Strike One for "Congestion Pricing" in New York City

New York City Mayor Michael Bloomberg's plan to enact "congestion pricing"-- that is, an $8 fee drivers would pay for entering the core of Manhattan by car-- has hit a serious road bump. The New York Times reports that the state Assembly has come up with an alternative plan for solving the city's transportation crunch. Turns out the Mayor had it all wrong: what's needed is a tax cut, not a tax hike. The Assembly wants to use a carrot instead of a stick:

[T]he new proposal, sent to Assembly members on Sunday night, would attempt to ease traffic congestion with tax credits for businesses that encourage employees to telecommute, for employees who use car pools and for commercial drivers who enter Manhattan before 6 a.m. and after 9 p.m.

Opponents of the Mayor's plan have two main beefs: an $8 fee is more regressive than most any other tax you'll see, and the fee shouldn't be implemented until there are more generally available public transit alternatives available for New York City commuters. But a Bloomberg representative says the second charge is hokum:

A spokesman for Mr. Bloomberg said that the mayor’s plan called for large-scale improvements to the city’s mass transit system before the start of congestion pricing. “None of the other potential plans provides a revenue stream to fund $30 billion in mass transit improvements over the next two decades,” the spokesman, John Gallagher, wrote in an e-mail message.

The regressivity charge is being contested as well. Here's another quote from the Bloomberg camp:

“It’s not regressive, because those who drive to work make 33 percent more than those who take the subway to work from the four boroughs outside of Manhattan.”

(Of course, in the tax world, averages aren't everything: even if Manhattan commuters tend to be wealthy, the $8-a-day fee will be felt most acutely by however many low-income commuters end up paying it.)

The New Yorker's Elizabeth Kolbert agrees that a congestion charge wouldn't be regressive, but she's not relying on statistics to prove the point. Rather, she thinks low-income people wouldn't be hit by the congestion charge because driving into the city has already become costly enough that fixed-income families aren't doing it:

In fact, the poor don’t, as a rule, drive in and out of Manhattan: compare the cost of buying, insuring, and parking a car with the seventy-six dollars a month the M.T.A. charges for an unlimited-ride MetroCard.

This refreshingly out-of-touch position ignores the question of whether public transit options are currently available for commuters living in various New York suburbs. Now, don't get me wrong-- Kolbert may be correct in her assertion (she offers no proof, so it's hard to tell!). But just about everyone, including Kolbert herself, is making the case that no matter what tax-related measures are enacted to curb congestion, they will need to be accompanied by an effort to make public transit options more generally feasible, which is basically an admission that public transit isn't all that great right now.

In other words, for commuters living in areas that simply don't have easily available public transit, it doesn't really matter that public transit is already cheaper than owning a car. If it's not available, the price doesn't matter.

In the end, both of the charges levelled against Bloomberg's plan are worth worrying about. Even if Bloomberg's and Kolbert's arguments are right, there are almost certainly plenty of low-income workers who commute into the city, and these folks will get hit hardest by an $8 congestion charge. The regressivity problem could partially be remedied by offering a low-income tax credit or rebate, although it's hard to see who would administer such a program given that you'd want residents of New York, New Jersey and Connecticut to be eligible.

The second charge is equally problematic (although not exclusive to Bloomberg's plan). Virtually any American born in the twentieth century was born and raised in a world that worships the car. Far from taking steps to encourage an urban, public-transit-based lifestyle, American public policies have always made it relatively easy to live (and work) wherever people want. From this perspective, the sudden imposition of punitive fees for those who have chosen the green spaces of the Jersey suburbs over city living arguably is pulling the rug out from under suburbanites in a way they had no reason to expect.

This isn't to argue that the congestion charge is the wrong approach, and is certainly not to say that the Assembly's tax-cutting alternative is the right answer. There's a growing belief that American consumers won't change their carbon-consuming behavior until they get hit with a pretty big stick (tax-wise, that is). This means that Americans who have organized their lives around commuting will likely face higher gas taxes and more "congestion charges" in the near future, and that's probably a necessary thing. But policymakers need to think seriously about how to avoid soaking the poor at the same time-- to say nothing of creating a universally available public transportation infrastructure.