By Steven Cohen, Ph.D., Director of the M.S. in Sustainability Management program, School of Professional Studies
Before New York’s governor, Kathy Hochul, finally allowed implementation of a watered-down version of congestion pricing, a wide range of baseless projections about its negative impact were fiercely argued by a mob of pandering politicos. Television coverage before the new fee began always seemed to include curbside interviews with drivers, asking if they wanted to pay more to drive into lower Manhattan. What a shock to learn that drivers preferred lower tolls. One of the most ridiculous arguments against congestion pricing was the one advanced by U.S. Secretary of Transportation Sean Duffy, who argued that the fee was unfair to the working poor. Perhaps he should visit lower Manhattan to observe all the working people driving around. As I wrote in a piece last February:
“The argument that this is an unreasonable and regressive tax on working New Yorkers is ridiculous. Well over 90% of the people traveling into Manhattan’s central business district come in via mass transit. The congestion fee is a small part of the bridge, highway, and parking fees paid by people who drive into Manhattan south of 60th Street. You need to have no choice, be wealthy, or be a little crazy to drive into that part of the city during working hours. By spending congestion fees on mass transit, you are taxing rich people to subsidize mass transit for everyone. In the limited number of cases where the fee is a genuine hardship, it is easy to provide exemptions.”
The projections of doom before the implementation of congestion pricing included: parking and traffic disasters that would take place outside the congestion zone, declining business for stores in the congestion zone, and increased political opposition to the policy. In reality, none of the negative projections have taken place, and the early data on the program demonstrates its success. According to reporting by Oliver Milman in the Guardian:
“...the six-month anniversary, on 5 July, of congestion pricing highlights a string of remarkable successes. Traffic congestion in Manhattan, site of the $9 charge zone, is substantially down, cars and buses are moving faster, air quality is improving as carbon emissions drop, a creaking public transportation system has new verve and there are fewer car accidents, injuries and opportunities for incandescent New Yorker honking and yelling… Spanning the southern tip of downtown Manhattan northwards to 60th Street, the congestion charge zone has slashed traffic delays by a quarter, with around 2m fewer cars a month now entering streets previously gridlocked in traffic. Vehicles that were previously crawling at a pace slower than a horse and cart are now moving more smoothly, with traffic speeds rising by 15%. Carbon pollution, meanwhile, has dropped by about 2.5%, with air pollution such as soot that can bury deep in people’s lungs also down. Despite the faster traffic, fewer people are being directly hurt by car accidents, too… noise complaints along Canal Street, a key artery in lower Manhattan, have reduced by 70%.”
Moreover, retail businesses reported more customers in their stores and a higher level of walk-ins. Public support for the policy is growing, although suburban voters continue to oppose it. A problem with the congestion fee as adopted is its price inflexibility. Just as Uber and the airlines use “surge pricing” to raise and lower prices in response to demand, congestion pricing should allow higher fees on “gridlock alert days” and lower fees when traffic is expected to be light. However, even this inflexible fee is generating the revenue required to fund a massive increase in the MTA’s capital budget. According to Caroline Spivack of Crain’s New York Business:
“The city’s congestion pricing toll raised its highest monthly revenue in May at $61 million—$4.6 million more than the previous month—and is showing no signs of slowing as the busy summer travel season heats up, said MTA officials. Operating expenses for the toll on motorists entering Manhattan south of 60th Street took a $10.9 million bite out of the May revenue. Overall, the MTA brought $50.1 million in net revenue through the toll for the month. Congestion pricing has generated $216 million since the program’s launch on Jan. 5—keeping it on track to hit the authority’s target of $500 million in revenue for the program’s first year.”
The issue that the MTA will soon face is demonstrating that the fee is resulting in improved mass transit. It also needs to figure out a way of reducing the cost of operating the fee system. It’s hard to believe it costs $11 million to collect $61 million. Once the MTA manages to collect the revenues, most of the funding is earmarked for relatively invisible infrastructure such as signals and trackwork. Some will be allocated to the expansion of the 2nd Avenue subway, and some will help pay for highly visible new subway cars and buses. It is essential that the funds tangibly improve the rider experience—the speed, safety, and comfort of mass transit.
The MTA has a long-standing and well-deserved reputation for poor management of capital projects. In a detailed report in late 2017, New York Times reporter Brian M. Rosenthal published a thorough and detailed analysis of the MTA’s style of construction management. According to Rosenthal:
“The leaders entrusted to expand New York’s regional transit network have paid the highest construction costs in the world, spending billions of dollars that could have been used to fix existing subway tunnels, tracks, trains and signals. The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world. The recently completed Second Avenue subway on Manhattan’s Upper East Side and the 2015 extension of the No. 7 line to Hudson Yards also cost far above average, at $2.5 billion and $1.5 billion per mile, respectively.”
The Times piece examined the many causes of New York City’s high transit construction costs, and most can be reduced to management failures at the MTA. Contractors find the Authority difficult to deal with; unions and contractors wield political influence and use campaign contributions to generate increased corporate profits and employee benefits from the projects. The argument is often made that New York is just more complicated than other places and that these unique factors add to costs. This argument led Rosenthal to compare New York City to Paris. He found that:
“Across the Atlantic Ocean, Paris is working on a project that brings the inefficiency of New York into stark relief. The project, called the Line 14 extension, is similar to the Second Avenue subway. Both projects extend decades-old lines in the hopes of reducing systemwide overcrowding. Both involved digging through moderately hard soil just north of the city center to make a few miles of tunnel and a few stations about 80 feet underground. Both used…[the same] tunnel-boring machines... Both faced strict regulations, high density and demands from neighbors, which limited some construction to 12 hours per day. But while the Second Avenue Subway cost $2.5 billion a mile, the Line 14 extension is on track to cost $450 million a mile.”
If the MTA doesn’t improve its contractor management when it spends the congestion funds, it will delegitimize the fee and reduce its support from the public. The controversy around congestion pricing ensures that the projects funded by these fees will be scrutinized and placed under a very public microscope. The issue of the congestion fee itself should be supported by the Courts and will recede, as its opponents turn their attention elsewhere. Those opposing the fee may well shift their focus to the use of the money. The MTA might consider adopting some of the contracting techniques successfully used by the Port Authority at its LaGuardia airport reconstruction. They utilized the same company to build the airport that they used to operate it. The airport construction job was on-time and on-budget because the contractor’s big paydays didn’t begin until the new terminals opened. Mass transit facilities are not at all like airports, but creative contracting techniques can still be developed that provide incentives for vendors and workers to be more efficient.
Metropolitan New York’s mass transit system is a central element of the region’s economic vitality. It is one reason why the city continues to thrive despite the many predictions of its demise. Mass transit enables people from all over America and all over the world to come to New York and participate in its economic life. They do not need to buy a car, get a driver’s license, or own anything other than their ambition. The MTA has an opportunity to revitalize a decaying system. It is the first time since Richard Ravitch saved the system in the early 1980s that there is real hope for revival. The ball, or I suppose the money, is now in their court. Let’s see what they do with it.
Views and opinions expressed here are those of the authors, and do not necessarily reflect the official position of Columbia School of Professional Studies or Columbia University.
About the Program
The Columbia University M.S. in Sustainability Management program offered by the School of Professional Studies in partnership with the Climate School provides students cutting-edge policy and management tools they can use to help public and private organizations and governments address environmental impacts and risks, pollution control, and remediation to achieve sustainability. The program is customized for working professionals and is offered as both a full- and part-time course of study.
