Income-Based Equity Impacts of Congestion Pricing—A Primer
Equity Implications of Urban Partnership Agreements
FHWA conducted a survey of the UPA cities (including New York) to gather information about the real and perceived equity implications of their projects. In addition to equity by income, regional geographic equity was also considered in some instances, because the costs of congestion pricing and the distribution of benefits (typically in the form of new transit and ferry services funded from toll revenue) may be distributed unequally, as with any transportation policy that does not involve tolls or pricing. The comprehensive evaluations that take place in the UPA cities will each, to some degree, provide further examination of equity issues after the projects are in operation. Details about the projects are available on FHWA’s Web site at http://www.upa.dot.gov/index.htm
Focus groups were conducted in 1995 in regard to South Florida’s managed lanes on I-95. The focus groups discussed potential traffic-improvement strategies, including managed lanes. Of the nine focus groups of approximately 10 participants each, five were conducted in English, three in Spanish, and one in Creole. Although focus groups by their nature do not present a statistically valid representation of public opinion, their results may nevertheless be indicative of such opinion. Focus groups also have the benefit of ensuring that people fully understand the aspects of an issue before voicing their opinions.
A key finding from the focus groups is that the perceptions of benefits from managed lanes did not divide along any apparent demographic boundary, including ethnicity and income. The managed-lanes concept was found to be difficult to communicate, but after sufficient time was taken to convey the concept clearly, participants generally perceived that both personal and regional benefits would result from managed-lanes implementation. As could be expected, participants said that they would use managed lanes less frequently as the price to use these lanes rises. It is interesting to note, however, that many individuals had been unaware of toll increases that took place in the region shortly before the focus groups were conducted, suggesting that those who participated in the focus groups might be overestimating their price sensitivity.
San Francisco, CA
A 2007 survey asked 600 residents of the San Francisco, CA, region (JD Franz Research, Inc., 2007) about support for studying congestion pricing. Support was found to be slightly higher among very-low- and low-income residents of the region relative to other residents. San Francisco’s UPA project managers offered a theory for this result: Lower income residents are more likely to be transit riders who would benefit from both reduced congestion and increased transit investments from pricing revenues. For low-income drivers, their increased likelihood of having less scheduling flexibility (e.g., due to having to punch a time clock) and concern about daycare late fees may cause them to more highly value reduced congestion and greater travel time reliability.
King County, WA, conducted a transportation survey in December 2007 (EMC Research Inc., 2007). Many questions were asked of the 501 respondents, a number of them pertaining to support for tolling. Although the survey report did indicate the percentage of respondents in each income group, survey responses were not broken out by income. Among the findings was high support for tolling when compared with other alternatives when a specific infrastructure need was presented. Between 78 and 84 percent (depending on the order in which answers were presented) of respondents preferred electronic tolls over a sales tax increase to fund the SR 520 bridge replacement.
Support for tolling grew substantially if a portion of revenues was dedicated to transit, even if tolls had to be significantly higher to allow for such a diversion of revenue to occur. A toll of $2.50 to fund the replacement of the Lake Washington floating bridge was supported by 64 percent of respondents, whereas 74 percent supported a $4 toll to fund the bridge replacement along with increased transit and bicycling investments in the corridor. Thus, the equity and other benefits of improved transportation options were shown to be more important to respondents than was keeping the toll rates as low as possible.
With revenues dedicated to replacing the SR 520 bridge, 69 percent of respondents indicated support for variable tolling. In regard to another roadway, in which the need for tolling revenues was not presented, only 28 percent of survey participants indicated support for variable tolling, even after the benefits of such tolling in terms of relieving congestion were described to them. The bottom line is that the use of revenues is an extremely important determinant of public support for congestion pricing and is likely to be a more important determinant of support than the level of congestion charges and the design of the congestion-pricing scheme.
New York, NY
An analysis was conducted for the New York City Traffic Congestion Mitigation Commission with regard to the regional equity implications of three cordon pricing and tolling scenarios and supporting transit services (New York City Traffic Congestion Mitigation Commission, 2008). Results from the analysis are discussed below.
The analysis of the regional equity implications of the scenarios under consideration started by emphasizing the regional inequities from existing toll policies, in which 45 percent of toll revenues collected from drivers bound for Manhattan’s central business district (CBD) are paid by New Jersey residents, even though New Jersey vehicles constitute only 24 percent of the total drivers heading into the CBD. This 45 percent figure can be compared with Manhattan drivers, who currently pay only 7 percent of collected toll revenues, and residents of the other four boroughs of New York City, who pay a total of 29 percent.
Three scenarios were considered: (1) the mayor’s cordon pricing plan, (2) an alternative modified cordon pricing plan, and (3) tolling of existing free bridges into Manhattan. For new tolls under the various scenarios, Manhattan residents would pay between 28 and 31 percent, residents of the other four boroughs would pay between 38 and 49 percent, and New Jersey residents would pay only an additional 7 to 17 percent. The new toll revenues would be dedicated to subsidizing transit, and the new transit would primarily serve New York City residents. The new bus routes would be along the corridors where there is substantial car commuting, further relieving congestion along these routes and thus directly benefiting those who continue to commute by car.
The analysis concluded that between 22 and 24 percent of revenues for the transit subsidies would come from Manhattan drivers, and 41 percent would come from drivers from other boroughs, which would appear to be fair. Both the mayor’s congestion-pricing plan and the alternative congestion-pricing plan were found to “allocate transit subsidies among drivers largely in proportion to the percentage of CBD-bound drivers in each geographic area.” The toll plan, which added tolls to bridges that are currently toll-free, “allocates transit subsidies less proportionately as compared to the two congestion pricing plans.”
Councilwoman Melissa Mark-Viverito’s blog posting on January 30, 2008 (Mark-Viverito, 2008), partially excerpted on this page, speaks for itself.
The New York City mayor’s proposed congestion-pricing plan, the alternative congestion-pricing plan, and the toll plan all included the imposition of new fees and tolls. To better understand the impacts of these costs on different socioeconomic groups, agency staff examined the income profiles of those groups most likely to pay the fee or toll. This analysis raised several issues for further consideration, as discussed below.
The fee and toll plans most impact those who drive to the CBD on a daily basis; the vast majority of trips into the zone are not made by automobile. Therefore, individuals who typically walk, bike, or take transit to the CBD would not be financially affected by the fee or toll options. Of motorists, those who drive into the CBD every day for work would be most impacted. For example, under the mayor’s plan, a daily auto commuter who travels from Upper Manhattan to the Financial District would pay about $2,000 in congestion fees each year (vs. $912 a year for those who use transit). By comparison, a motorist who drives into the zone on weekdays once or twice a month for shopping or entertainment would pay about $100 to $200 a year in congestion fees under the mayor’s plan.
Those who commute by car to the CBD earn comparatively higher incomes: New York City DOT staff analyzed the income levels of city and suburban residents who use the automobile as their primary mode to reach Manhattan jobs. Staff found that of the 2.14 million workers in Manhattan, about 292,000, or 14 percent, drive to work each day. These workers have a median annual income of $60,941, compared with a median annual income of $46,416 for all workers in Manhattan, including the 1.85 million workers who take transit, walk, or bike to work. In aggregate, the fee would most impact commuters who earn 31 percent more than the median income of all Manhattan workers. Taking into account other income earners in the household, workers who drive to work in Manhattan have a median household income of $103,700. This compares with a median household income of $89,379 for all Manhattan workers.
A small proportion of low- and moderate-income commuters who drive would be disproportionately impacted by a fee or toll: Most low- and moderate-income commuters who travel into the CBD take transit or walk and would not be impacted by a fee or toll. Of all New York City residents who commute to work, only 5 percent drive to the CBD. Of that 5 percent, most (80 percent) have a feasible transit alternative to get to work that would take no more than 15 minutes longer than their auto trip. Therefore, only 1 percent of Manhattan workers lack a viable alternative to paying a congestion fee or toll. The low- and moderate-income workers disproportionately impacted by a fee or a toll represent a further subgroup within this 1 percent. Legislation that was proposed for consideration by the State legislature would have provided tax credits to compensate low-income motorists for amounts that they would have to pay in excess of the round-trip transit fare.
A large number of low- and moderate-income residents would benefit from improved transit services under any of the three revenue-generating plans: As a group, low- and moderate-income New York City residents rely more on transit for their travel needs when compared with higher income residents. Therefore, these low- and moderate-income residents would benefit more from the short-term transit enhancements that would precede a toll or fee imposition and from the expansion of the transit system made possible by increased revenues for transit investment.
“In the East Harlem and South Bronx communities that I represent, we are automatically skeptical when business interests and politicians from outside our communities claim to be watching out for us—because nine times out of 10, they’re doing just the opposite.
“So it is with congestion pricing. For months, some suburban elected officials from wealthy areas, as well as a coalition backed primarily by the American Automobile Association and Manhattan garage owners, have tried their best to cloak themselves as guardians of New York’s poor and middle-class residents.
“…The truth is that just 5 percent of commuters in Brooklyn, Queens, Staten Island and the Bronx travel to Manhattan by private car. People who drive their cars to work also earn 30 percent more a year than those of us who use mass transit. It is our poor and middle-class families who would benefit from congestion pricing—as the fees charged to drivers would be used to improve the bus and subway system.
“Critics have also tried to whitewash congestion pricing’s health benefits to communities such as Harlem and the Bronx, where kids are hospitalized for asthma attacks far more often than in Westchester, Nassau and Suffolk counties…
“Unlike those who falsely claim to speak for the best interests of my constituents, the commission ought to recognize it would be irresponsible not to pursue a policy that could provide immediate and measurable relief of traffic congestion while improving the air that all of my constituents breathe and the buses and subways that they ride daily.”
United States Department of Transportation - Federal Highway Administration