(Bloomberg) -- New York City’s transit system is moving forward with a plan to start charging motorists a fee to drive into crowded midtown Manhattan starting Jan. 5. The aim of the congestion pricing initiative, which will be the first in the US, is to reduce traffic and pollution while raising money for the city’s subways, buses and commuter rails.
Weeks before the program was originally set to begin on June 30, Governor Kathy Hochul abruptly halted it. For the revised effort, which the Metropolitan Transportation Authority approved on Nov. 18, Hochul slashed the pricing structure by 40%. Most drivers will now pay $9, a fee that’s set to increase to the original $15 charge in 2031. Reviving congestion pricing creates a potential showdown with President-elect Donald Trump, who has previously threatened to terminate the plan once he returns to the Oval Office.
What’s the idea behind congestion pricing?
Economists call it a demand-side solution: Jack up the price of something and demand will fall — producing, in this case, clearer streets and cleaner air. Doing that while also trying to maximize revenue makes things a little tricky.
Charge drivers too little, and you’ll make money but still have jams. Charge too much, and you risk turning off too many drivers. That’s great if you’re going for a bike- and pedestrian-friendly city, but not so hot if you really need the cash, too.
Elsewhere in the world, Singapore has charged since 1975, Stockholm made a trial run permanent in 2007 and Milan’s Area C began in 2012. But the most applicable reference for New York is probably central London, where fees have been in effect since 2003.
How will New York’s system work?
The $9 fee will apply once a day to motorists with an E-ZPass transponder entering south of Manhattan’s 60th Street from 5 a.m. to 9 p.m. on weekdays. The impacted area includes midtown office buildings, Times Square, the Theater District and the World Trade Center. Trucks and vehicles without an E-ZPass will pay more; passengers in taxis and for-hire vehicles such as Uber will pay a fee per trip ($0.75 or $1.50, respectively).
For context, a rush-hour commuter from Princeton, New Jersey, to central Manhattan already pays roughly $30 to $35 in tolls, round-trip, to use the New Jersey Turnpike and a Hudson River bridge or tunnel. However, drivers paying tolls on certain tunnels will receive credits to offset the new fee; nighttime fares will also be significantly cheaper. Some lower-income motorists will also get discounts.
How much money will the program raise?
The MTA, which runs New York City’s transit network, will implement the toll program. It’s anticipated to bring in hundreds of millions of dollars a year, which the MTA will borrow against to raise $15 billion over time. That money would then pay for modernizing the city’s 100-year-old transit system — from improving signals and accessibility to extending the Second Avenue subway line. New York’s comptroller said in early May that the MTA faced a potential $25 billion shortfall for future infrastructure upgrades to the subway system.
Congestion pricing could also incentivize some drivers to use the MTA’s subways, buses and commuter rails instead. That would provide a welcome boost after the pandemic decimated ridership, and the MTA’s usage numbers still lag 2019 levels. In 2026, system-wide ridership may still be only 80% of pre-pandemic levels, the MTA estimates.
Who’s for and against the plan? And what can Trump do, really?
Environmentalists, urban planners and transit advocates love congestion pricing. But some politicians have pushed back against New York City’s plan. US Representatives Nicole Malliotakis, a Republican from the city’s borough of Staten Island, and Josh Gottheimer, a Democrat of New Jersey, say congestion pricing may increase pollution and traffic in their districts while adding another toll for their constituents.
New Jersey Governor Phil Murphy has also filed a legal challenge seeking a longer environmental analysis of the program. But the MTA said in April that its latest submission to the federal government included money for New Jersey to help offset any pollution problems related to the new toll. Those funds may help to resolve the legal fight. Staten Island Borough President Vito Fossella, the United Federation of Teachers and a group of residents have also filed suit to delay or halt the new tolls.
Trump could also seek to end the program through litigation, similar to what New Jersey has done, according to Brad Lander, New York City’s comptroller.
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