Friday, April 20, 2018

Nota bene: Why New York won't get congestion pricing

New York congestion pricing is dead, again. As the NYT headline put it, “Congestion Pricing Plan for Manhattan Ran Into Politics. Politics Won.”

The latest version of the plan — call it Cuomo Pricing, to distinguish it from its predecessor, Bloomberg Pricing — was being sold less as a way to reduce congestion in Manhattan, and more as a way to raise much-needed funds to improve public transit. (The governor of New York State, Andrew Cuomo, is in charge of New York City’s subways, which are in terrible shape, and he wanted to find money to help fix them.)

The problem is that congestion pricing doesn’t really work, in New York, as a way to raise extra money. Not without running into exactly the kind of political buzzsaw that killed off Cuomo Pricing, anyway.

The reason is that New York already has a bunch of road pricing, in a way that London and other congestion-charge cities did not. The city’s five boroughs spread across the mainland (the Bronx) and three different islands (Long Island, Staten Island, and Manhattan). And as a result, there are a lot of bridges and tunnels, many of which are tolled.

This tolling makes very little sense, from a public-policy point of view. Governments should put tolls where they want less traffic, and no one wants less traffic on the Throgs Neck Bridge or the Verrazano Narrows Bridge. Those crossings are not particularly congested, and they provide crucial arteries for people to get around, in areas ill-served by public transportation.

If you were designing a road-pricing scheme from scratch, then, you would put a much heftier price on Manhattan streets (which drivers can currently drive on — and even, sometimes, park on — for free), while charging nothing for vital outer-borough bridges which provide an important public service.

Such a scheme would be politically popular among many of the politicians who opposed Cuomo Pricing, since while their constituents would be charged for their infrequent drives into Manhattan, they would save money on all of their much-more-frequent drives into or out of Long Island.

Andrew Cuomo, however, couldn’t put forward that kind of scheme, because his primary aim was to increase tax revenues. And New York’s bridges, it turns out, are amazing cash cows. It would be almost impossible to replace their revenue with a congestion charge.

Take the Verrazano Narrows Bridge: In 2017 alone, it was responsible for raising an astonishing $417 million in toll revenue. Now compare that to London’s congestion charge, which I believe is the most lucrative congestion charge in the world. It raised just £250 million in 2017, or $350 million. (See page 174 of this report.)

In other words, just one of New York’s many bridges and tunnels raises more money than the very expensive London congestion-pricing scheme. The inescapable conclusion: any politically viable New York congestion-pricing scheme, one which would move pricing from the bridges to Manhattan, would generate less revenue than the current system, even though it would be great for traffic flow.

Which is why I don’t think we’re going to see congestion pricing in New York. It’s politically possible, but only at substantial fiscal cost. And no politician wants to lose money by introducing a new tax.