Three avenues for New York City to re-start congestion charging

New York’s City congestion charging scheme was supposed to be launched last year but was “indefinitely paused” by New York State Governor Kathy Hochul “to address the rising cost of living in New York”.

The scheme was supposed to begin on 30th June 2024. The interruption of an already-deployed scheme caused horror among those who wanted to reduce congestion and pollution in the city. The move is being challenged by two lawsuits.

Surely, pausing the plan was not the best way to solve the growing funding gap of the Metropolitan Transportation Authority (MTA), the US’ largest public transit system. The congestion charge was expected to bring over $1 billion in revenues per year. The lack of new funding would ultimately lead to a reduction in MTA’s deeply needed investment plan or an increase in New York taxes.

On 14th November however, Kathy Hochul announced that it will restart the scheme based on a lower entry fee ($9 vs $15) at peak time. During the overnight time period, the toll will be $2.25.

The programme is expected to be launched on 5th January 2025, before new President Donald Trump is sworn in.

Trump declared in May he would “TERMINATE Congestion Pricing in (his) FIRST WEEK back in Office!!”. It may sound strange for a GOP politician to fight against such a scheme while several of the states with the highest density of tolling facilities are led by Republicans, namely Texas and Florida. Obviously inhabitants living outside of the “congestion relief zone” have the most to lose and New Jersey Republicans are suing the federal government to stop the scheme.

Hochul assumes that she can rely on the approval by the Federal Highway Administration (FHWA) in its environmental study released in June 2023. It is fair to say that a lower rate will have less consequences for the environment and so that approval can be extended to this new, lower rate. Federal authorisations are necessary because the charge has an impact on the mobility between several states and particularly New Jersey and Connecticut.

However, as political opposition from New Jersey politicians and new federal Department of Transport Secretary Sean Duffy is very likely, it is important to reevaluate the merits of this congestion charge.

Is congestion charging the issue?

The fact is that high tolls exist already on entry into Manhattan from New Jersey ($15.38 at peak time) and the city has some of the highest parking prices in the world.

However this has not curbed traffic. According to the MTA, over 700,000 vehicles enter Manhattan’s CBD every day. Average travel speeds in the CBD have decreased 23% since 2010, from 9.1 mph to just 7.1 mph.

In other words, whether it is called congestion charge or toll does not matter. There is a need to reduce incoming traffic to New York City and a road charge might be the best way to adjust traffic to capacity.

A dozen other cities in North America have been evaluating the creation of congestion charging schemes, notably Washington DC, Seattle and Los Angeles. It is clear that a move forward by the Big Apple would facilitate the deployment of these new schemes in more cities.

Compared to traditional toll facilities, congestion charging programmes can be integrated into a complete traffic demand management plan that is tied to the public transport and parking policies. While they can use exactly the same technologies (RFID, ANPR, DSRC) as tolls, local agencies can adapt their tariffs so as to limit traffic.

So we believe a congestion charging scheme is a perfect tool but it must be designed differently to avoid alienating certain segments of the population. As has been seen in other contested programmes, the initial goal of “congestion charging” (i.e. traffic reduction) has been replaced with a MTA funding mechanism. And suburban and rural inhabitants object to them paying for a public transport system they may not even be able to use.

Three avenues to align the goals of the different stakeholders

Based on our analysis of the key success factors of new road charging schemes, we would like to propose 3 avenues to align the major stakeholders, namely the MTA, NYC inhabitants and out-of-city inhabitants who travel to Manhattan.

1. An adaptation of the charge to traffic levels

An additional flat $15 fee for most of the times of the week appeared as too high a barrier for travelers who are often less affluent than Manhattan inhabitants. A lowering of the fee to $9 already appears more reasonable but could still be a challenge for some commuters.

A better articulation of the level of the charge with the actual traffic demand would help reducing citizens’ concerns. For example, the price could reach $9 dollars during peak traffic times (e.g. 7-10am and 4-7pm) and be reduced to $0 at non-peak hours. This would certainly drive a smoothening of traffic that would be welcome by all parties.

While this sounds complex, this is actually a requirement that has been integrated in the EU’s latest Eurovignette revised directive, which we analysed in our recent Electronic Tolling Europe Study. In the EU,

• Congestion charges may only be applied on road sections that are regularly congested and only during the periods when they are typically congested
• Congestion charges should reflect the actual costs imposed by each vehicle directly on other road users, and indirectly on society at large, in a proportionate manner.

In other words, a congestion charge should address congestion and should not be a barrier to entry! 

In addition, we believe that a number of simple variations could also make the scheme smarter.

One of them would be to have tariffs fluctuate based on the emissions of the vehicle. This is standard practice in Europe (under so-called Low Emission Zones), notably in the UK, where zero emission vehicles pay less than others. While this will not reduce traffic, it will push commuters to change towards less polluting and noisy cars, which will have a positive effect on the health of the city’s inhabitants.

Another well known model in the US is to charge less users whenever they have multiple occupants in the vehicle. These so-called HOT (High Occupancy Toll) lanes push people to aggregate their mobility needs and create a sort of mini-public transport delegated to private vehicles.

2. An increase in paid parking in the New York MSA

While the MTA’s investment needs are legitimate to replenish an antiquated infrastructure, it might seem unfair to place the burden on on a single category of the constituents.

Interestingly, while parking prices in New York City are very high, the share of paid on-street spots in total places is surprisingly very low, particularly if you compare with other densely populated cities such as European metropolises. In 2021, an EY study commissioned by the NPA (National Parking Association) estimated that only 15% of parking spaces in the New York MSA (Metropolitan Statistical Area) were paid.

This encourages people and companies to have cars, even if they never use them. As a result, available parking spots are rare. This has many negative side effects. For example, delivery companies such as UPS and FedEx have to double park their vehicles, blocking the road, bike lanes, etc. with their trucks because there is nowhere along the curb to park.

Increasing the share of paid parking spots would bring very significant revenues without alienating any single stakeholder category.

3. An integration of public transport into the wider mobility landscape

Unfortunately public transport supporters often seem at war against car users (and vice versa!). In our view, all should recognise the fact that it may not always be convenient, practical or even safe to use public transport or a private car. It may depend on the user categories (men vs women, teenagers vs adults vs senior citizens), the time (day vs night, rainy day vs sunny day, etc.) and obviously the place of residence.

How to factor this in?

For the charge to be really fair, the MTA could make the users’ toll depend on whether they have public transport (or other modal) alternatives or not. For this to be possible, the MTA charge payment could be be integrated into a Mobility-as-a-Service (MaaS) multimodal app. Depending on the existence of alternatives, the user would receive a discount on the toll or not.

Last but not least, a reduction in the MTA’s leakage levels would also be welcome. According to the New York Times, 48% of the city’s bus passengers do not pay their fare, among the worst rates of compliance in the world and up from 18% in 2018. We believe that such a high leakage rate can be explained by lenient enforcement but also a deficient user experience. A well designed MaaS solution would improve this.

Overall, we advocate a more balanced model between the different funding sources and transport modes that would help bring all parties together. Cities cannot build road charging barriers to entry so high that they make mobility impossible for visitors.

If you wish to continue the discussion, contact Frederic Bruneteau.