New York’s congestion pricing (taxing) debacle: it was supposed to raise $1 billion annually for transit. (Commentary)
by Robert Poole
While I have long supported various forms of road pricing, I was not surprised at the extent of opposition to the plan that was terminated by New York Gov. Kathy Hochul only days before it was about to start last month. The congestion pricing plan was ill-conceived from the outset.
First, its primary purpose was to raise $1 billion per year to support the capital program of the city’s Metropolitan Transportation Authority (MTA), which runs the city’s subways and buses. Working backward from the revenue target led to decisions such as charging vehicles 24/7 rather than, perhaps, only during business hours. It also ended up leading to what many considered very high daily rates, especially for those who already pay tolls to get to Manhattan from New Jersey.
Second, the congestion pricing project’s planners should have looked more carefully at the three successful cases of congestion charges to enter city centers—Singapore, London, and Stockholm. The first of these is not very relevant since Singapore is governed as a one-party state, with some laws and regulations that would seem authoritarian if they were proposed for a U.S. city.
London’s congestion zone is a much smaller fraction of the city’s downtown than the Manhattan charging zone, and those who use cars to commute to and from “the city” in London are among its most-affluent residents.
Stockholm is the example New York City could have learned a lot from. Stockholm’s congestion pricing plan was first implemented as a six-month experiment, to be followed by a referendum in which commuters, as well as those living within the charging zone, were entitled to vote. A majority in the referendum judged the pricing system to be beneficial, so only then was it adopted permanently. The prices charged were based on models of how well they would reduce congestion, not on how much revenue would result. The proceeds were used to improve both transit service and the Stockholm metro area roadway system.
The New York MTA is now faced with a funding crisis. The revenues from the congestion tolls (more accurately congestion taxes) were to have been placed in a “lockbox” along with revenues from a relatively recent “mansion tax” and two “internet market taxes.” MTA bonds would then be issued against the lockbox revenue stream, as Jeff Davis reported in a June 7 Eno Center for Transportation commentary.
A June 26 presentation to the MTA board on the impact of the congestion pricing cancellation said the net impact of losing the projected pricing revenues will be $16.5 billion less for the coming five-year period. Among the impacts are deferring $5 billion in system expansion (primarily Phase 2 of the Second Avenue Subway), $2 billion in “accessibility” projects such as Americans with Disabilities Act compliance, $500 million for zero-emission buses, $1.5 billion for subway rolling stock, $3 billion for signal modernization, $3 billion for “state of good repair” projects (i.e., resulting from deferred maintenance), and $1.5 billion for miscellaneous infrastructure upgrades.
I’m not sure that the federal Environmental Assessment (EA) for the project was correct in finding that the project would have “no unmitigated impacts.” That 4,000-page EA (far less complex than an EIS) showed that by diverting some traffic around Manhattan, the plan would lead to increased traffic (and emissions) in the Bronx, Staten Island, and northern New Jersey. There would be an estimated 700 more trucks per day on the Cross-Bronx Expressway, reported Manhattan Institute’s Nicole Gelinas in a New York Times guest essay.
It seems doubtful that the current congestion pricing plan will be re-instated after the November election, when Gov. Hochul hopes Democratic members of Congress from New York will all be re-elected. But as the world’s most-congested city, per the latest INRIX analysis, there might be hope for something like Stockholm’s successful approach to be considered in New York.
Originally published by the Reason Foundation. Republished with permission.
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