NYC’s Congestion-Pricing Plan Wins No Friends on NJ Side of the Hudson

John Reitmeyer | April 23, 2019 | Transportation
Garden State commuters already pay stiff tolls for driving into the Big Apple, but there doesn’t seem to be much support for carveouts and exemptions

Credit: NJTV News
GWB toll plaza
With the full support of regional-planning advocates, New York is moving ahead with a proposal to raise money for mass-transit improvements by tolling motorists who drive into the heart of Manhattan. Known as congestion pricing, the new initiative could help the city realize several big policy goals, including cutting back on vehicle emissions that drive up asthma rates.

But across the river in New Jersey, the notion of congestion pricing is upsetting commuters who already face high costs, including the Port Authority’s double-digit tolls and the state’s ever-rising gas tax. Gov. Phil Murphy is among those who’ve begun lobbying New York officials for exemptions or carveouts for Garden State motorists, but it remains to be seen how much success they’ll have.

Still, there could also be policy lessons for New Jersey as New York trailblazes a new way of raising money for mass-transit investment.

Is gas tax burning out?

It was just a few years ago that New Jersey enacted a $16 billion, eight-year reauthorization of the state’s Transportation Trust Fund, which relies on billions of dollars in revenue coming from the state’s tax on gasoline. But some lawmakers have already begun to question that scheme amid the rising popularity of hybrid and electric vehicles, and as younger generations of New Jerseyans show a preference for mass transit and ridesharing.

Even Murphy has suggested that the state may have to come up with a new funding “mousetrap” for transportation and mass transit. One option would be to move away from gasoline consumption and focus instead on mileage.

“I think that’s a reality that we’re going to face,” Murphy said during a recent public event in East Orange.

The immediate task at hand for the governor is deciding what to do about the congestion-pricing proposal that was recently approved by New York lawmakers. Due to go into effect in 2021, it will establish new tolls for motorists driving south of 60th Street in Manhattan.

MTA, NJT, on par for complaints

New York’s goal is to generate an estimated $15 billion in revenue for the Metropolitan Transportation Authority, which rivals New Jersey Transit when it comes to the amount of criticism aired by regular commuters. While many of the policies are still being written, some reports have suggested the tolls could run as high as $25 a day.

Congestion pricing was a key topic of discussion during the Regional Plan Association’s annual assembly, which was held last week at a hotel in Manhattan that would fall within the proposed tolling zone. The RPA, a leading regional-planning group, supports the scheme, which would make New York City the first place in the country to adopt such a policy.

Midori Valdivia, an MTA official who serves as chief of staff for the agency’s chairman, called it a “transformative moment” for the MTA.

“Right now, what we’re doing is laying the groundwork for implementation of the plan,” she said.

NJ says, ‘no thanks’

But congestion pricing is also drawing sharp criticism, especially in New Jersey, where concerns have been raised about double taxation. Some public officials, including U.S. Rep. Josh Gottheimer (D-5th), have proposed enacting retaliatory measures if New York goes forward. These include passing federal legislation that would threaten any federal aid for projects across the river if congestion pricing takes effect.

“Proposing a new regressive congestion tax out of the blue on New Jersey commuters who already pay a fortune is no way to make this region stronger,” Gottheimer said during a news conference in Fort Lee that was held last week at the foot of the George Washington Bridge, which is above the proposed tolling zone.

Congestion pricing could also push more people onto NJ Transit, which relies heavily on TTF revenue for capital funding. And while Murphy has started to boost the operating subsidy for NJ Transit out of the state budget, the agency continues to divert significant dollars from its capital resources to cover operating costs. Yet when the issue of whether NJ Transit could get a piece of the revenue haul from congestion pricing came up during the RPA event, New York officials made it clear New Jersey will be on its own.

Meanwhile, Murphy is seeking exemptions for Garden State residents who regularly drive into New York, but policy experts are concerned about what could happen if too many are handed out, even if they are for seemingly good reasons. The New York legislation already provides some carveouts, including for the disabled and low-income motorists.

“Every carveout means that the rest of the drivers pay more,” said Kate Slevin, the RPA’s senior vice president of state programs and advocacy.

Right now, New Jersey’s primary source of revenue for road, bridge and rail-network projects is the Transportation Trust Fund, which is supported by the gas tax and borrowing and also draws federal matching dollars. The TTF was last reauthorized in 2016 after lawmakers and then-Gov. Chris Christie agreed to enact a 23-cent gas-tax increase. As part of the same deal, lawmakers also linked the gas-tax rate to consumption, meaning it can rise and fall depending on whether a specific revenue target is met.

A drop in revenues

Last year, after revenues fell short of the goal, a 4.3-cent hike was enacted, pushing the rate up to a record high of 41.4 cents.

Sen. Steve Oroho (R-Sussex), one of the main drivers of the 2016 TTF legislation, said there were discussions at the time about creating some other way to pick up revenue from the motorists who aren’t buying gas, but none made it into the final legislation. That’s become a concern given the current trends in gas consumption, he said.

“There are many other cars using the infrastructure that are not being charged,” Oroho said during a budget committee hearing in Trenton earlier this month. “It’s becoming more and more apparent, and more and more important.”

Perhaps one silver lining of New Jersey’s current approach to transportation funding is that the TTF is now providing more state money for county and municipal road improvements. That means state gas-tax dollars — including some provided by out-of-state motorists who buy gas in New Jersey — are funding projects that would otherwise have to be paid for with property taxes.

“The vast majority of the 23 cents went to local aid,” explained state Department of Transportation Commissioner Diane Gutierrez-Scaccetti during a recent event in Atlantic City.