Trump administration threatens NY funding over congestion pricing

Michael Nagle/Bloomberg

Transportation Secretary Sean Duffy Monday threatened to withhold federal highway funds from New York City if Gov. Kathie Hochul, a Democrat, does not halt Manhattan's congestion-pricing plan.

"The federal government sends billions to New York — but we won't foot the bill if Governor Hochul continues to implement an illegal toll to backfill the budget of New York's failing transit system," Duffy said in a statement Monday. "We are giving New York one last chance to turn back or prove their actions are not illegal."

Duffy's letter to Hochul came after the state failed to halt the tolls by the April 20 deadline given when the administration terminated the program in February. The DOT floated a fresh deadline of May 21 for the state's transportation department to either shut it down or show why it's not a violation of federal law, Duffy said.

If Hochul fails to take action, the administration will freeze authorizations for projects in Manhattan except for those deemed to be essential for safety as well as halt all National Environmental Policy Act approvals for Manhattan projects and approvals of certain Statewide Transportation Improvement Program amendments.

If the state continues to defy the orders, FHWA may expand its funding freeze to all of New York City, not just Manhattan, canceling all obligations of FHWA formula and competitive funds, among the other measures, the letter said. "The corrective measures noted above may be expanded to other geographic areas within the state of New York, if any noncompliance continues," the letter said.

"I received the letter from USDOT extending their congestion pricing threats once again," Hochul said in a statement to The Bond Buyer. "I repeat: congestion pricing is legal — and it's working. Traffic is down, business is up and the cameras are staying on."

Approved under the Biden administration, the cordon pricing program launched in January marked the first of its kind in the U.S. Proceeds from the $9 toll on most drivers entering Manhattan south of 60th Street are to back $15 billion of bonds to pay for New York Metropolitan Transportation Authority's capital projects.

The program was beset with lawsuits before Hochul abruptly halted the program last June citing concerns about cost. She resurrected the program in November with lower tolls than originally planned. Hochul and the MTA raced to begin the program before Trump's inauguration.

The Trump administration canceled the agreement authorizing the program in February, saying it violates federal law because there's no toll-free alternative, drivers already paid for the roads with federal taxes, and because the tolls raise revenue for the city's transit system as opposed to the need to reduce congestion.

"Perpetuating this type of cordon pricing program forever on federal-supported roads is unprecedented in the history of the United States and completely inconsistent with any previous pilot project," Duffy said Monday in the DOT announcement.

A lawsuit filed by MTA and the Triborough Bridge and Tunnel Authority in the U.S. District Court Southern District of New York will likely play a role in the program's final fate. The city and state transportation departments, and New York City itself, have joined the lawsuit, as have nonprofits Riders Alliance and Sierra Club.

Noting that Trump shared his plans to terminate the program with a social media post that said "Long Live the King!," the lawsuit says "Despite the Administration's 'royal' decree, its effort to summarily and unilaterally overturn the solution to the city's congestion enacted by New Yorkers' elected representatives is unlawful and invalid."

An amended complaint filed Friday says recent studies show the program is working. "Traffic in the [central business district] has decreased substantially, with approximately 5.8 million fewer vehicles entering the district in January through March 2025 than would be expected based on data for prior years, representing a 12.5% reduction overall across the first three months of the program," the suit says.