Avoiding Congestion Chaos?

Congestion pricing is coming to New York. The question is whether it will come after an enlightened debate about what kind of transportation we want, and how to pay—or whether it will come amid the chaos of a fiscal emergency, with the money not going to transportation investment but to ever-higher labor costs. The Republican takeover of the state Senate on Election Day makes the latter outcome more likely—although Democrats have hardly helped push Albany in the right direction.

You don’t need a crystal ball to divine that some time in the next decade, Albany will enact a version of the congestion-pricing plan that then- Mayor Michael Bloomberg saw die in 2008. Today’s improved plan, called Move New York, would toll currently free crossings into core Manhattan and levy charges on Manhattanites who drive or ride. Of the $2.2 billion raised annually, $605 million would go to reducing too-high tolls on the Verrazano and other expensive crossings far away from Manhattan. The remaining $1.59 billion would go to transit and road investments, mostly transit.

Why is such a plan inevitable? It’s just the numbers. After 2018 the MTA has no way to balance its Operating budget—even with the money it gets from the 2009 payroll tax and from two planned fare hikes.

Why? “Health insurance, debt service, overtime and liability claims are all growing faster than revenues, and some long-term obligations are not well-funded.” That is the state comptroller talking. When he says obligations are “not well-funded,” he’s not kidding—the MTA owes $20 billion in healthcare promises.

Beyond a $262 million budget deficit in 2018, the MTA has no way to pay for $15.2 billion of the $32.1 billion in long-term investments it needs to make over the next five years.

Some fiscal experts at a recent breakfast panel suggested that the MTA should borrow to fill this gap, since interest rates are so low. But the MTA already did that—it will soon owe $39 billion, more than double the level a decade ago, and it already plans to borrow $6.2 billion for the next capital plan.

And though it is reasonable for the Citizens Budget Commission to suggest that the MTA improve its planning process, it is not reasonable for the MTA to delay expansion projects. The MTA is not planning to expand that much. Of the proposed capital plan, only $1.1 billion a year— less than 1 percent of the general city and state budgets—will go to new projects. And these “new” projects are mostly progress on the Second Avenue Subway and bringing the Long Island Rail Road to the East Side.

Yes, yes, it is a good idea to invest money wisely, but no one ever suggests that the government stop education, military, or Medicare investment until it has controlled waste, fraud and abuse.

So the MTA needs a lot of money— and what possible untapped revenue is left?

Back in 2009, the last time the MTA needed a massive bailout, the only thing the state Legislature could come up with was a new tax on downstate payrolls.

Income, sales, real estate and everything else—already tapped out.

What Albany should be doing right now is taking advantage of the lack of a crisis to figure out how to tweak the Move New York plan to suit everyone’s needs—where and how much to toll and which projects are most important.

Just as critically, Albany should be working on how to cut the MTA’s costs, both on its own payroll and its private construction contractors.

Alas, rational debate doesn’t look likely—judging by how the Republicans won the state Senate.

The GOP prevailed partly by running against the 2009 downstate payroll tax. In bidding for his majority, Senate Majority Co-Leader Dean Skelos reminded voters that “every single Democrat” voted for the “job-killing MTA payroll tax.” Like Skelos, upstarts who won new seats or incumbents who defended their old ones by running against this tax are from Long Island or the Hudson Valley. Tom Croci won in Suffolk County, for example, by campaigning against the payroll tax, saying that “our tax dollars are being sent to New York City.”

This rhetoric isn’t short-lived campaign stuff. Jack Martins won his seat four years ago—and kept it this November—by running against the payroll tax; Long Island’s Ken LaValle too defended his seat on a platform of “complete repeal.” Judy Rife of the Hudson Valley’s Times Herald-Record summed it up in writing that the payroll tax has “united the Hudson Valley and Long Island counties as never before.”

It would be one thing if the Senate Republicans were gunning for deep cuts in the MTA’s growing employee costs. But they are always quiet on the cost side. Long Island’s Lee Zeldin is the poster child of this strategy. He won his state Senate seat four years ago by railing against the payroll tax. He leveraged his opposition this time around into a seat in the U.S. Congress—without saying which $1.5 billion of annual MTA spending he’d cut.

Blame the local media, too. Community news outlets from Poughkeepsie to Sag Harbor are under the impression the payroll tax is temporary and still editorialize against it. Even a cursory look at the MTA’s budget shows that depiction to be an insane fantasy.

But lest you think it’s all the Republicans’ fault, consider that Gov. Andrew Cuomo recently told a Hudson Valley editorial board, “I’m against the tax.”

Yet he wasn’t against increasing the MTA’s costs by another $300 million a year—permanently—when he pushed the MTA to sign bad union agreements ahead of his re-election campaign. Those deals took away money the MTA could have used for $4.5 billion in capital investments.

And nearly a year into his own term, New York City Mayor Bill de Blasio does not appear to have thought deeply about transit.

So the risk is that the MTA doesn’t get congestion pricing soon-ish to pay for long-term investments, but instead has to fall back on it later to pay for yet another fiscal crisis caused by skyrocketing employee costs, coming after it has already postponed its expansion projects.

Correction: An earlier version of this piece erroneously stated that $770 million, rather than $605 million, of the money raised from Move New York's congestion pricing plan would go to reducing tolls on the Verrazano and other crossings.

Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.