New York Can Do Better Than London

Come January, traffic comes back and congestion too. The state Congestion Mitigation Commission has until the end of next month to submit final proposals to the State Legislature and the City Council on Mayor Bloomberg's congestion tax proposal.

Something has to be done about New York's traffic. Congestion wastes New Yorkers' time, burns excessive gasoline, pollutes, and discourages businesses and shoppers from coming to Manhattan.

One sensible remedy would be congestion pricing. President Bush endorsed this approach at a news conference on December 17. He said, "If one of the things you're concerned about is massive traffic jams on your highways, in and out of your community, then it may make sense to say to somebody, if you're going to ride between 9:00 a.m. and 4:00 p.m., you pay a higher fee than somebody riding before 9:00 a.m. or after 4:00 p.m. It's worked in some parts of the world. I definitely think we ought to look at it."

Road use varies with time of day. Road pricing can encourage drivers to shift non-essential trips to less busy times, and eliminate some trips altogether. But there may be better ways to reduce congestion than the mayor's approach.

The mayor proposes to charge a fee to all vehicles entering the city center, using E-Z Pass technology. All passenger vehicles entering or leaving Manhattan below 86th Street on weekdays, except holidays, from 6 a.m. to 6 p.m. would pay $8 a day. Trucks would pay $21.

Cars and trucks that are in Manhattan below 86th Street overnight and that do not leave, such as residents' cars, would be charged $4 and $5.50 respectively.

Traffic within the zone is expected to decrease by 6.3%, and speeds to increase by 7.2%. An even greater level of reduction could be achieved with higher fees. E-Z Pass users paying bridge and tunnel tolls to enter the zone would be credited up to $8 worth of round-trip tolls per day (equalizing the cost between entering Manhattan through a toll entrance and a non-toll entrance).

The mayor's plan is modeled after London's system of congestion charges. Passenger cars are charged $16 for entering central London. London is the best-known example of congestion pricing, and is held up as a model for other cities. But it has drawbacks, and New York can do better.

The main flaw in London's system and in the mayor's proposal is that drivers pay flat fees, and are not charged by miles driven or by routes taken. Once southbound drivers cross 86th Street, they have no incentive to economize on driving, or to choose less-crowded streets, but can drive an unlimited distance on any street.

A better scheme would be to have drivers pay per mile, with higher charges on more heavily-used streets. Someone who drove around Manhattan all day would pay more than someone who came in and left after an hour. And driving on 5th Avenue, for instance, could cost more than driving up less-crowded streets.

This is the method in Singapore, where cars are equipped with devices like taxi meters which hold pre-paid "Cash-Cards". As vehicles pass checkpoints, electronic equipment in overhead gantries debits the CashCards and photographs the license plates of vehicles not properly equipped.

Oregon is developing GPS-based distance measurements to replace fuel taxes it now levies to pay for the use of its roads. Oregon would not immediately require all vehicles to have GPS. At least to start with, road users would have the choice of paying either fuel taxes or mileage charges.

Until recently, technology was not available to operate such a system. But with the price of transponders and global positioning systems falling, sophisticated and efficient systems are now possible. Efficiency in road pricing would relieve congestion but raises thorny questions. Cities must decide what to do with toll revenues, and how to resist the temptation to use tolls to finance increased general spending, as is the case with the New Jersey Turnpike. And they must decide how to treat the poor equitably.

Under the mayor's plan, revenues would be dedicated to transportation investments through a new Sustainable Mobility and Regional Transportation Financing Authority (SMART). SMART would be funded partly through congestion pricing to pay for MTA and public transit maintenance, repair, and expansion.

A far better idea would be to dedicate revenues to road improvements, as was proposed by President Bush on December 17, and decided in Bergen (Norway) in 1986 and Stockholm (Sweden) in 2006. In that way, motorists would know that they benefit from the user fees.

Increases in charges over time are a problem. In July 2005, London's mayor increased congestion charges from $10.00 to $16.00. This was seen not as a way to reduce congestion, but as a way to raise revenue.

To allow politicians to control congestion charges is like putting alcoholics in charge of liquor stores. It would be far better to have the prices and revenues under the control of independent trustees, some of whom represent road users' interests.

Critics claim tolls are unfair to lower-income drivers. New technology makes it easier to devise solutions to this problem. Low income motorists could be given toll credits through license plates.

It's not congestion charges that are particularly detrimental to the poor, because they can be rebated - it's congested roads. Congestion diminishes mobility, making it harder to find jobs and get to work. A more even, rapid flow of traffic gives all road users more valuable time. Road space is like any other commodity: if it's free, it will be overused. To protect themselves from choking on traffic, cities must find a way to reduce congestion and let people travel more quickly and efficiently. New York has the opportunity to be a model for the rest of the country, and the world.

Ms. Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. She can be reached at dfr@hudson.org.