Will NYC Congestion Pricing Just Die Already?
by Lewis DerkinsAugust 4th, 2008, 5:38 pm
Faced with a looming $900 million budget shortfall at MTA, congestion pricing advocates have reared their ugly heads again to rally for the implementation of the fees in order to fund mass transit. I make no attempt to conceal the fact that I’m not a fan of congestion pricing. But even if I was, the idea that you will use congestion pricing as the solution to this problem is absolutely the stupidest idea I have ever heard.
The whole idea behind congestion pricing is to alleviate congestion – in other words to take cars off the roads. Assuming congestion pricing would work, this will mean that you have less drivers paying the tax, and the other drivers who were priced off the roads simply get displaced onto mass transit.
Right now, New York’s MTA is in a hurt locker. They have horrible service and reliability problems, their maintenance is shoddy, and they are experiencing declining revenues despite a record ridership so high that they don’t have enough room on the trains. Putting more people on these trains will only compound MTA’s problems – there isn’t room for any more riders.
The only way to accommodate more people will be to expand the system’s capacity, but since the riders MTA already has can’t come close to covering the costs – currently they pay about 39% of them – that means you’ll have to get the money from the congestion tax again, and oops, no more drivers.
What will you continue to do – escalate the congestion pricing until you take all the cars off the roads? The argument is that the people who can afford to pay will do so – that’s great, so are the roads going to be free and clear for the 100 or so people in the city rich enough to pay oppressive escalating fees for public goods while 99% of the population waits for trains that aren’t coming?
The congestion tax is not your solution. New York estimated that they would bring in $500 million from the tax – that’s only a little more than half of the money you need, clowns. Currently a little over 15% of your federal gas tax pays for mass transit. New York charges an additional 41.2 cents on every gallon of gas and charges a sales tax on top of it. A large portion of that pays for mass transit. 33% of MTA’s budget comes from “dedicated taxes” – the majority of which comes from the Petroleum Business Tax and the Metropolitan Mass Transportation Operating Assistance Account – gasoline tax based revenue streams. So a congestion tax is a double whammy to MTA. Not only will you no longer get the congestion tax revenue once cars stop driving, but you’ll no longer get the gas tax revenue either.
This simply illustrates the absurd paradox that policymakers in this country have placed mass transit in – you want to encourage people to stop driving, but if they do stop, you’re screwed.
Mass Transit funding needs to be uncoupled from the gas tax. Mass Transit riders may not like the idea of a fare increase, but the harsh reality is that the only real solution here is to make the mass transit riders cover the fair share of costs for their system. We need to stop kicking around the idea that a congestion tax on cars will be mass transit’s salvation. The truth is that any successful implementation of a congestion tax could be mass transit’s apocalypse.
Posted in Congestion Pricing, Gas Taxes, Mass Transit, Spending, Subways, Tax Increases |
You’re unclear on the concept of inelastic demand, aren’t you?
It would be best if the MTA had a fixed subsidy, one that was not tied to any tax. Still, the logic behind using congestion pricing to fund mass transit is sound: the idea is that since more people will need to use the MTA, the MTA ought to get more funding.
It would be a sound idea to have fares cover operating costs. Anti-car activists want everyone to pay for the transit system except the people that use it.
If you want to subsidize ridership in any way, then, rather than subsidize all rides indiscrimintaely, subsidize poor riders. There is no reason why a hedge fund trader taking the 4 to work from 86th Street to Wall Street needs a subsidized $2 fare. There is no reason to subsidize the 7:15 LIRR special out of Port Washington. Subsidize poor riders, make the bulk of riders pay the freight, and you’ll have a much sounder system.
Michael -
I’m familiar with inelastic demand - what does that have to do with the argument I’m making?
If you drop the price, surely more people will demand the MTA’s services, and that will only compound the problems further - even more riders, even less revenues.
thebird -
That logic is only sound if revenue from congestion pricing were guaranteed.
It’s not. Congestion pricing will take cars off the roads - that is the entire goal of congestion pricing.
Less cars on the roads means less people paying the congestion taxes.
Less taxes means less funding for MTA.
That is not sound logic.
Lewis, that would only be true if demand were elastic. However, demand for peak, commuting traffic is usually inelastic - meaning that you can increase the price (congestion tax) and not have a proportional drop in driving.
“Not only will you no longer get the congestion tax revenue once cars stop driving, but you’ll no longer get the gas tax revenue either.”
Your argument that a congestion tax will cause fewer people to drive and thus will decrease revenues is crap. Sure, fewer people will drive, but not enough to offset the gain in revenue you’ll get from a congestion tax. There will still be a ton of people driving (because demand is inelastic) and there will be revenues available for MTA.
The ruling elites want the cameras on the streets to track the general public.
Exactly, Michael. Though, I still think that funds for mass transit should be fixed with yearly (predictable) increases– rather than tied to various taxes. It makes it way too hard to do any long range planning. That’s why we’ll never get a 2nd Ave. Subway. Also we need more funding from the state. NYC tax dollars go upstate and never come back. It’s absurd.
Michael -
The funny thing is, I actually think it’s possible you’re right. In London, congestion pricing has been a miserable failure. But New York is geographically different than London, and I wouldn’t be surprised if this does take cars off the roads.
My problem with congestion pricing is that Mayor Bloomberg is selling it to New York as a way to take cars off the roads to decrease congestion.
http://www.ny1.com/ny1/content/index.jsp?stid=1&aid=70533
So here’s the rub - if you want to levy a tax against cars to fund mass transit - you should simply have the guts to say so publicly.
That’s not what Bloomberg wants - he wants a “sustainable New York” - whatever that means. A key part of that plan is less cars on the streets.
You may be correct that congestion pricing won’t work exactly the way I predict, but that’s a matter of difference of opinion - not proven fact.
I personally don’t think the demand for peak period driving is inelastic in a place like New York since there are such extensive mass transit options. Think about it - $8 in tolls or $2 to ride the subway - people are already switching because of $1 increase in gas prices, are you telling me that an increase like this won’t cause more of them to make the change? I don’t buy it, but only time will tell if it ultimately gets implemented.
However, Bloombergs intent is clearly to remove cars from the roads, which is why he’s pushing congestion pricing, and if he succeeds in removing them it will be disastrous for mass transit.
Michael -
I’d also like to point out that right now the evidence does not favor your theory about demand for highways being inelastic.
In the past two weeks, I have written numerous posts about declining gas tax revenues, declining MTA toll rvenues, and their effects on mass transit. All of these things have been widely reported in the New York media.
People are already chosing not to drive on the highways during rush hour because of a price increase. And we’re also seeing those people switching over to mass transit. That’s exactly what I said was going to happen in the post above - only it isn’t yet happening because of congestion pricing.
Highway demand is not inelastic where you have other transportation options.
Lewis,
From 1985 to 2001 I drove into Manhattan from New York every single day. Every day I paid a toll and was pissed that my tolls were paying for mass transit. In 2001 I changed Jobs and driving was no longer an option- so I figured that all of those years of paying tolls to use the tunnel would somehow pay me back with my contribution to the Long Island Rail Road. Well it’s been 7 years and I don’t know what the hell they did with all the money because the train has never improved! Now since the gas prices went up so has the train ridership- good luck getting a seat! So the way I figure it is if they implement congestion pricing-along with the price of gas- the train ridership will increase even more- and there will be less tolls to help pay for it.. It’s a no win situation. Maybe you guys can get the word out. I wish I could afford parking in Manhattan because I miss driving in….
I would urge anyone looking at the congestion pricing idea to examine real world cases beyond London. The NYC anti-car elites (who seem to get everywhere they go by car) use London as an example, and the average person thinks that London is the only example. It’s not. There is driving charge to get into center city Stockholm right now, as we speak, although you wouldn’t know that by reading the NY Times. The funds generated by that charge are being used right now, as we speak, to build road capacity to route through traffic around Stockholm. If an NYC congestion pricing charge was being used to build below ground or elevated routes to get, for example, traffic heading from Queens to Hudson County, NJ off Manhattan streets, not only would I be in favor of it, I would do cartwheels all the way to the voting booth to cast a ballot for it.
It’s really funny that they keep using London as an example. I was there twice this year on business. The first time I arrived on a Sunday morning and made it from the airport (Gatwick) into the city in record time- no traffic- but it was a SUNDAY. On my second trip we arrived on a Tuesday morning and it took us almost 2 hours to drive into the city…Wow- Congestion pricing really works- I could only imagine how long it would have taken without it…LOL Give me a break- its just another tax and an expensive one at that….I like Eric’s idea…but how do you get the government to implement it.
Transit funding needs to be uncoupled from the gas tax and highway funding needs to be uncoupled from the general fund. I think all transportation projects should be self-funding. And every transportation mode should be taxed at a rate which forces the user of any particular mode to internalize the negative externalities of that mode. Only once we have an entire transportation system that is economically efficient can we determine the natural rate of usage for any mode within that system.