Can a new effort to price out road use set a path for U.S. cities to follow?
There's a reason for New York City's ongoing flirtation with road pricing: the city is set up perfectly for it. It has a clear core business area (Manhattan) accessible by limited entryways (bridges and tunnels) that would be easy to price for traffic reductions (via tolls or cordons). Its overwhelming traffic oozes into and out of town each morning from all sides at the speed of … ooze. Its expansive transit system is in perpetual need of revenue and further expansion.
Oh, and its current system of handling commuter traffic is completely busted. If you can even call it a system. Three different entities manage the bridges and tunnels surrounding Manhattan — Port Authority, the Metropolitan Transportation Authority, and the city — with no concerted effort to reduce traffic. Case in point: the four city-owned bridges over the East River are free, but the two MTA-owned tunnels beside them cost commuters $15 cash round trip, leading to rampant "bridge shopping."
"The term I'd borrow from my father is that we have a cockamamie system of charging people that makes absolutely no sense," says engineer and former city traffic commissioner "Gridlock" Sam Schwartz, "and in fact encourages people to drive through our densest part of the city: Manhattan."
On Friday Schwartz and the Move NY group will launch a public campaign to rally support for what they're calling a "fair" tolling plan for the city. The fact that the new effort follows so closely behind the failed Bloomberg pricing plan suggests that New York has reached a natural breaking point with its traffic woes. "I describe it as a vampire," says finance scholar Jonathan Peters of the College of Staten Island. "Whenever you put the stake in it, it's going to come back to life, because nobody else has a better answer."
As with everything else related to vampires, the rest of the country will be keeping a close watch. Congestion pricing — or whatever name you'd like to apply to a scheme for charging fees to reduce traffic congestion — has generally worked in the cities bold enough to adopt it: Stockholm, Singapore, and London being the standard examples. If New York buys into this new plan, some experts believe the path to road pricing could open for congested American cities to follow.
"I think in the grand scheme of things, we need something that works in North America for the idea to move forward," says transport economist Gilles Duranton of Wharton. "I think New York is about as good a place as it gets."
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The Move NY plan remains in its formative stages and open to change, but some of the basics are in place. Its first goal will be to distribute bridge and tunnel traffic more evenly and dissuade bridge shopping on the East River. To that end, all the eastern crossings, including the currently free bridges, will cost the same price: $10.66 round-trip for E-Z Pass users, $15 cash. Those increases will be counter-balanced with toll reductions on the outer bridges of as much as 50 percent.
That takes care of commuters entering the island from everywhere but the west. (The outcome of Bridgegate aside, the plan does not involve the Port Authority bridges and tunnels that carry travelers from Jersey for various logistical reasons.) Next the plan takes aim at congestion in Manhattan itself. A toll cordon would be placed at 60th Street to charge drivers heading into the part of the city with the greatest demand: the midtown business district.
Those are the broad strokes; now for some of the finer details. Drivers will be encouraged to pay with a transponder (like E-Z Pass); those without one will be captured via license-plate cameras. Cars will pay the tolls each pass, but commercial vehicles will only have to pay once round-trip in a 24-hour period, to limit the burden on businesses. Yellow cabs will pay a surcharge south of 96th Street — the idea being that they contribute to congestion but in their quasi-transit role shouldn't pay the full cordon price every time.
All told the plan could generate up $1.5 billion in net revenue every year. The MTA would manage the money (under the terms of the plan, the agency would lease the four free East River bridges from the city, though the feds might have final say about that). Precisely where the money will go is what Schwartz and Move NY leaders hope to determine with public input awareness campaign. For now, most of it (roughly a billion) is earmarked for transit: maintaining current service and expanding into transit deserts, with anything extra stowed away for long-term capital projects. The rest would go toward the city's roads and bridges, as well as subsidies for suburban buses or rail commuters.
The revenue number might attract local eyes, but it's the traffic improvement that will get the attention of other cities. Schwartz and Move NY want traffic flows in the cordon area to improve by 20 percent. Right now the tolls are fixed, but Schwartz says they'll be adjusted on a quarterly basis to make sure that mark is being met. If traffic is flowing above expectations, it could be lowered. If it's still oozing like ooze, the tolls might go up.
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There are plenty of rumors and even some legitimate reasons as to why New York's last pricing plan failed, but Sam Schwartz says what he hears most often, when speaking about his plan to residents in the outer parts of the city, was that they weren't consulted. "What I find in going around — and I've been traveling a good deal over three years around the city and suburbs — is each person wants to know what's in it for me," he says. "That wasn't well articulated in the past according to them. In many cases they felt there was nothing in it for them except paying more."
Schwartz and Alex Matthiessen, head of MoveNY, are determined not to make the same mistake this time around. Their "public listening tour," as Matthiessen calls it, is organized to make sure everyone from Rockefeller Center to the Rockaways learns about the pricing plan and engages in a meaningful dialogue about how to shape it. They want to meet with elected officials and Chambers of Commerce and labor unions and transit groups and environmental groups and so on. "Everybody we can possibly get a hold of we think would have an interest," says Matthiessen.
That includes past opponents. Schwartz and Matthiessen each say they've already had constructive talks with Mark Weprin, a city council member who was vocally opposed to the Bloomberg plan but seems now to be more receptive. The same goes for AAA New York, which had gone so far as to sue past city administrations over previous toll hikes. "We've been preaching to the rebels," says Schwartz. In a further attempt to distinguish itself, the plan is conspicuously not being referred to as "congestion pricing."
At the end of the day, Move NY wants all parties to feel that even though they're paying something, they're gaining something. Some drivers will pay higher tolls but get an easier trip. Other commuters will be priced out of their cars but have their transit corridors improved. Manhattanites will pay higher cab fares but reach their destination quicker; cabbies will owe the surcharge but pick up more passengers. Transit riders may fight more crowds at first, but they'll get better service over time. The MTA has more things to manage but gains a stable funding source and new revenue from drivers-turned-straphangers. Environmental groups will see fewer cars on the road, and retailers should see an increase of people traveling into the city.
"One of the things we really try to emphasize over and over is this is about fairness," says Matthiessen. "This isn't about sticking people with new tolls. Everybody's paying their fair share, and everybody's getting something in return." Envisioning New York several years from now, if the plan works as he hopes, Schwartz says he'd expect to witness a much better transit system, much less traffic, far fewer car crashes, and millions fewer vehicle-miles traveled. "It'll be a happier place," he says.
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Happier from a traffic perspective, perhaps, but others aren't so sure the city will be happier from an economic one. New Yorkers already pay $2.5 billion in tolls a year and about a quarter of the nation's annual tolls; boosting those figures with new tolls could tip the balance in a city already struggling with affordability. Jeffrey Brinkman of the Federal Reserve Bank of Philadelphia recently argued that the traffic advantages gained through road pricing could be offset by the loss of business agglomeration over the long-term. In non-economist speak: people and jobs might leave the city.
No population is left more exposed in a road-pricing plan than low-income drivers. Any equitable parsing of the new toll revenue must provide vastly improved transit options in the tolled corridors — including hard to reach corners of the city like the eastern parts of Queens and the Bronx, outer Brooklyn, and Staten Island. Pricing a low-income driver off the road from a 40-minute car commute might be a win for traffic, but it's a loss for society if that person now rides two hours to work.
"I think it's a step in the right direction in terms of equity to talk about trying to deal with the transit deserts and look at it as a holistic mobility equation," says Peters, the finance scholar at the College of Staten Island. "Inequity problems are most profound in a corridor that has poor transit alternatives. Because what do the poor people have as an option? The answer is nothing. They're priced off the facility and they can't shift."
Some transportation experts worry that a pricing plan won't even advance to the point of debating the economic and equity questions. Over the years some notable pricing plans — Hong Kong in the 1980s, Edinburgh in 2005 — failed to get off the ground because residents lacked faith in the funding agency to manage the new revenue. Scholars Michael Manville of Cornell and David King of Columbia call this the "credible commitment" problem of congestion pricing. A few years back, Manville and King interviewed 50-some officials in Los Angeles about road pricing. About a third explicitly said they would not support a congestion plan because they didn't trust state officials to redistribute the toll revenue as promised, the same share who feared that pricing might be unfair to the poor.
"What happens is, absent that trust, that sort of revenue promise doesn't necessarily lead to the kind of political support you might think," says Manville. "In some ways, what people were saying is it would never get far enough for pricing's regressivity to be a problem, because we would just never see this money."
Considering the emphasis Move NY's plan places on revenue redistribution, not to mention the MTA's own mixed record of public promises, those findings give reason for pause. The way around the commitment problem, says Manville, is to stress the traffic benefits that a strong pricing plan will bring, as opposed to the revenue gains. Some believe the best way forward is to run a pilot project first, as officials did in Stockholm.
But there's no pilot project in the works at the moment, and convincing drivers of the traffic benefits is traditionally the hardest part of passing a road-pricing plan. That's a bit odd, since they stand to benefit most. Manville compares the situation to patients who've suffered from an illness so long they can't even conceive of a cure.
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It's not such a stretch to think of traffic as a disease. Long commutes pose well-documented harm to a person's physical and mental health, something drivers in congested metro areas don't need to lay eyes on a study to know. So if we accept traffic as a disease, the traditional treatment has been building roads. That does relieve the symptoms — for a time. But only for a time.
Then the fundamental law of highway congestion sets in. Discovered by Anthony Downs in 1962, and augmented by Gilles Duranton and Matthew Turner in 2011, this law says that any rush-hour space created on urban roads will quickly be filled. The instinctual response is to up the treatment dosage, though all that really does is require more treatment.
There are alternative therapies, such as transit improvements, but these too mask the underlying cause of the disease: an insatiable demand for free roads. In that sense, the only true cure for city traffic is to reduce the demand through pricing. And since traffic is non-linear — meaning one less car opens up more than one space — a fee need only nudge a few drivers onto mass transit or off-hour trips to turn a terminal case of congestion into a healthy road.
"We've been fed this stream of cures that go down easy for drivers: we're going to improve transit, we're going to have a bike plan. All these things that don't require any real change on driver's behavior," says Manville. "But if the problem really is congestion, what should have happened a long time ago is the tough-talking doctor says: this isn't going to go down easy — tolls — but it's going to cure the disease."
Many patients just don't want to hear it. This isn't a new problem; Columbia economist William Vickrey, who won the Nobel Prize in 1996 for his idea on pricing (and tragically died of a car crash days later) felt perplexed by opposition his whole career. "People see it as a tax increase, which I think is a gut reaction," he once said. "When motorists' time is considered, it's really a savings."
It is, however, a persistent one. Analyzing why pricing failed under Bloomberg, New York Deputy Commissioner for Traffic and Planning Bruce Schaller concluded that drivers perceived too little benefit for themselves. They felt transit was not a viable option and were unmoved by arguments of greater social benefits. (They also doubted the MTA would use the revenue as promised.) In a 2010 paper, Schaller writes that HOT lanes, another pricing scheme, often gain support because they still offer a free alternative — whereas congestion pricing plans generally don't.
"These lessons from the New York City experience, supported by experience elsewhere, suggests that it will be very difficult to obtain approval of congestion pricing in U.S. cities," he wrote.
Duranton remains hopeful the New York plan can break through and become that model other U.S. cities sorely need. Despite seeing flaws in the New York plan — pricing should vary by time of day, he argues, and costly technology like license-plate readers should be scrapped for transponders and fines — he's found that pricing can bring significant traffic benefits even when the plan is "deeply imperfect." He also fails to see another option. "The more I think about it," he says, "the more I think that there's only one solution."