Can congestion pricing revenue defuse the political mines?

Roads

Can congestion pricing revenue defuse the political mines?

by David Alpert • May 20, 2009 9:46 am

Political will is all that stands between the Washington region and greatly reduced traffic congestion. One of the largest political questions around such a program is what to do with the money it raises. Can the two political issues dovetail in a way that clears the way for congestion pricing?

Image by diwong.

The Federal Highway Administration, of course, would prefer to spend such money on highways. Their report suggests using the revenue "to improve HOV alternatives as well as maintain the roadways, address choke points and bottlenecks, and improve alternate routes." That mainly means HOT lanes, which are the wrong answer. More roads, especially more toll roads, only exacerbate the already-great economic inequalities that come from having expensive housing near jobs and transit and cheaper housing far away.

Many argue that congestion money should go to transit. The dollars car commuters pay could increase the alternatives to car commuting. Logically, that would help further drive down congestion, enabling those car commuters to face even lower traffic. Mayor Bloomberg proposed this, dedicating the money to a new authority that would develop new subway and BRT service in New York City.

Bloomberg believed that this would blunt the arguments that congestion pricing hurts poor drivers, by giving the residents of car-dependent parts of the city new, fast alternatives to driving. Unfortunately, the state legislators who scuttled the plan themselves drive, their friends drive, and their campaign contributors drive, even though most of their constituents take transit.

Is there an alternative? On FiveThirtyEight.com, Robert Frank points out a very similar issue in recent memory: free directory assistance. Until the mid-1970s, all calls to directory assistance were free. Of course, many people called directory assistance, using up operator time and costing telephone companies money, even when they could just check the phone book. The Public Service Commission wanted to charge ten cents per directory call, but according to Frank, "Social scientists appeared before the commission to testify, preposterously, that charging for directory assistance would disrupt vital networks of communication in the community."

The Commission then hit on a simple solution. Every telephone subscriber got a 30-cent monthly credit, regardless of how often he or she used directory assistance. People who called three times a month saw no net effect, while anyone who called less often saved money. Frank writes, "Political opposition vanished instantly, and today no one questions that the new policy makes perfect sense."

Frank suggests extending the same concept to congestion pricing:

The burden [on low-income workers who have to drive] could eaily be eliminated by giving every low-income worker in Manhattan an annual allotment of transferable congestion vouchers. On the rare occasions when these workers needed to drive into the city, they could do so free of charge. And they could earn some extra money by selling any vouchers they didn't need on Craigslist.

Could this model work in DC? We could give everyone a tax credit who pays payroll taxes in the congestion zone. That tax credit could equal the total revenues from the congestion system. We could also give everyone "vouchers" against E-ZPass charges, but it'd be important to give something to every worker, not just every driver. After all, the system gains the most congestion savings when as many of people switch to transit as possible.

This resembles some carbon pricing proposals, which would impose a carbon tax but then give all the revenue away as tax credits to everyone. Either way, it creates an economic incentive against doing something that produces externalities, without increasing or decreasing the size of government. It's worth exploring, at least.

20 comments

Tags: congestion pricing, economics

Congestion pricing, pro and incoherent (Nov 22, 2005)
Conservatives for congestion pricing (Feb 8, 2007)
MoCo planners considering congestion pricing (May 27, 2008)
Field report: San Francisco congestion pricing workshop (Aug 5, 2008)
Regional congestion relief for the cost of a latte (Mar 29, 2010)

David Alpert is the Founder and Editor-in-Chief of Greater Greater Washington and Greater Greater Education. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He loves the area which is, in many ways, greater than those others, and wants to see it become even greater.

Comments
Add a comment »

It may be difficult to do on a regional basis, but in principle it is quite sensible.

More generally, I would favor raising the gas tax and using any revenue to eliminate the first X dollars of payroll tax such that it's revenue neutral. That way everyone who works a little bit gets that money back.

by ah on May 20, 2009 10:16 am • link • report

@ ah: I second you. Congestion taxes are elaborate and inefficient. Gas taxes rule and have the added advantage that it hurts low mileage car owners more than high mileage cars.

by Jasper on May 20, 2009 10:38 am • link • report

Unfortunately gas tax treats every gallon of gas the same, whether it's consumed on a deserted country lane, or a crowded urban freeway. Sure, the freeway driver is going to pay a penalty for the inefficiency of being stuck in slow or stopped traffic, but is it enough to send the right "price signal" of the true cost of what the driver consumes in terms of asphalt space, environmental damages, etc.? Gas taxes still give the illusion that driving on the highway is "free", and as some wise sage once said, "there's nothing more expensive than 'free'". Similarly, part of the "crisis" in health care is due to the lack of price signals to the end user so that rational cost/benefit calculations can be made. People on employer-based health insurance plans never see the true prices they pay for their care, and neither do retirees who get lot of their health care for "free" via Medicare.

by Paul on May 20, 2009 10:54 am • link • report

Jasper, you mean it hurts the person more who can only afford a used 1999 model for $4000 and hurts less the person who can afford a $30,000 prius. I'm not opposed to it, just thinking about who pays up front short term. There MUST be improved access to mass/alternative transportation along with it. Clearly there is long term benefit affecting everyone with reduced pollution. I do think one of the affects will be to cause people who can afford the more effecient car to get one of those instead of the guzzler, and it will cause those same people to think more about their driving habits. People who count nickles to buy gas now are already conscious of their driving habits.

by Bianchi on May 20, 2009 10:55 am • link • report

@ Paul: Seriously. Highways are free? Who built them? Little magical dwarfs? Can we stop this non sense?

@ Paul & Bianchi: Isn't the overall goal to reduce CO2 exhaust? CO2 molecules really don't know whether they are made on a desert road or on a highway.

@ Bianchi: Obviously, there must be much more transit. A congestion tax isn't gonna build more transit though.

by Jasper on May 20, 2009 11:14 am • link • report

Paul, while it's true that gas taxes don't address the congestion problem, the price of gas is one of the most transparent pieces of information out there. Price signals most certainly have altered behavior, and a tax that increases the cost of driving will have effects. As for solving congestion, perhaps not.

Bianchi -- the key question is what to do with the revenues. On the one hand, yes, putting the money towards public transit will be win-win. But for political support, it's a lot easier to tell people that they'll get the money back in their paychecks instead.

by ah on May 20, 2009 11:15 am • link • report

@ah-- Yes, price signals undeniably influence behavior, but the current federal 18-cent gas tax and its various state and local add-ons are very weak price signals, and get all but buried in fluctuations in the price of crude. I'm all for price signals, just a different kind more directly tied to peak highway usage. It bears mentioning that last year's spike from around $2 to more than $4 a gallon was more than 10 times the current federal tax. And that kind of tax increase would unfairly burden rural folks and farmers who can't take transit.

@Jasper -- I'm an agnostic on anthropogenic global warming and GHG, but there's no denying the direct relationship between consumption of petroleum distillates and traffic congestion, not to mention low-level pollutants like particulates, ozone and hydrocarbons and long-established links to their adverse effects on human health. It's intensity of usage that causes those pollution problems. Putting an additional 30k cars a day on the road in Wyoming is not a problem. Putting those cars on the road in DC is. Furthermore, if electric, hydrogen, CNG, etc. vehicles make serious inroads, we're going to be forced to come up with a new pricing structure to replace the gas tax anyway. We might as well get a head start come up with one that addresses capacity and congestion issues, as well as transit alternatives.

by Paul on May 20, 2009 11:44 am • link • report

@Jasper Again no one said roads are free. What he said was "Gas taxes still give the illusion that driving on the highway is 'free'" (emphasis mine).

I agree with everything Paul said. This is about fixing congestion. Gas taxes don't do that and we're going to have to move away from a gas tax anyway.

As far as a congestion tax being inefficient that can be easily fixed.

Step 1: Add wifi to all cars attached to the odometer (or GPS).

Step 2: Each time the car is filled up (or plugged in or whatever) it downloads the amount the car drove since the last time.

Step 3: The tax is automatically added to gasoline, hydrogen, CNG or electric bill.

Effortless

by David C on May 20, 2009 11:58 am • link • report

David (Alpert): please elaborate on why HO/T lanes are the "wrong answer". Are you basing this (as you did before) on how the D.C. region is going about it, with a private consortium running the HO/T lanes? Are you basing it on that FHWA report? Or have you not looked elsewhere in the country to see what's already happening?

Again, I point out the example of the existing HO/T lanes on I-394 and the under-construction HO/T lanes on I-35W in Minneapolis, MN. Tolls from the I-394 HO/T lanes support transit service in that corridor, and the same will happen for I-35W once its lane is complete later this year.

by Froggie on May 20, 2009 12:16 pm • link • report

Looking at my previous comment. Step 1 has to be GPS, because it has to know where you are and when you were there. It would help if a little light lit up on your dashboard to let you know you were being charged too.

by David C on May 20, 2009 12:34 pm • link • report

Perhaps choosing one solution is not the right answer. A gas tax would curtail driving a little bit overall and a congestion fee would curtail a specific behavior. I still think a gas tax is regressive, but perhaps with the correct credit system for low income drivers it would be less so. Returning the congestion fee revenue in the way you describe in this post would make it more popular but perhaps slightly less impactful. The dollars would be beneficial if they went towards transit, but that bill might never pass.

by Nick Partee on May 20, 2009 12:42 pm • link • report

@ Paul: I'm an agnostic on anthropogenic global warming and GHG... etc

Sigh. Claiming agnotism on global warming presumes that global warming has to do with faith and believing. There is no faith or believing in science and the laws of nature.

You can not believe in gravity. It's there. Undeniably.

You may not be an expert on the subject. You may be ignorant on the subject. You may doubt certain aspects of a model. You may be an expert and have issues with certain details of the presented models describing the laws of nature. But claiming agnotism on science is equating science with faith.

Science and faith can not be compared. Their inner workings are diametrically opposed.

I am wondering off-topic. Sorry. I'll stop.

by Jasper on May 20, 2009 12:46 pm • link • report

Decreasing congestion has to be a goal in itself. Even if the same amount of miles are driven, in the same cars, decreasing congestion results in less pollution (including greenhouse gases). That's because congestion results in more idling and stop-and-go driving, which is less efficient. It's also a waste of time and a bunch of unhealthy stress for drivers.

So I'm all for the social goal of less car-dependent communities. And I'm all for the environmental goal of less pollution and lower greenhouse gas emissions. And less wear-and-tear on roads, and less oil consumption... But reducing congestion is worthwhile goal as a specific goal, as part of all the above.

Switching drivers to more fuel-efficient or less-polluting cars won't reduce congestion. Reducing driving overall may not necessarily reduce congestion: in fact, I think people would cut back first on the "non-essential" driving (e.g., by combining shopping trips), rather than on commuting.

Congestion needs to be targeted head-on. I'm for any solution that doesn't involve building more roads. I think some sort of congestion pricing has to be part of the solution.

by Gavin Baker on May 20, 2009 12:47 pm • link • report

How would congestion pricing in DC work? Manhattan had much easier choke points to control and monitor traffic. I support the economic principle, but wouldn't the Maryland side be tough to enforce? i.e.- how do you stop people from jumping on neighborhood roads to get around the booths on Rhode Island, Georgia, New Hampshire Aves, etc.? Or do you just assume that most people will stick with arterial access like Rte 50/NY Ave and the BW parkway?

Also, at what price point do we push too many people onto community streets to avoid the tarriff? I am assuming we would have an EZ Pass booth at every arterial entrance to the city. Do we need cash booths as well? Is there an exemption for neighborhood travel?

How does this work on the VA side? Chain Bridge/Glebe Road and 395/SW Freeway look pretty simple, but where do you put a booth on the Key Bridge?

My major point is that I love the idea of congestion pricing, but implementation is everything. How do we pay for implementation and how do you actually enforce your goals without ending up with serious negative outcomes?

by Brad Soule on May 20, 2009 4:31 pm • link • report

@Jasper

http://www.merriam-webster.com/dictionary/agnostic

Take a look at # 2.

by Steve on May 20, 2009 4:35 pm • link • report

@Brad Soule--congestion pricing need not be on the Ken Livingston model of taxing only traffic entering the city center. For instance, the state of Oregon floated the idea of an odometer-based charge. We could make that idea a little more targeted. Enact a steep regional gas and alternative-fuels sur-tax, but exempt those willing to install a GPS-based congestion-based meter that would encourage different driving habits. Right now, in the absence of a gas price shock, the major motivator keeping people off the roads at peak hours is the legitimate fear of being caught in horrendous congestion. (The regional tax would also allow visitors and short-timers in the area to continue using the roads.) Those that want to drive essentially unlimited miles at peak hours can continue to pay the hefty surtax. Those willing to limit or eliminate their peak usage will get billed each month via the meter.

As I pointed out earlier, if we are serious about "energy independence" and alternative fuels, the gas tax will eventually become obsolete (that's in the long term) and more and more unfair in the shorter term as electric/hydrogen/CNG/what-have-you users continue pay no motor fuel tax for the space they take up on the roads.

@Steve -- On the term agnostic, thanks. Obviously I meant definition #2. I've heard the arguments of both sides, and neither one (yet) has convinced me. And before someone says that AGW is "settled science," let me point out that true science is never "settled" --all sorts of hokum was once considered "settled" and mainstream--and anyone that says that it is settled either knows very little about science or is grinding a political ax. And sometimes it's both. (See also: Gore, Al)

by Paul on May 20, 2009 5:39 pm • link • report

@ Paul

From an enforcement perspective, I can understand the how raising gas tax and discount people who install GPS tracking. But from an implementation perspective I see it just as difficult (or maybe more difficult) than tolls on the arteries or beltway. Let me frame your idea another way as a devil's advocate: 1. Raise gas taxes across significant (but not all) parts of three state jurisdictions; 2. Convince the general public to let the government install GPS tracking devices in their personal vehicles so that the government can "only" track how far you drive; and 3. Create equitable tax rebates (income or payroll) across all three state jurisdictions that allow you to discount the high gas taxes.

I think the jurisdictional issues alone are enough to kill that idea, let alone the civil rights issues that come with government tracking your car. However, you might get around that by doing odometer checks during emissions inspections or license renewals... still, crossing that hump would be pretty tough.

by Brad Soule on May 20, 2009 5:52 pm • link • report

But Paul, I see no reason not to tax hydrogen, or separately configure electric use for car charging. Ethanol is already easily taxed.

Putting GPS in each and everyone's car and then monitoring them 24/7 would not only be expensive, but it would produce outrageous data security and civil rights issues. Take a look at this interesting article about the uniqueness of commutes based only on census tracts. A disturbingly simple hack of the system could yield all sorts of goodies for all manner of unsavory personages, including spammers.

Even if it's voluntary, it's pretty unwise in my opinion.

by цarьchitect on May 20, 2009 6:08 pm • link • report

@ Steve: I understand that what he's trying to see, but I object to the terminology. Paul makes the point himself. But the wrong way. The reason why science is never settled, is to allow it to develop. That's the whole freaking point of science. Doubt is what makes science different from faith. Paul admits not knowing enough to make up his mind. While it is hard to believe that you can be informed and not come to a conclusion that is better than saying you're agnostic. I know I am splitting hairs, but as a scientist - not a politician - it drives me insane that non-scientists tell me what science is, and how it is practiced, only to immediately turn around and abuse the ever-present doubt in science as proof against scientific reasoning. I digress again. Shouldn't do it here. Not the correct forum.

And thank you architect for standing up against everybody being GPSed. Where am I? In the USA, or the USSR? WTF?

by Jasper on May 20, 2009 9:05 pm • link • report

Why not just give an incentive to use a car sharing service such as Zipcar?

by robthebear on May 20, 2009 10:05 pm • link • report