Bacon's Rebellion

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New York in Bloom(berg): Time for Congestion Fees

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by

James A. Bacon
in

New York Mayor Michael Bloomberg has proposed an $8-per-day congestion fee for drivers who enter parts of Manhattan. He’s billing the fee, patterned after a similar levy in London, as a tool to ease the strain on infrastructure, combat ground-level pollution and curtail greenhouse gases implicated in global climate change. The New York Times has the story here.

Revenues from the congestion fees would generate about $400 million in its first year, which would be funneled into improvements to the transit system. Bloomberg pledged not to impose the fee, however, until the city upgraded mass transit service into the city.

The flat fee would apply between 6 a.m. and 6 p.m. weekdays. According to the NYT, “there would be no toll booths, just a network of cameras that would capture license plate numbers and either charge a driver’s existing commuter account or generate a bill to be paid each time.” Truckers, who faced fees of $21 per day, were predictably unhappy with the proposal. So, too, were advocates of the poor and the middle class.

Nobody likes paying money where they didn’t have to before. On the other hand, access to Manhattan is a finite commodity. Price is the most efficient rationing mechanism yet invented. If people don’t like paying the fee, which would amount to $40 per week or $2,000 per year, they could take buses, share rides or arrange for telecommuting.

To sell the idea politically, Bloomberg has to ensure commuters that the congestion fee isn’t just another scheme for raising slush funds for politicians. The congestion fee must be plowed back into the transportation system or it will be perceived as just another scam. The proposal is sure to be controversial. But at least New Yorkers are discussing the idea of congestion pricing. That’s more than you can say for Virginia.

(Hat tip to Lyle Solla-Yates for pointing out the story.)

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17 responses to “New York in Bloom(berg): Time for Congestion Fees”

  1. Groveton Avatar
    Groveton

    I am starting to agree with Jim Bacon on this – congestion fees may not be perfect but they are better than the alternatives.

    I would add one thing to Mayor Bloomberg’s proposal – a congestion fee for employers. Companies that have large workforces in Manhattan should be chared a fee for every employee living more than a certain distance from where they work. This would put pressure on the employers to find way to make telecommuting work.

  2. Ray Hyde Avatar
    Ray Hyde

    Go Groveton. The employers and planners that let them locate inappropriately where insufficient transportation is available or even possible are as responsible for our transportation problems as those that “choose” to live 30 miles away.

    I am at a loss to figure out how funds from a congestion charge can be used to improve transportation in New York. Surely, ground level is built out. New York already has the highest percentage of transit users, and not coincidentally, the longest time of commute.

    Even the underground areas are getting crowded. The best thing you could do is ban taxis, and convert them all to Jitneys.

    Good Luck.

  3. Larry Gross Avatar
    Larry Gross

    Here’s the deal.

    The are two parts to congestion pricing.

    The first part is to charge for something that is finite – parking and throughput capacity on the roads.

    Charging for something does this:

    Folks make decisions about just how important their trip is – based on “out of their pocket” economics and not personal preference (Gee.. I hear they got gumquats on sale over on 88th street).

    Because some folks will decide that the trip is no longer “worth it” since it is no longer “free”, additional capacity is provided and congestion reduced – solely because decisions are now being made on economics.

    But the above IS totally independent of how the proceeds would be spent.

    I think folks think it not fair to “charge” unless they actually get something in return but that’s not really the point of congestion pricing in the first place.

    I’m also skeptical about the effectiveness of this because $8 to New Yorkers is what they’d pay for a coke and a hog dog…right?

    I just don’t see $8 as doing anything by discouraging the most discretionary of trips.

    Second, if this was really about reducing congestion/providing capacity – the TOll would be variable so that they could adjust it per current conditions to explicitly produce the desired ‘sweet spot”.

    I note for NoVA that the Wash Area MPO, the TPB is very close to approving our own regional HOT lanes pilot projects on I-395 and I-95.

  4. Larry Gross Avatar
    Larry Gross

    re: “I am at a loss to figure out how funds from a congestion charge can be used to improve transportation …. The best thing you could do is ban taxis, and convert them all to Jitneys.”

    The beauty of congestion pricing is that private enterprise will spring up and provide new services that deliver value.

    For instance, HOT lanes will almost surely generate more HOV use that will range from further empowering slugging carpools to, (for a price) high quality bus service… with TV/internet connectivity.. etc perhaps.

    You won’t have to ban taxies but you might have to change the laws to allow other services to compete.

  5. Anonymous Avatar
    Anonymous

    Real Quick

    Blurb on the today show this morning

    of course they ruined it by having people complain calling it “lexus lanes” and we already pay too much taxes

    At least the issues is getting some MSM coverage

    ______________________________
    Issues with signing in

    NMM

  6. Ray Hyde Avatar
    Ray Hyde

    “since it is no longer “free”, additional capacity is provided…”

    No, it is not. No new capacity is provided. Instead the existing capacity (paid for by all)is reallocated among those who are willing and able to pay more to exclude those who are unwilling or unable to pay.

    Let’s not magically create new capacity where there is none provided.

    However, there are economic truths here. Those who are willing to pay must be providing a service that is valuable enough that they can afford to pay this extra amount in order to make the service available. At some point this makes their service less competititve, or as Groveton says, I can pay less to those whose cost of travel is less.

    “I think folks think it not fair to “charge” unless they actually get something in return but that’s not really the point of congestion pricing in the first place.”

    OK, I agree, but it begs the question of what happens to the money. The argument going in is that it will somehow be used to create additional (or alternative) capacity.

    You say that the beauty of congestion pricing is that private enterprise will spring up and provide new services that deliver value. But the money for congestion pricing isn’t going to private enterprise. (Except for the contractors that operate the cameras, and that money isn’t creating new capacity.) The idea that new capacity will magically “spring up” seems a fantasy to me in this instance. Where is anything going to spring up in the midst of 10,000 people per acre? At some point there is only so much you can do.

    I’ll reiterate my position, congestion pricing is an engine to move commmerce someplace else. This is something the planners could have done for free at the appropriate time, by banning commerce that is not supported by sufficient infrastructure and housing, APF.

  7. Larry Gross Avatar
    Larry Gross

    Actually – if there are less cars as a result of congestion pricing… doesn’t that mean less congestion?

    Isn’t that what is being sold?

    In other words, you can “buy down” the congestion much like you could “buy down” the interest rate on a loan by paying points.

    Same concept with “cheap seats”. Want a better “seat”? .. actually it’s the same seat but a better view.. you can “upgrade” by kicking in more money.

    Or turn this around.. for the base rate.. you get a crummy seat and sit with the unwashed.. or you can buy your way to a better situation.

    and you don’t ban commerce with congestion pricing anymore than you ban spectators by having different pricing on different seats.

    Private industry benefits because once something has a cost attached to it – it attracts innovation to the opportunities to provide add-on services that .. may provide alternate choices for those who don’t wish to pay for top-tier service.

    For instance, a plush commuter bus with internet services, drinks and a toilet for the same as the price for a solo toll ticket and daily parking or you could go the ultra-cheap cattle car route.

    The market will meet the demand.

    But the whole point is that paying for roads with taxes completely divorces the concept of paying for a specific service but once you tie a quid-pro-quo fee for service to the equation… the dynamics change.

    This is not rocket science.

    Everyone – including the companies that lost their shirts – realized that “Free” tech support is neither free nor a particularily good service.

    Once you put a price on it.. expectations and performance orient like they should.

  8. Ray Hyde Avatar
    Ray Hyde

    “Actually – if there are less cars as a result of congestion pricing… doesn’t that mean less congestion?”

    Yes, but that is a lot different from having more capacity.

    Flip it around, doesn’t less congestion mean less business, one way or another? We are now going to pay in order to create less business? Please explain to me where the future is in that?

    Let’s be clear about what you mean by buying down congestion. We are going to send money to our governors for the privilege of having them restrict our voting peers from our space.

    Does that sound pretty much like a bribe?

    I’ll say it again, I am in favor of congestion fees, but for reasons entirely different from the ones you claim.

    I look at it this way. Congestion is a personal nuisance, too bad. But congestion also causes excess and wasteful pollution. Congestion pricing is really a pollution charge, whereby if you pay, you get to pollute, and enjoy the benefits therefrom.

    What we are saying is that we don’t want pollution in one place, but we will allow it in other places for free.

    Congestion pricing is an engine for sprawl, paid for by polluters. Looked at that way, congestion pricing doesn’t look so “green”.

  9. Ray Hyde Avatar
    Ray Hyde

    “For instance, a plush commuter bus with internet services, drinks and a toilet for the same as the price for a solo toll ticket and daily parking or you could go the ultra-cheap cattle car route.

    The market will meet the demand.”

    Nonsense. None of those prospective “services” you mention will be available without substantial public subsidies. The ultara cheap cattle car route already costs two to three times what the user pays. The only reason it exists is that users get to use it without regard to the actual costs.

    The “market” would never support either Metro or VRE, and wouldn’t even support most of the metro bus routes. However, it will support limousine service.

    What planet do you live on?

  10. Ray Hyde Avatar
    Ray Hyde

    “Everyone – including the companies that lost their shirts – realized that “Free” tech support is neither free nor a particularily good service.”

    Free tech support was a two way street, the companies got to find out what was wrong with their products first hand.

    The ones that survived were the ones smart enough to recognize the problems and fix them, at least to a reasonable level of competence.

    Then, they could afford to charge the boobs with no brains to give them a helping hand when they refused to read the instructions, because their competitors with free and frequent support were gone.

    The real key is to recognize what is actually going on. Subsidizing rail and peanlizing autos doesn’t make rail better, actually. Creating “free” open space by eliminating by-right lots is neither free nor is it a particularly good service. We have a big demand for protecting open space, but how is the market meeting that demand?

    We have a price on road use. It is called own a car that can pass inspection, pay insurance, pay maitenance and fuel, and then wait in line to use the road.

    Considering the pollution and other waste that congestion causes, that price maynot be high enough. But let’s not cloud the issue by claiming that paying more to government will make more private services available, or that government will magically create more capacity where there is space for none, and no environmental capacity either.

    What is going to happen is that we will pay more, and get less. I believe we can find a better way to spend the money, and actually get something we need and can enjoy.

  11. Jim Bacon Avatar
    Jim Bacon

    Ray, You wrote, “The idea that new capacity will magically ‘spring up’ seems a fantasy to me in this instance. Where is anything going to spring up in the midst of 10,000 people per acre?”

    That’s a legitimate question. The private sector isn’t going to build new roads or lay any heavy rail lines in densely settled urban areas. But the private sector can provide shared-vehicle ridership — buses, jitneys, vans and carpools. In theory. The problem, as I have argued repeatedly, is that shared ridership services are overregulated and/or government-owned monopolies. A critical piece of any transportation overhaul is freeing up the private sector to be innovative. Unless that happens, I agree with you, congestion pricing will add little in the way of new capacity.

    On the other hand, rationing existing scarce capacity still has value.

  12. Ray Hyde Avatar
    Ray Hyde

    Yes, the private sector can do as you say. Then what?

    Ultimately, if we cannot increase capacity in densely populated areas we will have to declare them full, which is what congestion pricing does.

    Rationing existing scarce capacity does have value. Too bad our planners didn’t think of that before they authorized more jobs than they could support.

    We ration road and subway use in the places where we don’t have enough of them. So what is the reason for rationing land use, when we have more of it than we can use for development, as Ed Risse frequently points out, and more than we can use for farming, as Larry pointed out?

    This still boils down to what is going to happen to the mnoney. A good chunk of it will go to contractors running the cammeras: a business that produces nothing, less than nothing in fact.

    If we can’t spend the rest of it to increase capacity, where does it go? How about if we use it to create incentives for productive jobs outside the congested zone: jobs that can be reached by those who cannot pay the congestion charge.

  13. Larry Gross Avatar
    Larry Gross

    Here’s a question.

    Is METRO a competing service to regional roads or is METRO a less expensive way to mitigate rush-hour congestion than .. building more roads?

    First – before reading further – do we know the financial facts of METRO vs more NoVa roads?

    Is there a belief that folks that drive autos and pay gas taxes should ONLY receive more road infrastructure – even if some other use of road taxes might result in better service for them (by diverting some rush-hour drivers to METRO).

    In other words – spending gas tax money on METRO is wrong – even if doing so is the most cost effective way to provide better rush-hour road service than plowing that same money back into additional highway lanes?

    Should EACH mode of transportation stand on it’s own financial legs?

    Should VRE, METRO and HOV charge exactly what it costs to provide that service even if it would result in both services no longer offered and net road congestion increased far beyond what the gas money would provide in more lanes?

    Should regional mobility be addressed as an integrated and complementary function or should each mode be treated distinct and separate and it’s scope and scale dictated by it’s own revenues?

    Bonus question: Are rail and walking and biking facilities expensive doo-dads provided by do-gooders who should find other good causes to support and get out of the transportation arena?

  14. Ray Hyde Avatar
    Ray Hyde

    “Is METRO a competing service to regional roads or is METRO a less expensive way to mitigate rush-hour congestion than .. building more roads?”

    Metro is complementary, not competing. It cannnot compete because it does not offer anything like the same service that roads offer. If it could compete then the passengers wouldn’t be paying something like half of what it costs to move them – with the rest being paid by mortorists (including themselves), one way or another.

    And it is not even cheaper. Metro’s operating costs work out to something like $0.45 per passenger mile, and that doesn’t count capital costs. But, at that price it does allow a higher (short term) traffic density, gained by taking out the seats and packing people in like sardines. That is what makes it complementary and not competing.

    It provides a service that allows the downtown office districts to get the workers they need, at a density that otherwise could not be supported. Metro makes some landowners very wealthy at the expense of all the people that contribute to keep Metro afloat.

    You can argue, as some have done, that those people suffering the indignities of Metro desrve to be subsidized, because they are taking the load off of the highways. That is partly nonsense, because the highways couldn’t accomodate the load, and people wouldn’t stand for it: they would move.

    Yes, if you believe in the free market, then VRE, Metro, and VDOT should charge full price for their services, meaning gas prices would have to increase, and Metro fares would increase.

    When the dust settled, crs would win hands down. Rail service would be about 2% of what it is now, and bus service would be about 4% of what it is now. But, the number of people who use those services is so inconsequential, that auto usage would go up about 2% to replace them.

    OR

    We can look at the entire transportation network as one system and fund it accordingly: we would all throw our money in a big box and let the experts spend it the best and most cost effective way. Cars would still win hands down on a cost / benefit basis.

    We would all like to believe otherwise, but those are the facts.

    Look at it this way, if we shut down Metro tomorrow, it would not be too long before the rents in downtown office buildings would begin to fall. For what it costs to run Metro we could put new office buildings where the terminal Metro stations are, and give them away rent free to anyone who would locate a business there.

    Metro is a stupid idea from square one, but it has been so successfully packaged, sold, and promoted that many have come to believe it is a good idea.

    Biking and walking facilities can be part of the transportation network, or they can be entertainment facilities, but whatever they are, they are complementary and not competitive, so we should be looking for a “best mix” solution, but we should consider that solution on facts, not homilies, and we should seek that solution without an agenda in place beforehand.

    We are not going to get very much more Metro capacity. Even if we had all eight car trains, we don’t have the road capacity or parking capacity to fill the trains. We aren’t going to get any more road capacity either.

    We could go up, and double deck the roads and double deck Metro in order to serve the decadecked office structures. We could add PRT guiways above the roadways.

    But any of that is going to have to be paid for, and since we haven’t raised the gas tax in thirty years we aren’t going to pay for it that way.

    Meanwhile, out in my neck of the world, there are hordes of bicyclists who come to use our roads for entertainment on weekends. Maybe we are building bike trails in the wrong places. Maybe, if we added a bike lane on both sides of the roads we have, then maybe they would be wide enough for two trucks to pass without destroying the shoulder. And on weekends, we would both be able to use the roads, instead of having cars idling behind the bikes waiting for a chance to pass.

    I’m glad to have the cysclists here. But if Metro and VRE and VDOT charge full price for their services, when do I get to charge for providing scenery?

  15. Larry Gross Avatar
    Larry Gross

    we’re actually “tracking” here…

    …”the highways couldn’t accomodate the load, and people wouldn’t stand for it: they would move.”

    who would move and where would they go – where they would no longer be using the highway?

    Are you saying… shutdown Metro.. and when congestion reaches essential gridlock that people will quit their NoVa jobs and move away?

    …

    “When the dust settled, crs would win hands down”

    really?

    Above .. you seem to agree that .. yes highway capacity is finite and limited and can only hold so many vehicles before the network would essentially become so unreliable and undependable.. and predictably in such a condition .. to the point that people would leave the area…

    Transit thinks in terms of moving people per time/distance unit.

    Highways think in terms of moving vehicles.. and default.. that most are SOLO…

    If every vehicle was a shared passenger vehicle… whether it be METRO or a 3 person Auto… would we gain highway capacity by taking 2 cars off the road for every 3rd one that had 3 folks in it?

    If you buy the last statement – then you’re buying also into the concept that capacity can be INCREASED if you are measuring people instead of cars…

    .. AND that efforts to spur vehicle sharing .. could be effective.. whether they be METRO, or buses.. BRT or cars…

    wrong? wrong approach?

  16. USpace Avatar
    USpace

    We all have to wonder what Bloomberg is really thinking of with this congestion pricing tax scheme. Maybe he mostly just wants a new tax. Just wrap it up in ‘concern for the environment’, and people can just demonize those who oppose it.

    If he cares so much about traffic jams, congestion and air pollution, why does he let Park Avenue be blocked off? Why doesn’t he do anything about that?

    Pershing Square Restaurant blocks Park Avenue going South at 42nd St. for 12 hours a day/6 months of the year! This Causes Massive Congestion & Air Pollution!

    But apparently it does not bother NYC’s Nanny-in-Chief Mike “Congestion Pricing Tax” Bloomberg? Check out the map!

    http://whataplanet.blogspot.com
    http://preview.tinyurl.com/38obfd

    Check it out!

    Thanks,

    Little Blue PD

    🙂

  17. king Avatar
    king

    Calls to mobile phones or other wireless devices/internet calling may be charged at higher rates than calls to traditional landline phones. Additional fees and taxes may apply. All rates, promotional or otherwise, are subject to change at any time without notice. Call times are billed in one-minute increments.

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