Congestion Pricing Across America

Congestion pricing in New York City has been a clear success. Traffic is down, public transit commutes are up, the Metropolitan Transportation Authority is raising substantial revenue to modernize transit (over $215 million in the first four months) and even car accidents have seen decline. And contrary to the predictions of skeptics, congestion pricing has not slowed workers’ return to the office — which actually appears stronger in New York than in other cities. 

So far, congestion pricing has also held up in the courts — with a federal judge this week ruling the program could stay in place, for now, despite federal attempts to cancel the program. 

The success of this approach should pave the way for the adoption of congestion pricing in many more traffic-choked metro areas across the country. As cities around the country struggle with sluggish transit use, fiscal challenges and quality of life problems, congestion pricing is one policy that can help revive downtown areas.

NYC’s success should spur more cities to adopt congestion pricing. Here are a few zones which might work pic.twitter.com/y507X87PSD

— Arpit Gupta (@arpitrage) May 22, 2025

Let’s start with the obvious problem targeted by congestion pricing: auto traffic. Despite the impact of remote work in reducing some office commutes, cities have seen traffic come roaring back in the postpandemic years. Even San Francisco, the poster child for postpandemic sluggishness, has seen traffic volumes return to prepandemic levels. In part, this is due to new commutes and trips across the metropolitan area — many of them longer than before — which result in congestion and pollution concentrated in metropolitan cores.

The flip side of high auto traffic is weak public transit usage. Cities across the country have struggled to revive their public transit systems, and are even facing fiscal cliffs in coming years as postpandemic support dries up. The fundamental risk is a “death spiral” of transit usage: unless new funding sources can be developed, transit systems will have to cut back on operations, which will further drive down usage. 

Congestion pricing corrects this dynamic in two ways. First, by creating a financial incentive for commuters to take transit over driving, congestion pricing can help drive further increases in transit usage. Systems with more riders typically see lower levels of  disorder and crime, because “eyes on the street,” or in this case, on the train and platforms, discourage bad behavior. 

Second, the funding generated by congestion pricing can be directly applied to transit improvements, as New York City is doing. Many transit networks across the country have seen that such improvements — for instance, the electrification of Caltrain — also help draw more commuters into the system. Congestion pricing revenue, if wisely spent, can provide a fiscal boost for these transit systems.

Such resources are especially essential in today’s broader fiscal environment. Urban grants of a variety of forms are drying up, and cities are facing growing pressures in their traditional revenue streams due to the population losses they experienced over the pandemic; the loss in value of office buildings in which remote work has reduced occupancy; and new cutbacks in immigration, a traditional source of new residents for cities. Cities like Chicago are facing municipal downgrades, while cities like Los Angeles and San Francisco face substantial budget deficits. Together with co-authors, I have referred to these challenges as potential catalysts for an “urban doom loop” if cities are not able to effectively manage them.

Congestion pricing — which taxes problems like pollution, which harm society, and uses the revenue to maintain essential services — is a far more appealing source of funding than most other sources, like income or sales taxes, which may trigger broader population outflows and cost-of-living concerns. 

How would it work? Cities across the country have already considered congestion pricing as an option, but were waiting to see New York City’s experience. The first basic step for cities like San Francisco or Chicago is to develop an internal consensus that pursuing congestion pricing would be valuable, develop a proposed system and then pursue implementation. 

However, there are a few basic challenges that cities face in implementing congestion pricing. The first and most obvious one is legal: Cities typically lack the authority to implement congestion pricing. In New York City, this legal authority had to be granted by a vote from the state legislature. Similar efforts should be pursued in other jurisdictions, for which the success of New York can provide a motivation. 

Yes, federal law prohibits local taxes imposed on these roadways, which is why New York City went through extensive rounds of federal oversight and environmental clearance to implement congestion pricing in its area, which included some federal roads. This approval was ultimately granted under a pilot program, the approval of which the Trump administration has tried to cancel. The Trump administration would most certainly try to stand in the way of other jurisdictions starting their own congestion pricing programs — though the first Trump administration had advocated for user fees.

Cities should not be deterred by these legal challenges. Under fiscally strained conditions, it is necessary to find creative sources of revenue that come with limited costs, and congestion pricing is a key example of this. 

If cities are able to clear these legal hurdles, there are several choices about how congestion pricing should be implemented. Other cities would have to learn from New York City’s example. The first basic choice is between a cordon- vs. a region-based method. Cordon-based congestion pricing zones (Stockholm is one example) typically focus on pricing checks through a handful of entry points. These are ideal for urban environments which already have a number of chokepoints (bridges, tunnels, etc.) on which tolls can be deployed. In the region-based approach, as seen in London, cities have to instead deploy a larger number of cameras to capture traffic from a larger number of entry points.

The basic trade-off is that cordon-based approaches can be cheaper to deploy and easier to implement; however, they may require a larger congestion pricing zone in order to hit key geographical chokepoints. Region-based approaches can be more targeted to specific congestion pricing areas, but are typically more costly to roll out. 

New York City has a topography well-suited for a cordon-based approach, but it actually opted for the regional approach, primarily to avoid imposing tolls on the FDR Drive and the West Side Highway. This option presented the benefit of allowing commuters to avoid the congestion pricing zone if they went into Lower Manhattan. However, this design choice then required a large network of cameras and a high operational cost — New York City spent over $500 million in startup costs, and will spend over $100 million annually in operations.

An alternate strategy in New York could have entailed simply using the existing tolling structure on bridges and tunnels, perhaps adding some tolls on existing free bridges. This would have had the advantage of not requiring federal approval and would have been pretty cheap to implement. However, part of the revenue would then have had to be shared with New Jersey through the Port Authority. Other cities can consider simply adjusting tolls on existing roads and bridges to better manage congestion and traffic, as an existing approach that is easier to implement.

Cities would also have to choose how much to toll rideshare services like Uber and Lyft. New York City’s approach taxes these rideshare services a relatively small amount (an additional congestion pricing surcharge of $1.50), which some researchers have suggested may lead to relatively small traffic reductions inside the congestion zone itself, where rideshare trips make up a substantial portion of all traffic. Taxing rideshare closer to parity with ordinary traffic may help to limit the diversion of trips towards rideshare, and many cities (such as Chicago, and New York City before congestion pricing) already charge rideshare congestion charges in certain zones anyway.

The other major choice cities face is how to spend congestion pricing revenue. New York City’s approach has been to focus the spending on the MTA. This approach will yield important accessibility and transit improvements. However, the scale of these improvements strikes many observers as relatively small given the $15 billion in revenue generated.

As has been richly documented, the MTA’s spending is poorly controlled. There have been some improvements in this regard — for instance, lower station costs in the Second Avenue Subway expansion and direct-to-platform elevators that avoid a duplicated set of elevators. Still, it is essential for cities to insist on productivity improvements alongside new funding streams.

Another key question is where transit investments should be made. Congestion pricing largely ends up taxing commuters coming in from New Jersey, upstate New York and Long Island — places where commuters don’t have great transit options already. However, the new transit spending is largely going to the five boroughs, further improving connectivity for residents who typically take public transit anyway. 

An alternative approach would have been to dedicate more funding towards precisely the residents who would be most impacted by congestion pricing — focusing on additional transit improvements in buses, New Jersey Transit, Long Island Rail Road and Metro-North. The patchwork nature of local governance across multiple and competing entities is a challenge here — and would surely be so in other cities trying to implement a congestion pricing program.

There are few easy fixes to urban governance, but congestion pricing is the rare policy that can simultaneously fix a big problem while raising revenue. As cities nationwide grapple with fiscal pressures, declining transit ridership and the need to revitalize urban cores, New York City’s success with the policy should inspire cities around the country to adopt it.