Give Congestion Pricing a Chance

A na Ley of the New York Times reports that the Metropolitan Transportation Authority’s congestion-pricing plan has received approval from the Federal Highway Administration (FHWA). Now that the MTA’s plan has been approved, should it be implemented?

Many on the right point to the plan as just another cash grab by tax-hungry politicians. While I’m as resistant to new taxes as the next guy, I think the plan is at least worth considering.

First, a look at what is being proposed: The plan would charge a fee to enter Manhattan’s Central Business District (CBD), defined in an August 2022 report by the FHWA as “the geographic area of Manhattan south of and inclusive of 60th Street.” The tolling program’s aims are several: reducing traffic, improving air quality, and generating revenue for the MTA, which Ley notes is legally required to be spent on capital investment.

A fee scale has not yet been set, but the FHWA report specifies several scenarios with different pricing regimes. Under Scenario A (the base plan), cars, motorcycles, and commercial vans would be charged once a day at a rate of $9 during peak weekday hours (6 a.m.–8 p.m.), $7 during off-peak hours (8 p.m.–10 p.m.), and $5 overnight. While considerable surcharges, such congestion prices are not egregious when compared with the one-way toll rates for bridges and tunnels into the city ranging from $2.45 to $10.17. Under Scenario E, the rates for peak, off-peak, and overnight access to the CBD increase to $23, $17, and $12, respectively, but exempt taxis and transit buses, and credit vehicles for tolls paid on Manhattan-bound tunnels.

Who would shoulder the burden of the new tolls?

Of the 7.7 million daily commuters into the Manhattan CBD, about a quarter (24 percent) arrive by car, according to 2019 NCMTC Hub Bound Travel Data Report. Even with the vast and increasing majority of commuters taking transit, NYC remains the third-most-congested city in the U.S., according to INRIX. This congestion imposes unseen costs: The FHWA report calculates the cost of congestion to be 102 hours of lost time per driver in the NYC region, translating to $1,595 per driver each year on average. Under Scenario A, commuters who choose to continue driving into the Manhattan CBD during peak hours can expect to pay an additional $2,160 a year ($9 toll, five times a week, for 48 weeks). So even factoring in the supposed value of reclaiming lost time, that’s a net cost to drivers, and middle- and upper-income commuters earning salaries don’t stand to recapture lost hourly wages anyway. However, these commuters have a greater ability to pay the toll, which is without question regressive: Commuters with lower incomes paying the same dollar amount as those with higher incomes pay a higher percentage of their annual income to enter the CBD. The FHWA recognizes this adverse effect and recommends “a tax credit for CBD tolls paid by residents of the Manhattan CBD whose New York adjusted gross income for the taxable year is less than $60,000.” As for those who can’t afford the proposed toll and ditch their cars for public transit because of it, there’s a potential long-term benefit.

As Thomas Sowell said in A Conflict of Visions, “There are no solutions. There are only trade-offs.” Reducing traffic, expanding transit service, and reducing travel times in the nation’s largest city is an expensive endeavor. But it’s a necessary one. The 2020-2024 MTA Capital Program estimates that subway delays cost workers $307 million annually in lost wages, and the region served is expected to grow by 1.4 million in the next two decades. The MTA needs revenue to serve New Yorkers. By instituting the tolling program, the FHWA projects raising $15 billion for MTA’s 2020–2024 Capital Program, reducing daily vehicle miles traveled by 5 percent, and the number of vehicles entering the Manhattan CBD by 10 percent.

The economic track record of similar congestion-pricing schemes offers helpful context. A 2008 report commissioned by the FHWA and conducted by K. T. Analytics, “Lessons Learned from International Experience in Congestion Pricing,” summarizes findings from Singapore, London, and Stockholm. The impact of congestion pricing in each city was a “10 to 30 percent or greater reduction in traffic in the priced zone” as well as a “ten to 30% increase in [driving] speed.”

In 1998, Singapore implemented its Electronic Road Pricing system at a cost of $110 million. This considerable investment yielded annual revenues of $100 million from 300,000 daily transactions, decreased the number of vehicles from 271,000 to 206,000, and increased travel speeds from 19–22 to 25–28 miles per hour. Meanwhile, the profitability of the program has enabled revenues in excess of costs to finance “improvements to bus and rail services,” leading to a 2022 Customer Satisfaction Index of Singapore (CSISG) score of 74.2 out of 100. Conversely, the MTA’s Customers Count Fall 2022 Survey reports only 54 percent of subway riders finding service satisfactory. By raising money to be invested in public transportation, the MTA’s tolling program could improve its service, increasing worker productivity and better satisfying subway riders.

Spirited debates are warranted about the costs and benefits of the MTA’s tolling program, the complexity of calculating them, and the distribution thereof. No matter where one comes down on the program, it should not be dismissed out of hand.