New York needs to revisit and improve congestion pricing plan

My first exposure to the idea of congestion pricing was in the 1970s when future Nobel economics laureate William Vickrey and the Urban Institute were studying cordon charging for big cities such as New York. However, the lack of a practical way of collecting cordon tolls without toll booths stymied progress for decades until the advent of all-electronic tolling.

Singapore’s somewhat authoritarian government was the first to implement cordon pricing, aided by an enormous tax on car ownership. But more recent implementation of cordon tolling in Stockholm and Central London helped revive the idea in New York City.

Unfortunately, the city’s plan was flawed from the outset. Instead of figuring out what sort of charges would most effectively reduce congestion within the cordon zone (Manhattan below 60^th Street), the program designed by the Metropolitan Transportation Authority (MTA), the transit agency, was aimed at generating $1 billion per year to be used exclusively for a $15 billion program of subway and bus system upgrades. It was to charge a flat rate between 5 am and 9 pm to drive within the city’s cordon zone, perhaps because it may have been seen as too difficult to project the revenue had variable rates been charged instead.

When the plan was finally implemented in January, the initial passenger vehicle daily rate had been reduced from $15 per day to $9 a day, with planned increases to the original $15 by 2031. Early reports in local media, such as the New York Times, emphasized data showing congestion reductions, suggesting that the system was working as planned. However, detailed data collected by Prof. Emily Oster of Brown University found that while trip times had “improved dramatically” on routes leading into Manhattan, there were “marginal decreases or no change on within-congestion zone routes.”

Then came what New York officials had feared. On Feb. 19, Department of Transportation Secretary Sean Duffy sent a letter to New York Gov. Kathy Hochul rescinding the prior approval that came under the Biden administration of the cordon charge program. Secretary Duffy argued that the basis of the original Federal Highway Administration (FHWA) approval, deeming the project eligible under its Value Pricing Pilot Program (VPPP), was made in error.

Duffy’s first point was that the limited exclusions to the still-standing federal ban on tolling Interstate highways did not include cordon pricing. He argued that FHWA had never previously approved a VPPP project that did not include a toll-free alternative. To the best of my knowledge, based on having been a subject-matter expert for FHWA during the VPPP’s early years, that is correct. Moreover, there are no Interstate highways in Manhattan below 60^th Street.

Duffy’s second point, in my view, is even stronger. “The revenue target for MTA projects artificially drives the establishment of toll rates for the highway users rather than the price needed to reduce congestion.”

His letter goes on to add that “VPPP does not authorize tolls that are calculated based on conditions separate from reducing congestion or advancing other road-related goals.”

This reasoning is why, in my December 2024 critique of the project in my monthly Surface Transportation Innovations newsletter, I referred to New York’s plan as a “transit tax” rather than congestion pricing. In that and other critiques, I suggested Stockholm’s congestion tax, as it is known in Sweden, as a better model.

Transportation consultant Michael Sena, who has lived in Stockholm for over 40 years, explains that under Sweden’s tax system, the new congestion tax collected from Stockholm’s drivers goes to the national government, which uses it for roads.

Transit is a local government responsibility in Sweden. So, the proceeds from Stockholm’s congestion tax have all been devoted to building a much-needed highway bypass around Stockholm, which, when completed by 2030, should divert a lot of traffic off Stockholm’s own roadways.

What could New York City and the state do if the federal veto of their MTA-focused plan is sustained?

A new and improved congestion pricing program should have the following features: 

• First, set variable rates modeled to actually reduce traffic congestion on Manhattan streets.
• Second, dedicate the proceeds of congestion pricing to both roadways and transit. both of which need improvements.

What kind of roadway improvements? The Heritage Foundation’s Diana Furchtgott-Roth suggested in an op-ed for The Telegraph that part of Manhattan’s traffic congestion is self-inflicted:

In New York, urban planners have added bike lanes, pedestrian precincts, lower speed limits, and traffic lights that are deliberately designed to slow traffic and encourage people to move to transit.

If local politicians desired, New York City could reduce congestion by prioritising traffic flow on the roads. The Big Apple could also charge competitive prices for curbside parking, now free in many places, to keep a certain share of spaces free for delivery vehicles, reducing double-parking and ensuing traffic jams.

Greg Cohen of 2349 Solutions suggested in an online discussion that the city should define a decent level of service for its major thoroughfares and invest some of the revenues from congestion pricing on intersection and signalization projects.

Manhattan’s street network is critically important for all kinds of trips that are needed all day, including truck deliveries to just about every single business, taxi and ride-hailing trips, buses, emergency-response vehicles (ambulance, fire, and police), and personal vehicles including commuters to and from Manhattan. The city’s transportation policies in recent years have been anti-car, anti-truck, and anti-emergency vehicles and have gravely damaged a roadway network that is vitally important to the city’s functioning.

A sensible congestion pricing program should provide a revenue stream that could reverse New York City’s anti-roadway policies and help improve the MTA’s buses and subways.The next congestion pricing program’s goal should be to improve travel on the roadway network, not to raise a specific amount of money for transit.

A version of this column appeared in Public Works Financing.

The post New York needs to revisit and improve congestion pricing plan appeared first on Reason Foundation.

Source: https://reason.org/commentary/new-york-needs-to-revisit-and-improve-congestion-pricing-plan/