New York has chance to improve congestion pricing plan

New York City’s attempt at congestion pricing has been shaped more by politics and revenue-generation concerns than by a serious policy effort to reduce traffic congestion and improve mobility through the city. 

While congestion pricing has been successful in managing traffic in other major cities, such as London and Stockholm, focusing on generating revenue to bail out the transit system instead of traffic management was always going to reduce the program’s effectiveness in New York City. As a result, supporters of congestion pricing as a useful policy tool shouldn’t be upset at the Trump administration’s efforts to kill the New York program. In fact, killing the New York City program, which has rightly been described a revenue grab for rail transit, could improve the prospects for a more effective congestion pricing system over the long-term. 

New York City’s traffic congestion is severe. Each New York City driver loses 108 hours per year. Approximately 700,000 of those drivers enter Manhattan each day from the suburbs. And it would be impossible to build enough new bridges to Manhattan and roadways in Manhattan to reduce congestion using a supply-side approach. Therefore, elected officials borrowed a page from cities across the world and decided to use a demand-side approach: cordon pricing. 

New York is using a form of congestion pricing, sometimes referred to as cordon pricing, which charges drivers a set fee for entering a designated area, typically during peak travel hours. The pricing’s primary purpose is to manage traffic volumes by spreading out or reducing trips during rush-hour periods, thus lowering greenhouse gas emissions. Secondary benefits of the congestion pricing plan were additional transit funding from these fees and faster bus travel times. To be effective, the toll must be set at a rate that optimizes traffic flow. 

Cordon pricing works in two ways. The fee, $9 between 5 am-9 pm weekdays and 9 am-9 pm weekdays, makes driving during peak hours more expensive and less attractive. As a result, some commuters switch to making trips during off-peak hours. Others switch to alternative modes, including transit, bicycling, walking, and working from home. Thus, the peak period demand and traffic congestion decrease. 

Congestion pricing has been implemented in several major cities. London has used cordon charging for around 20 years. In that span, Longon’s designated charging zone experienced a 30% reduction in congestion and a 38% increase in transit ridership. Stockholm uses a similar system. It saw a decrease in traffic congestion in the range of 30-50% since its implementation in 2006. 

However, the concept behind congestion pricing and implementing it effectively are two very different things. New York state has been trying to implement congestion pricing in Midtown and Lower Manhattan since the passage of the Traffic Mobility Act in 2019. (The program was formally known as the Central Business District Tolling Program.) The program’s initial start date was set to June 30, 2024, by New York Gov. Kathy Hochul. 

Complicating the congestion charge-setting process, the Metropolitan Transportation Authority (MTA), which oversees many of the city’s bridges and transit lines, demanded that the plan focus on financing $15 billion in needed transit system improvements. Therefore, the congestion charges were, at least in part, selected based on generating the revenue needed for major transit improvements rather than the charges needed to manage traffic congestion in the city. 

Four groups of drivers were particularly upset with the original plan: truckers, delivery drivers, New Jersey residents, and taxi/ride-hail drivers. 

Under the original plan, MTA required trucks to pay $24-$36 (depending on size) to enter the zone, while automobiles would pay $15. 

Delivery drivers claimed any added cost was unfair because it would make daytime deliveries more costly for them and their customers. 

New Jersey commuters were upset that they would have to pay the congestion charge to enter Manhattan after already having paid $15.38 in bridge or tunnel tolls if they used the George Washington or Verrazzano-Narrows Bridge or either the Lincoln or Holland Tunnel. 

Taxi and ride-hail drivers were upset that they would have to pass along the charge to customers via an additional ride fee of $0.75 and $1.50, respectively, for each ride within the city’s designated zone. 

These concerns and the political fallout that could come with them led Gov. Kathy Hochul to suspend the program, fearing a potential voter backlash against Democratic lawmakers up for re-election in November. Complicating matters further, then-presidential candidate Donald Trump announced that he would kill the congestion pricing program if elected. 

To help rebuild support for the congestion pricing program, elected officials and transportation analysts made changes. Truck tolls were reduced by 40%. Medium-duty trucks would pay $14.40, while heavy-duty trucks would pay $21.60. 

For delivery truck drivers, the New York City Department of Transportation announced an off-hour delivery incentive program to develop the infrastructure for businesses to accept deliveries past peak hours. With more night-time coordination between receivers and suppliers, drivers would pay only 25% of the charge. Other cities like Stockholm have found that nighttime deliveries reduced travel time by 25% to 30% and operation costs by 25%.

The cordon charge on passenger vehicles was reduced to $9, but the concerns of commuters using the Hudson River bridges and tunnels saying they’re being double-charged were not addressed. And, the ride-hailing charge was kept in the updated plan. The New York City tolling plan went live on Jan. 5. 

This current plan has three additional problems for the city. Most importantly, the proposed cordon charge is still not set at an efficient level to manage traffic congestion, which should be the primary goal. Early data shows that the congestion charge level has reduced traffic in Midtown Manhattan slightly, but not as much as advocates would hope. The New York Times reported, “In the first week of February, weekday traffic inside the toll zone dropped 9 percent compared with the same time last year, with an average of 561,678 vehicles entering the area, down from 617,000, according to the M.T.A.”

That level is insufficient to reduce peak-period congestion by the desired amounts. It also isn’t going to generate the amount of money the Metropolitan Transportation Authority wants. MTA has a significant hole in its budget and has to pause some transit expansion projects because of insufficient revenue. A 40% reduction in revenue from the original congestion pricing plan would imperil some of MTA’s planned projects. 

The cordon tax is also disproportionately burdening passenger vehicles more than for-hire vehicles. A study by the National Bureau of Economic Research found that, despite a comparable number of trips, personal vehicles would pay $1.057 billion in congestion pricing compared to $244 million for for-hire vehicles. 

And now President Trump is aiming to end the program. The New York Times:

President Trump intends to revoke federal approval of New York City’s congestion pricing program, fulfilling a campaign promise to reverse the policy that tolls drivers who enter Manhattan’s busiest streets to help finance repairs to mass transit.

In a letter to Gov. Kathy Hochul on Wednesday, the president’s transportation secretary outlined Mr. Trump’s objections to the program, the first of its kind in the nation, and said that federal officials would contact the state to “discuss the orderly cessation of toll operations.”

The letter, from Sean Duffy, the transportation secretary, cited the cost to working-class motorists, the use of revenue from the tolls for transit upgrades rather than roads and the reach of the program compared with the plan approved by federal legislation as reasons for the decision.

Mr. Duffy did not indicate a specific date by which the federal government intended to end the program.

Mr. Trump wrote in a post on his social media platform, Truth Social, that New York was “saved” as a result of this news.

“CONGESTION PRICING IS DEAD. Manhattan, and all of New York, is SAVED,” he wrote. “LONG LIVE THE KING!”

Ms. Hochul defended the congestion pricing program on Wednesday and vowed to fight the president’s move.

“We are a nation of laws, not ruled by a king,” she said in a written statement. “We’ll see you in court.”

If courts side with Trump’s effort to kill it, New York City may ultimately be thankful that the tortured version of congestion pricing that creates many losers and won’t reduce congestion over the long term can be replaced. A better congestion pricing plan focused on the primary goal of managing traffic congestion and improving mobility for individuals and businesses in and around New York City rather than a plan primarily designed to generate money to reduce MTA’s debt would benefit all involved.

The post New York has chance to improve congestion pricing plan appeared first on Reason Foundation.

Source: https://reason.org/commentary/new-york-improve-congestion-pricing-plan/