Urban Partnership Agreement Low-Income Equity Concerns of U.S. Road Pricing Initiatives
Equity concerns have often been raised about congestion pricing. When public use of infrastructure assets is deliberately made more expensive at certain times, low-income people and those concerned with their welfare may raise legitimate concerns about equity. With congestion pricing, the truth is much more complicated than it appears and carefully designed congestion-pricing projects will typically improve equity. This paper presents information on the low-income equity issue in two sections: (1) an overview of what is known about the low-income equity issue based upon current literature and (2) what is known about the issue, at this point in time, from the five U.S. Department of Transportation (DOT)-funded Urban Partnership Agreements (UPAs).
Based upon value priced facilities currently in operation along major transportation corridors experiencing high levels of congestion in California, Minnesota and Texas, the data has shown that a wide range of income groups use the value priced lanes at different levels of frequency. Research from San Jose State University and the University of California, Berkeley suggest that the differential impacts of congestion pricing often relate more to user schedule flexibility and route availability than to income. Nevertheless, equity and fairness concerns may still be able to prevent congestion pricing implementation.
Studies of the SR-91 express lanes in California have shown that at any given time about one-quarter of the vehicles in toll lanes belong to high-income individuals, while the remainder of toll-lane users are low- and middle-income individuals. Based on research conducted in California, certain pricing schemes do not necessarily disadvantage low-income drivers. In evaluations of SR-91, it has been shown that low-income drivers do use the express lanes and are as likely to approve of the lanes as drivers with higher incomes. In fact, over half of commuters with household incomes under $25,000 a year approved of providing toll lanes.
Research has identified some suggested strategies to redistribute toll revenues that include distributing rebates or credits or transferring revenues to transit and carpooling services in the corridor. One model for how toll revenues may be redistributed is seen in California which mandate that 18% of toll revenues from the Bay Area Toll Authority be transferred into three accounts controlled by the Metropolitan Transportation Commission.
Users on San Diego's I-15 HOT lanes were more likely to have higher incomes than drivers in regular lanes, but lower-income drivers did sometimes use the HOT lanes. Attitudes of I-15 drivers showed a broad approval of the HOT lane program, perceived it to be fair, and noted that it had reduced congestion. Equity issues in this corridor are being addressed by dedicating some of the express lane revenues to bus service. I-15 was the first project that demonstrated how implementing tolls as a demand management measure can play a major role in paying for transit and reducing the impact of pricing on low-income individuals.
While limited, evidence from the successful operating projects from the Value Pricing Pilot Program clearly shows that the most important goal of tolling and pricing projects is that of providing travelers with a choice. People appreciate the ability to have a choice on whether or not to use priced lanes. A commuter's decision on whether to use the express lanes hinges on many factors and does not solely depend on income level. Studies have shown that lower income individuals face the greatest financial harm when they are denied adequate choices. Lack of choice can result in lost wages or late fees for day care that could have been avoided had they been provided the opportunity to secure a reliable trip. Data from projects have demonstrated that even when priced lanes are seen to be more frequented by high-income users than low-income users, users of all incomes still express approval of the projects because they provide everyone a choice of using the tolled route, an alternative route, or a different transportation mode.
Equity Implications of Urban Partnership Agreements
A quick survey was conducted of the five UPA cities to see what information they might already have about the real and perceived equity implications of their projects. All cities provided some information, but the types and quality of information provided varied substantially. In addition to equity by income, regional equity was also considered in some instances, since the costs of congestion pricing and the distribution of benefits (typically in the form of new transit and ferry services funded from tolling revenue) may be distributed unequally, just as the costs and benefits of pre-congestion-pricing transportation policy may be distributed unequally. The comprehensive evaluations taking place in the five UPA cities will each, to some degree, provide further examination of equity issues.
The only information provided from Miami was a summary report of South Florida managed lanes focus groups that took place in 2005. The focus groups discussed potential traffic-improvement strategies, including managed lanes. Of the nine focus groups of approximately ten participants each, five were conducted in English, three in Spanish, and one in Creole. While focus groups by their nature do not present a statistically valid representation of public opinion, their results may nevertheless be indicative of such opinion. They also have the benefit of making sure people fully understand something before voicing their opinions.
A key finding of the focus group report is that the perceptions of benefits from managed lanes do 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 do so, participants generally perceived that both personal and regional benefits would result from implementation. As could be expected, participants did say that they would use the managed lanes less frequently as the price to do so rises. Interestingly, though, many had been unaware of toll increases that took place in the region shortly before the focus groups were conducted, suggesting that they might be overestimating their price sensitivity.
Two sources of equity information were provided from this region: a report on the I-394 MnPASS evaluation attitudinal survey that was conducted in 2006 and a Master's thesis research paper, "Lexus Lanes or Corolla Lanes? Spatial Use and Equity Patterns of the I-394 MnPASS Lanes." The attitudinal survey asked about both usage of and support for the I-394 MnPASS lanes, where solo drivers are charged between $0.25 and $8 per trip depending upon demand. MnPASS usage was reported across all income levels, including by 79% of higher income respondents, 70% of middle income respondents, and 55% of lower-income respondents. Support for the lanes was also found to be high across income levels, including by 71% of higher income respondents, 61% of middle income respondents, and 64% of lower-income respondents.
The research paper, "Lexus Lanes or Corolla Lanes? Spatial Use and Equity Patterns of the I-394 MnPASS Lanes," sought to answer the question of whether the higher levels of managed lanes use found among wealthier drivers was attributable to their residential location (specifically along the managed lanes corridor) or to their income. Both were found to be significant. It was pointed out that, from an equity standpoint, the highest income motorists paid the most (in average and total tolls) and received the most benefit. Finally, the paper cited some specific equity benefits of managed lanes, including: vehicle shifts away from the general-purpose lanes improving travel conditions on such lanes; a high quality transit alternative is generally part of a managed-lanes project; even unused transponders may be considered to provide high-value travel-time insurance to their owners, and; when the social benefits are paid for by those choosing to drive, situational equity is generally improved.
Only a single slide was provided by San Francisco which summarized a 2007 survey of 600 residents of the region that asked about support for studying congestion pricing, and follow up is now occurring to see if any additional information might be available. Support was found to be slightly higher among very low and low income residents of the region than among other residents. San Francisco 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 cause them to value reduced congestion and greater travel time reliability more highly.
A King County transportation survey was conducted in December 2007. Many questions were asked of the 501 respondents, a number of them having to do with support for tolling. While 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 as against other alternatives when a specific infrastructure need was presented, with between 78 and 84% (depending upon the order in which answers were presented) preferring electronic tolls over a sales tax increase to fund the 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 such a diversion to occur. A toll of $2.50 to fund the replacement of the Lake Washington floating bridge was supported by 64% of respondents, while 74% supported a $4 toll to fund the bridge replacement along with increased transit and bicycling investments in the corridor. Thus, the equity and/or other benefits of increased transportation options were shown to be more important to respondents than keeping the toll rates as low as possible.
With revenues dedicated to replacing the 520 bridge, 69% of respondents indicated support for variable tolling. On another roadway where the need for tolling revenues was not also presented, only 28% of survey participants indicated support for congestion tolling even after the benefits of such tolling were described to them. The bottom line is that the use of revenues is an extremely important determinant in whether the public will support congestion pricing, and indeed 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 City
Two very different pieces of information were provided by New York. One was analysis by the New York City Traffic Congestion Mitigation Commission about the regional equity implications of three of the cordon pricing and tolling scenarios, and supporting transit services, that are being consider. The other was a blog posting by New York City Councilwoman Melissa Mark-Viverito, who represents Manhattan's Eighth District. A third document, an announcement of a February 4, 2008 press breakfast hosted by COMM.U.T.E!, provided documentation on current racial and economic inequalities in commute times. The document showed that 64% of those earning under $35,000 per year commute more than one hour each way in the New York City region, versus only 6% for those earning over $75,000 per year. Similarly, while whites make up 41% of all commuters and blacks make up 22%, white commuters make up only 34% of those having to endure commutes of 50 minutes or longer, while blacks make up fully 28% of such commuters. COMM.U.T.E! argues that this proves that existing transportation policy is inequitable and it endorses congestion pricing and specific transit investments as a partial remedy.
The Commission's analysis of the regional equity implications of the scenarios under consideration started by emphasizing the regional inequities from existing toll policies, where 45% 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% of the total drivers heading into the CBD. This 45% figure compares to Manhattan drivers paying only 7% currently, and residents of the other four boroughs of New York City paying a total of 29%. For new tolls under the various scenarios, Manhattan residents would pay between 28 and 31%, residents of the other four boroughs would pay between 38 and 49%, and New Jersey residents would pay only an additional 7 to 17%. 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 in by car.
The analysis concluded that between 22 and 24% of revenues for the transit subsidies would come from Manhattan drivers and 41% 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, where tolls are added 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, partially excerpted below, speaks best for itself:
"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."
The Mayor's proposed congestion pricing plan, the alternative congestion pricing plan, and the toll plan all include the imposition of new fees and tolls. In order 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 raises several issues for further consideration:
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 from Upper Manhattan to the Financial District would pay about $2,000 in congestion fees each year (versus $912 a year for 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 Mayo's plan.
Those who commute by car to the CBD earn comparatively higher incomes:
Agency staff analyzed the income levels of city and suburban residents who use the auto 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. This compares to a median annual income of $46,416 for all workers in Manhattan, including the 1.85 million 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 to 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 into the CBD take transit or walk, and would not be impacted by a fee or toll. Of all City residents who commute to work, only five percent drive to the CBD. Of that five 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 one 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 represents a further sub group within this one percent.
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 City residents rely more on transit for their travel needs as compared to higher income City residents. Therefore, these residents would benefit more from the short-term transit enhancements that would precede a toll or fee plan and from the expansion to transit system made possible by increased revenues for transit investment.