Canceling Congestion Pricing Could Kill 100,000 New York Jobs

Gov. Kathy Hochul said she paused New York City’s congestion pricing program for economic reasons: The tolls could hurt the region’s recovery from the coronavirus pandemic more than they helped.

But a new analysis of the transit budget gap left in the wake of the program’s suspension this month points to possibly deeper pain: the potential loss of thousands of high-paying jobs throughout the state over the next few years.

At least 101,500 jobs could be lost in New York if the state does not find another way to fill the multibillion-dollar hole left in the Metropolitan Transportation Authority’s budget, according to a report released Wednesday by Reinvent Albany, a watchdog group.

A majority of those jobs would have been created by private companies that work with the authority to build new trains and buses and install new propulsion systems, among other things. On average, workers in these fields earn over $100,000 a year, said Rachael Fauss, a senior policy adviser with Reinvent Albany.

“The M.T.A. is an economic development engine for the entire region — not just to get people where they need to go, but to create jobs through all the infrastructure they have to maintain and repair and build,” she said.

The report, based on an analysis of M.T.A. spending and data from the Partnership for New York City, a business group, paints a picture of what might have happened if congestion pricing had been enacted, though how it would play out in reality is difficult to know. Reinvent Albany is a longtime supporter of the tolling program and has been critical of Ms. Hochul’s decision.

But observers agree that the stalling of the plan will have catastrophic effects on the authority’s budget. On Tuesday, the office of the state comptroller released a report saying there were “no good options” for the M.T.A. to manage the budget hole created by the pause on congestion pricing, and it will likely need to remove about $17 billion in projects from its current improvement plan.

The congestion pricing program, which would have charged most drivers up to $15 to enter Manhattan below 60th Street, was expected to decrease traffic, reduce pollution and raise $15 billion of the transit agency’s more than $51 billion capital needs plan.

Ms. Hochul announced the reversal just weeks before the program’s June 30 start date, citing concerns that it would create another burden for struggling New Yorkers. She said congestion pricing was deferred indefinitely without offering specifics.

Ms. Hochul has helped to find new funding for the M.T.A. in the past and she has promised to do so again.

“The governor has made clear she is committed to funding the transit investments in the M.T.A. capital plan, many of which are still years away from their scheduled start dates,” Anthony Hogrebe, a spokesman for Ms. Hochul, said in a statement.

He added that New Yorkers could “still count on the good jobs and expanded service those projects will bring,” and that suggesting otherwise was “little more than fearmongering.”

Jay Jacobs, the state Democratic Party chair, supported the pause.

“Nobody is saying that congestion pricing was necessarily bad policy,” he said. “We’re saying that the timing is bad economically.”

When asked about the potential loss of jobs because of the tolling suspension, he said the state was exploring different funding options. But the Legislature has yet to approve such a replacement.

Critics balked at the governor’s affordability argument, in part because it discounted the economic benefits of the program, including job creation.

Of the more than 100,000 jobs that could have been created by congestion pricing funding, nearly 88,000 would have been in the private sector, according to Reinvent Albany. The group relied on an analysis of the M.T.A.’s 2020-24 capital plan by the Partnership for New York City.

That is more than the entire work force of the transit authority, which employs about 70,000 people.

The absence of that economic stimulus will hurt the region more than tolls for drivers, and it complicates the governor’s rationale, Ms. Fauss said.

“If you don’t have a job, you’ll certainly have a harder time living in the New York City area,” she said.

The loss of the congestion pricing revenue could also hamper the city’s already battered construction sector.

The industry was down 23,000 jobs, or 14 percent, last month from February 2020, according to James Parrott, the director of economic and fiscal policy at the Center for New York City Affairs at the New School.

The M.T.A.’s capital plan, which includes train signal upgrades, more wheelchair accessibility and an extension of the Second Avenue subway line, would have helped bolster the construction industry at a time when commercial real estate projects have slowed, he said.

But the effects of halting congestion pricing, which would have been the single largest source of revenue for the authority’s capital plan, could be felt far beyond the city. The M.T.A. spent $35 billion to pay private companies for work across the tristate area from 2014 to 2023, according to an analysis of public records by Reinvent Albany.

The M.T.A. did not respond to questions about the report, but said an update on its capital plans would be presented to its board on Wednesday.

Alstom, a global manufacturer of rail cars and related equipment, has built about half of all the subway cars in New York City, but its plants are in small towns and cities upstate, including Hornell in the Southern Tier and Plattsburgh in the North Country.

“These are very small communities, and the transit manufacturing industry is a very big deal in these places,” said Dani Simons, a vice president of communications for the company.

M.T.A. spending from congestion pricing revenue was going to create more work over the next several years, but now those plans are unclear, she said. Alstom employs about 1,500 people in New York and works with a network of 300 vendors throughout the state.

The authority paid Alstom and its related companies over $281 million in the last decade, according to Reinvent Albany.

Ms. Simons would not say what the funding gap could mean for the company’s hiring plans, but added that the reversal had “put stress on our business, and stress on the whole chain of vendors.”

It is unclear if the State Legislature can find a suitable replacement for the funding that would have been raised by congestion pricing. Lawmakers have already rejected a plan to shore up the lost revenue with an increase on payroll taxes for businesses, and the M.T.A.’s board must establish a new capital plan for 2025 to 2029 this fall, which will require additional revenue sources.

Critics have called the governor’s decision a political tactic to help democrats win House races this year. Polling suggested that congestion pricing was unpopular among key voters.

But that calculus could backfire if thousands of jobs are put on hold, said Dr. Parrott.

“She will hear loud and clear from her constituents upstate,” he said.