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Proposed postponement

On June 5, Governor Hochul, in a major reversal, announced that the implementation of congestion pricing on June 30 would be indefinitely paused. She cited concerns that implementing the program would hurt the city's economic recovery, and that the toll would especially hurt middle-class New Yorkers already burdened by high inflation. Hochul said that the State had set aside funds to address the gap in revenue from the program in preparation for the possibility that the program was delayed due to lawsuits, and insisted she remained committed to investing in public transit. News reporting indicated that she was considering proposing an increase on the MTA payroll mobility tax on New York City businesses to fill the $1 billion a year that would have been raised by congestion pricing, though the State Legislative session had just two days left. Hochul would later say that her proposed PMT change included a tax cut for smaller businesses.

The previous evening, Politico and The New York Times had reported that Hochul was considering delaying the implementation of congestion pricing. Their reporting indicated that Hochul's decision was driven not by economic concerns, but out of concern that the program would hurt Democrats in competitive races for the House of Representatives in the New York suburbs, an issue that had been raised by Hakeem Jeffries, the House minority leader. Congestion pricing was seen as a political vulnerability that could harm Democrats' efforts to take control of the House in November elections. Both Republican and Democratic political operatives saw the move as a political panic move to take the controversial issue off the table in those competitive seats.

Reporting in Crain's New York indicated that Hochul had been worried about the political implications of the implementation of the program for several months and had been looking for cover to pause the program. The Times reported that at a conference in May for climate leaders in Italy, she went away from her prepared remarks and did not explicitly tout the city's congestion pricing plan. She also reportedly voiced frustration for months that the plan was an artifact of the administration of former Governor Andrew Cuomo, and that she never believe it was correctly structured. Internal discussions about pausing congestion pricing significantly picked up right after an unrelated visit to the White House earlier in the week.

Hochul had spoken with officials at the White House, including President Joe Biden, about postponing the plan. Hochul had notified the White House, Jeffries, Mayor Adams and other politicians of her decision in the days prior to her announcement, though state lawmakers and MTA Board members were not briefed beforehand about the decision. Assembly Speaker Heastie said that the Governor had let him know in the previous two weeks that she was getting concerned with the response of voters to congestion pricing.

After Hochul's announcement, a spokesperson for Jeffries denied that he played a role in Hochul's decision, but said that he supported a temporary pause in the implementation of congestion pricing, and Mayor Eric Adams said he would stay aligned with the Governor's position. Hochul's decision was strongly condemned by environmentalists, transit advocates, and by business groups that generally supported her, including the Partnership for New York City, and the New York Building Congress. Those business groups were strongly opposed to the Governor's proposal to further increase the payroll tax in New York City.

Multiple top-level appointees by Mayor Adams spoke out against Hochul's decision, including two appointees to the MTA Board, one of whom was a deputy mayor, and the head of the Department of City Planning.

Prior to the Governor's announcement, on June 5, the MTA indefinitely postponed a set of webinars, set to begin with one at 11 AM, that were intended to inform the public about congestion pricing. In addition, attorneys for the MTA submitted court notifications in lawsuits against congestion pricing that, with the pause, they no longer expected congestion pricing to start by June 30.

A protest outside the New York City offices of Governor Hochul was organized by the Riders Alliance on June 5, and attended by groups such as the New York Building Congress, Open Plans and Transportation Alternatives.

MTA Chairman and CEO Janno Lieber was informed of the Governor's decision shortly before the news publicly broke. The decision caught MTA leadership by surprise. Streetsblog reported that Lieber initially tried to convince lawmakers to support a stopgap solution to fund the MTA with the hope that congestion pricing could be saved in the 2025 legislative session, but, pulled back after realizing the extent of the backlash to the Governor's decision. He also reportedly threatened to resign over the delay at one point. Crain's reported that Lieber might resign if congestion pricing was killed entirely instead of just delayed.

Role of the MTA Board

News outlets such as Politico and the New York Times believed that Hochul's decision would have to go a vote of the MTA Board. Crain's and other news outlets like Politico suggested that the MTA Board could overrule the Governor's order. State Senator Liz Krueger said that Hochul's decision was likely illegal and that if Governor Hochul did not change her mind, the Board should vote against her.

It was unclear whether it was legal for Hochul to defer congestion pricing unilaterally. A lawyer from Columbia University's Sabin Center for Climate Change Law said that her decision could be subject through a legal challenge under Article 78 of the state Civil Practice Law, which requires government officials to comply with their legal obligations under state law. That expert also noted that that the decision could violate the 2020 Climate Leadership and Protection Act's requirement that state agencies consider if their decision are inconsistent with the state's requirement to reduce greenhouse gas emissions by 85 percent by 2050, and the Green Amendment made to the state's constitution in 2021.

It was believed that the MTA Board could potentially override Governor Hochul's order since, according to the Public Authorities Reform Act of 2009, board members had an explicit fiduciary duty to the authority, though there was no precedent for board members going against the wishes of a governor on such an important issue.

PMT tax

The State Legislature extended their session past Thursday as they considered the Governor's announcement.

The Governor's proposed increase of the payroll tax did not go well with the State Senate.

On June 6, State Senate Finance Committee Chair Liz Krueger said she was not aware of what the $1 billion reserved to backstop congestion pricing was referring to or where it was coming from.

On June 6, Gothamist reported more details on the Governor's proposed increase in the payroll tax for New York City businesses. The proposal would have increased the tax on businesses with payroll expenses of more than $1.75 million a year from 0.6 percent of expenses to 0.825 percent of expenses. This would have been the second increase in that tax in New York City in two years. State Senate Democrats were not particularly supportive of the Governor's plan, though Assembly Democrats seemed more open to a deal. The proposal was also dead in the Assembly by the late afternoon. The Governor's team had offered to sign other policies into law in exchange for the approval of Hochul's proposed tax. Assembly Democrats were considered to be willing to consider the Governor's proposed PMT increase if it was part of a larger deal. State Senate Democrats were more openly opposed to the proposed PMT increase.

IOU

The legislature considered approving a resolution presented to them by the Governor's office that would have the state guarantee the capital borrowing of the MTA without specifying the new source of revenue, which would be determined when legislators returned to Albany in January 2025. The new proposal was described in the media as an IOU, and began to be considered on Thursday evening. By Friday, six Senate Democrats had already announced their opposition to the proposal. The MTA Board still sought clarity on whether they would have to vote on the proposal. No bill language was formally introduced, and the proposal only would have funded an initial $1 billion. At least 13 Senate Democrats were opposed to the plan.

The Governor's PMT plan was dead by midday on Thursday. The Governor's team pivoted to pushing the legislature to take $1 billion from the state's general fund to fund the capital program for the remainder of 2024, with a recurring funding stream to be identified in the following legislative session in 2025.

On June 7, it was reported that Hochul was willing to sign bills she had initially been opposed to in exchange for her efforts to get a new funding source for the MTA. The Governor's proposal was for a dry appropriation of $1 billion, which would put the full faith and credit of the state behind the bonds, to allow the MTA to sell $15 billion in bonds for its capital program.

A vote had been planned for the IOU plan on Thursday night, but was pushed off after it became clear there was inadequate support for it in the legislature.

Governor address

Hochul doubled down on her decision in a June 7 press conference, her first public appearance since her announced pause. She insisted that it would be a temporary pause in the implementation of congestion pricing. Hochul said that it was expected that people would feel more safe using the subway and that inflation would be lower, and emphasized that it was not the right time to implement the program. She described conversations with ordinary New Yorkers in three diners on Manhattan's East Side. She also stated that she did not believe a vote by the MTA Board on the pause was necessary since it would be temporary, and that MTA leadership agreed to implement it. Hochul said that New Yorkers were not ready for congestion pricing. She said she made the decision when she did to catch legislators before the end of the session. She also stated that the funding was not essential since it would have taken months for the revenue to accumulate.

VPPP approval, capital impactThe State Legislature adjourned their session on the morning of June 8 without passing legislation to provide alternative funding for the MTA. On the evening of June 7, the MTA made its first public statement since the Governor's initial announcement. The MTA's General Counsel and Chief Financial Officer, in a statement, stated that Hochul's decision put large sections of the 2020-2024 Capital Program at risk. They stated that the agency would deprioritize modernization and improvement projects, such as making stations ADA accessible, in favor of those necessary to maintain the basic operation of the system. The MTA Board would review the Capital Program to make necessary changes, and a revised capital program was expected to be presented at its June meeting. The MTA statement also said that, per federal law, congestion pricing required approval from the federal government, New York City, and New York State, and that the agency no longer had the state's consent with the Governor's announced pause, and thus could not unilaterally implement the program. The final approval of the program required the New York State and New York City departments of transportation, the MTA, and the Governor to sign the final approval of an agreement as part of the federal government's Value Pricing Pilot Program.

On June 8, ABC reported that the federal government had not yet issued its final approval for the plan, and that the MTA had not yet obtained written agreements with the New York State Department of Transportation and the New York City Department of Transportation. The Daily News editorial board put out an opinion piece on June 9 in which it said that Hochul likely instructed the State DOT not to sign the document, and that she had no right to do so since it was likely ministerial, and was just meant to certify that all steps were completed, comparing the situation to how it was illegal for a local official to refuse to grant a wedding license to a same-sex couple.

Streetsblog reported that the Governor's appointees to the MTA Board were irked by her decision to pause the program. It also reported that USDOT and FHWA did not yet issue the VPPP agreement for the three other parties to sign. Officials at the MTA had expected that the approval of the final VPPP agreement would just be a formality after the FHWA reviewed the program's final environmental review.

Impact on legislative session

The Governor's last-minute announcement regarding congestion pricing had a major impact on the other priorities of the State Legislature. With lawmakers spending time discussing the Governor's proposals for alternative funding for the MTA and the legislative session coming to an end, there was less time to discuss other legislation. Legislation that was easily expected to pass both houses, such as a measure to protect sex workers from prosecution if they report a crime were no longer expected to be passed. Bills to reduce the use of plastic packaging and end subsidies for gas companies that passed the Senate died in the Assembly.

Hochul proposed delaying the congestion toll's implementation indefinitely in early June 2024, in what MTA members described as a sudden move. Hochul cited concerns over New York City's economy, but media sources cited worries over the upcoming 2024 United States elections as the reason for the delays. The MTA had already spent $555.8 million on congestion pricing equipment and earmarked $15 billion of congestion-toll revenue for transit improvements. Congestion-pricing advocates said the lack of congestion-toll revenue would negatively affect the transit system, and they suggested that the MTA board could vote to overrule Hochul's announcement. To cover the lost revenue, Hochul proposed raising the city's payroll tax for business owners, but local business leaders opposed the proposed payroll tax increase. New York lawmakers adjourned their 2023–2024 legislative session without agreeing on an alternate source of revenue for the MTA.