NEW YORK - The transit authorities plan to start charging motorists a fee to drive into New York City’s crowded midtown Manhattan as soon as 2025.

The aim of the congestion pricing plan, the first in the US, is to reduce traffic and pollution while raising US$15 billion (S$20.2 billion) for the city’s subways, buses and commuter railways.

After years of wrangling between city and state lawmakers, the federal government in June 2023 gave the Metropolitan Transportation Authority (MTA) the green light to begin building the tolling structure.

In July, New Jersey sued to stop the plan on behalf of its residents.

MTA officials anticipate congestion pricing will cut the number of daily vehicles entering the district by as much as 20 per cent. Critics of the plan say it penalises drivers who already pay high tolls to get into Manhattan.

What’s the idea behind congestion pricing?

Economists call it a demand-side solution: Hike up the price of something and demand will fall – producing, in this case, clearer streets and cleaner air.

Doing that while also trying to maximise revenue makes things a little tricky. Charge drivers too little, and you will make money but still have jams.

Charge too much, and you may turn off too many drivers – great if you are going for the bike- and pedestrian-friendly option, but not so great if you really need the cash, too.

Where is congestion pricing already in place?

Singapore has charged since 1975, Stockholm made a trial run permanent in 2007, and Milan’s Area C began in 2012. Fees have been in effect in central London since 2003.

New York’s system 

The fee would apply to anyone driving into Manhattan’s Central Business District, which is south of 60th Street and includes midtown office buildings, Times Square, the Theatre District and the World Trade Centre.

The MTA, which runs New York City’s transit network, the biggest in the US, will implement the toll programme under the plan. A six-member Traffic Mobility Review Board would determine the tolling structure and any discounts or exemptions.

How much would it cost?

The new toll to enter central Manhattan could be up to US$23 during peak hours, with higher rates for vehicles without an E-ZPass transponder. E-ZPass is an electronic toll collection system used in parts of the US. 

For context, a rush-hour commuter from Princeton, New Jersey, to central Manhattan already pays roughly US$30 to US$35 in tolls, round-trip, to use the New Jersey Turnpike and a Hudson River bridge or tunnel.

Passenger cars, taxis and for-hire vehicles like Uber and Lyft would be charged only once a day. Some motorists would get discounts.

For the first five years of the programme, E-ZPass drivers earning less than US$50,000 a year would get a 25 per cent discount starting on their 11th trip within a calendar month. Car-owning residents of the Central Business District earning less than US$60,000 would get a credit on their state taxes.

How much money would this bring in?

Officials estimate the new toll would raise US$1 billion a year. The plan was for the MTA to borrow against that amount to generate US$15 billion through bond sales.

That money would then pay for transit infrastructure, including extending the Second Avenue subway line to Harlem, modernising signals and making subway stations accessible by adding and updating escalators and elevators.

Why use the money for transit?

Congestion pricing is expected to turn some drivers into users of MTA’s system of subways, buses and commuter rails, which would increase usage. That would be a welcome boost.

The coronavirus pandemic decimated MTA’s ridership, and it has struggled to match 2019 levels as remote work remains attractive for many employees. In 2026, system-wide ridership may still be only 80 per cent of pre-pandemic levels, the MTA estimates.

Who’s a fan? Who’s not?

Environmentalists, urban planners and transit advocates love congestion pricing. But some politicians have pushed back against the plan.

New Jersey Governor Phil Murphy wants to stop its implementation, saying the initiative’s current structure places a financial hardship on New Jersey commuters.

On July 21, 2023, New Jersey filed a federal lawsuit to block the plan. US representatives Nicole Malliotakis, a Republican from the New York City borough of Staten Island, and Josh Gottheimer, a Democrat of New Jersey, say congestion pricing may increase pollution and traffic in their districts while adding another toll for their constituents. BLOOMBERG