally or nationally, they're all consistently speaking out that this is one of the most disturbing switches in policy, like grabbing defeat from the jaws of victory —
David Roberts
Yeah.
Senator Liz Krueger
that they've been dealing with for decades. So everyone is upset. Even people in my district who always said they didn't like congestion pricing are more mad about this storyline than the fact that, yeah, congestion pricing was happening.
David Roberts
Yeah, and let me just review what we went through here. So there are three. There's the law that establishes congestion pricing, says "MTA shall do this," which seems to make it illegal for MTA not to do it. There's the law about MTA independence. So it seems straightforwardly like they're doing something against the financial interests of MTA at the bidding of the governor, which is, again, straightforwardly illegal on that law. And then there's New York climate change law, which says public agencies, you know, have to act to reduce emissions, can't purposefully do something that they know is going to raise emissions.
And reversing this would amount to raising emissions. So, that's at least three laws that are colorably violated by this. I am just curious, and Justin, maybe you have some insight on this too, is just like, who, it seems like a, just a miasma of illegality, but, like, who in particular has standing to sue here? Like, if there's a legal challenge to this whole, is it? And who adjudicates it?
Justin Balik
Yeah, and so people are sorting through all that right now. I think it's hard to overstate how much whiplash there's been in the last couple of weeks on this and how many folks are still reeling from this and just how much consensus there was around this. I think one of the things that it's hard to overstate is just, again, you're talking about dozens and dozens of public meetings in the 2019 to 2024 time period that you referenced earlier. You're talking about multiple advisory bodies, this thing called the Traffic Mobility Review Board that the governor appointed people to that actually advised on the toll rates.
You're talking about the MTA board, which, as Senator Krueger pointed out, most folks, most of the appointees are by the governor.
David Roberts
But Justin, did they check with diner owners at any point? Did the diner owners get a chance to weigh in?
Justin Balik
You know, I think there were thousands and thousands of public comments and open meetings. So, lots of people had the opportunity to weigh in. So, on the litigation, just quickly, I think Senator Krueger rightly referenced the disability advocacy community earlier. That's certainly a conversation that's happening around very specific ADA commitments that were made. And New York has this really, really old subway infrastructure and a dearth of accessible stations. And it's really a huge problem. And there were commitments to right a lot of those wrongs based on the congestion pricing revenue. So, I think there's a bunch of potential areas and avenues for folks to have standing.
I know that's one of the particular areas that people are taking a close look at. And then I think the real focal point, and it sounds really stupid and in the weeds, and that's because it is. But there is this final piece of paper that Senator Krueger referenced earlier, which is an agreement — so the environmental review is all done. We have a finding of no significant environmental impact, "The Fonz", as everyone lovingly calls it. The very last thing that needs to happen. And this is why the MTA is, if you read between the lines of the recent comments, the simple reason that they are not going ahead anyway is because, you know, a pause is a verbal directive as opposed to, you know, following the law as we've all talked about, the reason that they are not going ahead at the moment and they have to vote to potentially gut the capital plan in the next few weeks if there is not a resolution is the, there's this thing called the Value Pilot Pricing Program, and that is simply a final agreement that was always taken as a formality where the USDOT, Federal Highway Administration, the city of New York and the State Department of Transportation all have to sign something that says basically that this is how the total revenue is going to be allocated.
If you're going to toll federally, on roads that get federal money, and then use the money for mass transit instead of the roadway, it's basically a pilot program that lets you use the revenue for all the things that congestion pricing revenue is going to be used for. And the state DOT commissioner or her designee has to be a signatory to that. So, that is literally what is impeding the MTA.
David Roberts
So, that's what the governor's hanging all of this on? That's what she's hanging her legal authority on, basically, is this final pro forma signature from the state DOT. That's what she's preventing from happening. And I just wonder, like, you know, what if the MTA just said, "You and what army?" You know, like, we're going for it, we're doing it anyway, what would happen? Is that even, have they pondered that possibility?
Senator Liz Krueger
In fairness, I think you would have to ask the MTA that. I mean, technically, I believe that the head of the MTA does serve at the pleasure of the governor. I know that we confirmed him through the Senate confirmation process, but in general, when a governor nominates you to a job and you take it, when they say, "I'm done with you now," I think you leave. To Janno Lieber's credit as the head of the MTA, I think he has been very direct about the negative impact and consequences to the MTA of this action, saying something else needs to be done without being publicly critical of the governor. A fine line, I think, to walk, but I know that internally a huge number of the most important people at the MTA are just beside themselves.
David Roberts
Well, I mean, she appointed them to the MTA because they were congestion pricing supporters. I mean, that's why, you know, like, like she used to be like.
Justin Balik
Until about three weeks ago.
David Roberts
Right. I mean, of course, they're understandably upset. So, Senator Krueger, let's talk about filling this budget hole in the event — I mean, it seems like even if there's legal action, that's just going to drag out for years and a lot of the damage, it seems like, will be done regardless, even if there are lawsuits. So tell us first, because I just find this a very amusing chapter of this story, tell us first what the governor proposed initially as a way to fill this $1 billion a year budget gap. And sort of like, what's happened to those proposals.
Senator Liz Krueger
So, her first proposal upon announcing that she was doing this was to go back to a specific tax called the Commuter Transportation Mobility Tax, which is a tax on the businesses in the twelve MTA counties, the five counties of New York City, the two counties of Long Island, and then Westchester and going north of the Hudson Valley. So, they're defined as the MTA region. The MTA provides the public transportation services. So, she said, "We'll just do another increase on this tax, except not the twelve counties, just the five counties that are in New York City."
David Roberts
I mean, I know of all the things that have happened in this, this is the one that to me makes it most clear that there was no plan here. Like, this proposal is like, instead of taxing people coming from outside New York City, let's just tax everybody in New York City. Who wants that?
Senator Liz Krueger
Certainly, not the workers of New York City, who, by the way, this really is a tax on workers because it just gets rolled over to them. And we already increased this tax a year ago to help with the operating shortage that the MTA was facing. So, it would be going, "Hi. Remember, we just did this to you. Now we're going to do it again. Except not all of you. Now we won't have people from New Jersey or upstate or Connecticut or Long Island pay any of these costs, even though they're driving into the city. We're just going to hit you."
The residents of New York City, who already, between other taxes and the fare, provide the vast majority of revenue for the MTA, expect the entire region, multiple states, to need the MTA for its future and its survival. So, we were both offended and were, "I don't think so," frankly.
David Roberts
I mean, did she talk to any diner owners about that? Because it doesn't seem like they would want this either.
Senator Liz Krueger
Well, you keep referencing diner owners, but I don't know if your listeners actually know why that's a funny story.
David Roberts
It's a quasi-inside joke. This was her explanation for why she made this decision. She talked to a diner owner. Not just, I mean, the amusing part, not just a diner owner, the owner of a diner in a train station, in a transit hub, like the one diner that people would be least likely to drive to from outside of New York City. And they're like, this is what changed your mind, talking to people in diners, which is just like, to me, the lowest form of political cliche on the friggin' planet. But now, like, now, instead of forcing the diner owners to take the subway, she's going to tax them all, which just really doesn't seem like it would be super hot with diner owners either.
Justin Balik
You know, all the talk around the politics of suburbs versus city and you know who's driving in and who's not. It's just worth remembering that in the 2019 law, it is written that 20% of the congestion pricing revenues are meant to be invested in capital improvements to the Metro North and the Long Island Railroad. So, you are talking about direct benefits for suburban commuters into the city. And so, there are direct benefits, and then you get to the income levels of the folks commuting in various ways.
David Roberts
Yeah, could you remind us? I should have gotten to this earlier, actually, but could you remind us, just like, the numbers, like, what percentage of people working in this area of New York drive there from the suburbs? And what do we know about who those people are?
Justin Balik
I don't have the percentage, but it is very low. I think the stat is something like, there's 143,000 drivers commuting into the zone, which sounds high until you remember the, you know, millions of trips that you're taking within New York every single day, and the scale of what New York City is.
Senator Liz Krueger
Yeah, Justin, I think the data is there are 1.3 million people who come into the zone by public transit every day, and 143,000 people drive. So, 85% of the commuters already use mass transit. And the average income of those who do drive into the congestion zone is $108,000 a year, significantly above the definition of poverty. Because, of course, even without congestion pricing, you're going to have to pay $15 to cross the tunnel or the bridge. You're going to pay in the zone. You could be paying $40 for a workday parking spot, which is why also you really take a car into a diner next to the train station to pay $15 to go across the bridge, an hour in traffic to get there, and then $40 to park for the day. That's really bad economics on a personal level.
David Roberts
Extremely expensive diner. So, just, I mean, just to make the point, like I said, I should have made this earlier, but, like, the vast majority of people coming to this area come on public transit and will benefit from improvements to public transit. So, the number of people penalized by this, if you view it as a penalty, is tiny, tiny compared to the number of people who will benefit. Even if you're just looking at suburban commuters, even more of them would benefit from public transit improvement than would be hurt by this.
Justin Balik
And from nearly one in five cars off the road. So, if you do have to buckle up and pay the toll, whatever it is at the time you choose to drive in, the final stat from the environmental review that the MTA and the feds conducted is, it's about a 17% reduction in traffic, which sounds pretty good if you do have to—
David Roberts
So, even the drivers benefit.
Justin Balik
Yeah, exactly.
Senator Liz Krueger
And you know what the governor did say, and I agree with her, but there's congestion in other places, not just in the zone, in part of Manhattan. And my response is, "Of course," and you know what? The solution to that is more and better public transportation, which will require money to be invested. So, yes, I want less congestion everywhere also. But the answer is what we're actually now defunding. So that doesn't work.
David Roberts
Right. So, okay. So, the legislature took a look at this proposal, "Hey, let's raise payroll taxes" and raise taxes on every New Yorker, on the New Yorkers who are already suffering congestion. And they said, "No, thank you." So then, the governor had a second proposal, which somehow managed to come off as even more farcical than the first proposal. What can you tell us about that one?
Senator Liz Krueger
Well, the second part, it was never actually a bill. It was three sentences that people would read to you but wouldn't really let you get a copy of. But it sort of was an IOU, like, "We'll promise the MTA a billion more per year somehow, some way for the next 25 years, so that they can bond the 15 billion they need now." Well, endless problems with that, the least of which is Wall Street probably doesn't lend you $15 billion on a piece of paper that says IOU. I suspect they want evidence of your future ability to keep making the payments.
That's how we do every other bonding deal in New York State. So it was very uncomfortable. In fact, the Wall Street crowd already is making noises about lowering the MTA's bond rating because of all of this chaos, because they bond every day for different things. And if their bond rating goes down, our cost of having to borrow money goes up, making the story even worse.
David Roberts
Right.
Senator Liz Krueger
So, we didn't really think we were comfortable with some strange IOU that nobody could convince us would work anyway. Yes, of course, there are different ways to raise money, but I want to remind everyone we have the biggest and most important public transit system in the world, and we have a lot of infrastructure repair work that needs to be done, plus 21st-century expansion. We're in a five-year capital plan. We're in the last year of the capital plan. This 15 billion was for things that are already in process. We're already scheduled to use the money from the five-year plan we're ending.
We're walking next year into a new five-year capital plan, which I believe will be at minimum $50 billion w e have to figure out how we're going to raise from different sources. This would say to us, "Oh, the $50 billion we're going to have to deal with. And by the way, you're going to have to figure out another $15 billion also on top of that." It's just bad planning or no planning.
David Roberts
And her logic, insofar as there was any, was like, "Well, I talked to some people at diners and they don't like paying more." You've got to spend the money on MTA somehow. And if you spend money, somebody's paying that money. And whoever that is, is probably not going to like paying the money. But like, we live in a society, you know, like somebody's got to pay.
Senator Liz Krueger
I explain it to my voters and constituents, whether they vote for me or not. No one likes taxes, I get it. But governments need tax revenue and other sources of revenue to do the things you want them to do and you need them to do in order to not live in a nightmare chaos system of lack of functionality. Democracy requires public participation and it requires tax revenue. And you're absolutely right. You can say, "I don't like this," but guess what? We're not going to get a mass transit system we all need for our future unless we have the money to invest in it.
Justin Balik
And I think it's worth just adding on to that, and the senator is absolutely right. We already had this debate. So, everybody, to your point about how we got here in 2017, 2018, 2019. We had commissions, we had stakeholder groups. We had a whole legislative debate. Deals were cut around outer borough transit investments. Tweaks were made to the statute, and then we had this whole federal review and public comment process. So, the congestion pricing was not just something that was passed by the legislature on a whim. It was the consensus about how we are going to reduce traffic in the most congested part of New York and one of the most congested parts of the country, and invest in our mass transit system and tackle climate change all at the same time.
So, to your point about "We have to do this somehow," everybody looked at all the somehows already that's been done and we did that and everybody picked this. And so, I think the governor, I don't want to speak for legislators, but certainly in the stakeholder community, the governor's burned a lot of bridges because everybody thought that this was a done deal and that we were, you know, we had the debate and we had all the negotiations and we were ready to press the button and go for it.
David Roberts
Well, let's talk a little bit about the politics because, I guess, I mean, I guess what everybody more or less agrees, although there's no sort of explicit confirmation, is that the governor sort of panicked, politically speaking. Somebody got her in an office, showed her some polls that say, "people don't like this," and she freaked out about losing suburban House seats and losing a House majority and did this in the face of her panic. So let's talk about it just as a political decision. Is there any reason to believe that this will cause any suburban voters who were not going to vote for Democrats to now vote for Democrats?
Is there any reason to believe this will actually save seats the way she did this?
Senator Liz Krueger
I don't believe so. And frankly, we tried this, and I'm a Democrat, we tried this in 1999. The Democrats in the legislature and the governor decided if we end the commuter tax, that will make Democrats in the suburbs more popular and will win more seats.
David Roberts
And this was just a tax on people. I mean, what was the commuter —
Senator Liz Krueger
Was a tax on people who lived outside of New York City but earned their wages in New York City. So, tax on you as a commuter. No one was complaining about it. I don't even know if most people knew it existed. And yet, in order to win them over, to win more Democratic seats, we did away with it. We lost a seat that time. We did not gain any seats. And between 1999 and now, we ended up losing $19 billion of revenue for infrastructure and transit because we never got it back once we gave it up.
That's also the danger of even pretending we're pausing congestion pricing. Once you get so close and you pull the rug out from underneath, you don't get it back, which is terrifying to me. So, no, I do not —
David Roberts
$19 billion in exchange for no votes.
Senator Liz Krueger
One less Democratic elector. And frankly, if I'm a Republican, I'm already writing my TV commercial.
David Roberts
Oh, my God. Right.
Senator Liz Krueger
"I ended congestion pricing. Vote for me." So, I do not see any storyline where this actually helps Democrats running for seats in Congress.
David Roberts
Yeah, it's like, "Democrats admit Democratic policy is bad." You know, "Vote for Democrats."
Senator Liz Krueger
Yeah, it's just I, again, I don't know who was in the room with her. I don't know how any of that came about or what the motivation was, but I just fundamentally believe, on the political angle, this was destined not to work.
David Roberts
Justin, anything to add on the politics,?
Justin Balik
Just broadly, I think New York and the United States are certainly not the international community, but it's worth taking a look at how the politics of this have played out in other cities.
David Roberts
Yeah, yeah. I was gonna ask you about that specifically. Like, we do have some — I mean, we know, like, this is not a brand new thing.
Justin Balik
Yeah, and so you've seen in London, I think, is an illustrative example. Right before this turned on, the public support dipped, and it was a question of, okay, are people on board with this or not? But then people pressed on, and it turned on. And lo and behold, the world didn't end. And people saw that getting around was easier, and there was a whole bunch of investments that came about as a result from it. And you saw the popularity rebound. I think, in general, transportation policy and investments in New York is kind of the ultimate on-the-ground case study of Nancy Pelosi's famous "We have to pass the bill for you to find out what's in it."
David Roberts
Urban policy in general. Urbanism in general. Like, nobody thinks they want it, and then everybody loves it after they get it.
Justin Balik
Yeah, there's an amazing Daily Show segment right before Citi Bike was going live in New York about all the folks walking around the streets talking about how the docking stations were going to desecrate their neighborhoods. It's one of my favorite Daily Show segments ever. And lo and behold, Citi Bike has proven really successful. There's a busway on 14th Street that people were suing over and trying to stop from taking effect, and now is going amazingly well. So, I think there is a — because we've been so auto-centric in this country, there is almost, people have to see the thing in order to imagine it.
And again, we were really close to that moment. So, all the things that Senator Krueger raised about the process are really important, but it's also, you owe your constituents, if you, after you've taken them through this whole protracted process, a chance to actually see this thing in action.
David Roberts
Yeah, I mean, that's the thing is, like, if it had just gone into effect in June, as we say, it only affects 3, whatever, 3% of commuters, some tiny sliver, relatively tiny sliver of people. Everyone else would have just forgotten about it. You know what I mean? Like, by the time November elections rolled around, it would have been forgotten. And now it's going to be front and center. Like, it seems like she made, insofar as the politics of it are bad, she's just made them immeasurably worse. Like, you get all the conflict now with none of the congestion pricing.
Senator Liz Krueger
Exactly.
David Roberts
Maddening. One other thing, one other maddening thing about Senator Krueger, which you've discussed before too, is that she did this in the middle of the very end, the final few weeks of the legislative session.
Senator Liz Krueger
The final two days of the legislative session.
David Roberts
And they were like, you know, as is typical, I think, the final two days are sort of a frenzy of activity. There's all these final things that need to get done, all these final bills that need to pass. And so, this bombshell pulled everyone's attention away from that stuff. And so, some consequential bills didn't pass, including the New York Heat Act, which is, uh. Tell us. Tell us what the New York Heat Act was and what happened to it.
Senator Liz Krueger
Thank you. Well, that's also a bill I'm the lead sponsor on. We had passed it in the Senate, but there were issues that the assembly had. And remember, there are two houses that have to pass a bill, and then the governor has to sign it. So there were concerns by the assembly, and I'm used to different houses seeing things different ways. So, I was totally open to negotiating changes with the assembly and the governor. We were having what we call three-way negotiating sessions to get to the closing bill and pass this amended bill in both houses with confidence that it could be signed by the governor.
And then, the minute congestion pricing got thrown, I don't know, off a cliff, we couldn't get anybody in the governor's office to even talk about this bill or other bills because they were busy dealing with the congestion pricing crisis, which they created. And so, we never got to the finish line on New York Heat, which is a critically important bill to change the state law so that we don't have to continue by law to build gas and oil pipes into new buildings, even though we've already changed the law that says, "You can't build new buildings and use gas or oil. You need to use electricity, that is from some less polluting source."
David Roberts
Right. So, right now, the law is you have to build electric buildings, but then you also, by law, have to continue building the gas network.
Senator Liz Krueger
Exactly. Which makes no sense at all. But we have to change the law. And there's lots and lots of other details in it. I believe the correct details, the environmental community defines this as one of the top priorities for them in the New York State Legislature. And really, I was so sure, I think everyone was so sure we were getting this across the finish line after multiple years of not. And I talked to my other colleagues who were also killing themselves for important bills, same storyline. Nothing could get done because everything focused on this crisis of not moving forward with the congestion pricing, not having money for the MTA capital plan, not meeting our obligations under law and commitments and contracts.
So, none of these things got done. And it's so frustrating.
David Roberts
Yeah, I mean, New York Heat was such a big deal for the environmental community. So important. I mean, independently of all this.
Senator Liz Krueger
Exactly.
David Roberts
I actually saw an analysis the day after she, Hochul, did this, of someone saying, "Well, having completely screwed the environmental community on this, she will undoubtedly try to compensate by ensuring that the New York Heat Act passes." But no.
Senator Liz Krueger
"Yeah, no, I mean, even if that was someone's plan, you can't do that, you know, in 72 hours. This is just the, you know, look, we did the budget only a month ago because we were late on the budget — well, a month and a half ago now — this never came up during budget discussions. That would have been the appropriate time to see, say, we want to talk about alternative funding streams for the MTA capital plan. But no, no one said that. And then she went off to visit the Pope and Ireland, proudly talking about the environmental leadership coming out of her office and the state of New York."
And then she came back and pulled the rug out from under everyone.
David Roberts
Justin, you know, having witnessed this now, there are lots of other climate policies in New York, in various states of either consideration or passage or implementation, including a cap and invest program, which is going to involve some people paying more, as virtually any government policy does. Has this shaken your or the environmental community's trust in Hochul to implement and stand behind all the other climate policies that are flying around right now?
Justin Balik
In a word, yes. To that point, just this morning, and a few days ago for your listeners, by the time they're listening to this, the executives of our organization, Evergreen Action, Environmental Defense Fund, Sierra Club, Earth Justice, and the League of Conservation Voters, all the national heads of those organizations, wrote an open letter to the governor this morning, imploring her to reconsider and basically saying that we've been on side for all of New York's nation-leading climate goals, and our fear is both congestion pricing doesn't go forward and that's important on the merits, but also that this puts the whole project at risk in New York. We have the whole country, from a climate policy perspective, a climate leadership perspective, all eyes are typically on New York, and it's really critical that people not get cold feet when you're about to pull the trigger on something that you've committed to and you've been in the trenches with lots and lots of stakeholders on. I will also say there's a broader point.
So, to be clear, the blame for this, the decision maker, all the accountability should be aimed squarely at the governor. I will say, as an advocacy community, we need to do a better job of keeping our eye on the ball during implementation, too, and not taking victory for granted when we pass something through the legislature.
David Roberts
Well, I mean, good grief, if there's any victory you could have taken for granted, it was passed. It passed all these reviews. It passed all these legislative bodies. I mean, it had passed anything. I mean, good God, if you can't take a victory for granted two, you know, like weeks before it's supposed to go into implementation, truly, you can't take anything for granted.
Justin Balik
Yes, trust no one. But, yeah, I think the governor really stepped in. Here is the bottom line. But, and that's what the letter from the climate executives to the governor pointed out, is that this morning, not only is congestion pricing a really important and nation-leading policy in its own right, but we need New York to retain its leadership mantle. And you're putting that at risk and putting that into doubt with this whole decision. Both the substance and then the way to your point, the pulling out the rug from under everyone at the last minute, not just the substance, but the way it was done.
If you had political concerns or substantive concerns, there were ample opportunities to talk to people about this month and months, decades of opportunities to talk about tweaks or, you know, anything else. And instead, the governor was there — you know, I remember she debated Whoopi Goldberg on The View and Whoopi Goldberg was going after congestion pricing. And the governor said, "Here's why you're wrong, and here's why it's essential for the region." I mean, there's a million —
David Roberts
I mean she specifically said in speeches, "It's important to do the right thing, even if it's not popular sometimes." Like, literally about congestion pricing. She herself has said that, it's wild.
Senator Liz Krueger
Yes.
David Roberts
So, I mean, best case scenario here is just, she comes out in a couple of days and says, "You know, I paused. I heard from a lot of people, clearly, this is the right thing. Never mind, let's do this." Is there any chance she does that? I mean, clearly no one can predict what she's going to do, but is there any hint that that might happen, that she might just decide I stepped in it and I'm just going to step right back out?
Senator Liz Krueger
I have stated many times now, including, I believe, to her directly, that I personally make at least three major mistakes every day of my life. And I always tell my staff, "No penalty for making the mistake. You just have to fix it when you realize it." So, I think it's like, oops, let's do a do-over. Let's move forward as everyone imagined we would be doing for all these years, including you, Madam Governor. And let's just put this behind us. That's the best answer.
David Roberts
Yeah. Seems unlikely, but okay. So, final question, and I sort of hate to end this on a downer, although I guess, I guess all of it is. I guess all of it is a bit of a downer. But, Senator Krueger, I mean, aside from this specific policy, there's this angst, I think, on the left these days, looking at states that are run by Democrats that just can't seem to get their act together. They can't seem to build the things they need. Everything they do build costs way more than it ought to. Like, it just seems like blue state governance is not as inspiring as it ought to be.
And even in the context of that, New York Democrats in particular come in for a lot of grief from the left, just like, unable to get out of their own way, unable to win decisive victories in the bluest state in the universe. What do you say to people on the left who are starting to despair about the ability of their own party to govern coherently? Do you have any words of comfort for those people?
Senator Liz Krueger
Well, I don't think I'm as negative about that storyline as you are. And I feel like you need to give me another whole hour for that series —
David Roberts
An unfair last question.
Senator Liz Krueger
not just one question. You know, I look at this whole country and the state we were in at the end of the Donald Trump presidency. And I look at what we were able to do even without having the House of Congress on our side of it. Whatever anyone thinks about President Biden, I think history is going to show he has done an amazing job helping us do exactly that. Rebuild from the Trump era and the post-pandemic, invest in major infrastructure efforts for this country and every state, bring back the economy. Bring back dramatically employment.
Employment numbers are startling compared to where we were four years ago. And yes, there are big problems. We're living on a planet that's burning up with an international set of crises that you almost don't have a big enough scorecard to keep for yourself. It's really hard. Running government is really hard, I think, particularly at this point in history. And do I agree with the Democrats every day of the week? No, I'm never going to agree with anyone every day of the week. But do I think that there's a big difference between us and the party of Trump?
Hell, yes. And do I think we do, by and large, come up with better answers. And yes, everything takes longer than you want. Everything's more expensive. There's all kinds of inequity and unfairness. I walked into the state senate 23 years ago with a commitment to change the Senate and New York state government. I was in the minority for 17 of those years. But I didn't give up because I believed the Democrats could come up with better answers if we ever got into power. Because in the Senate, the Republicans had controlled the Senate for like 80 years.
We took over in 2019. I'm incredibly proud of the bills we have passed since then, the record we are building, and the responsible roles we are playing. And we're a diverse party in the New York State Senate Democrats. We have people who are DSA and the left, we have people who would be considered blue dog by federal language. And you know what? We all work together every day, pretty much get along every day. So, yes, I could list out all the problems. You could list out all the problems. Justin could list out more, but I'm actually not down on my party or what we're trying to do.
David Roberts
All right, well, fair enough. Well said. This does seem like maybe not a test you wanted, but this does seem like a test of blue state governance playing out in a national spotlight at this point. It would be tragic if one person —
Senator Liz Krueger
Yes, this was a big mistake. Everyone's watching. But I will also just point out, and everyone loves to criticize the MTA. It's almost our favorite sport in Manhattan. Our public transportation system is better than anywhere else in this country. It is financially more stable than any other public transportation in this country, and we have more people using it versus cars than any other place in this country. So even though we're talking about all these crises with public transportation, we also should remember we have a damn impressive system that we need to protect, expand on, and recognize it does cost money, and we've all got to pay towards it.
David Roberts
All right. Thank you. You too, for convening this emergency pod. I wish it were happier circumstances. I appreciate you two talking this through with us.
Senator Liz Krueger
Absolutely. Thank you for inviting me. Nice talking to you, Justin.
Justin Balik
Yeah, good to see you, Senator. Thanks for all your leadership. And David, thanks for having us on.
David Roberts
Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf. So that I can continue doing this work. Thank you so much, and I'll see you next time.
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