Congestion Pricing, One Year In: A Qualified Success

A full year on, let’s call New York congestion pricing — the much-beloved and much-reviled policy to charge automobiles $9 to enter Manhattan below 60th Street — what it is: a successful work in progress.

Before the first-in-the-nation plan went into effect on Jan. 5, 2025, proponents promised that the policy would bring entrenched Manhattan gridlock to heel, while foes predicted far-reaching economic and environmental harm. Gov. Kathy Hochul, fearing electoral consequences, delayed its implementation. The then-incoming Trump administration promised to kill the program in the crib.

The benefits have proven to be robust, though perhaps a bit less than advertised and not yet transformational. Although they will expand as the toll revenues transmute into long-lasting improvements in citywide transit service, making them transformational now will require implementing a suite of ancillary measures designed to allow more efficient use of the city center’s street grid.

Happily, any costs incurred so far have been difficult to discern. Yes, some $700 million has been paid in vehicle tolls (one-quarter of them as new taxi and Uber surcharges paid by customers); and the Metropolitan Transportation Authority, which designed and operates the vehicle entry fees into Manhattan’s central business district, probably expended a similar amount designing and constructing the tolling system.

But, contra the sky-will-fall predictions, congestion pricing is producing no noticeable social injury. Manhattan businesses haven’t fled. The city’s economy hasn’t contracted. Putative spillover areas like the South Bronx aren’t seeing more trucks and dirtier air. Mirabile dictu: the birth of a major public policy initiative has been attended by little if any disruption.

The absence of palpable costs isn’t surprising to congestion pricing advocates like me. The theory underlying congestion charging is as close as economics ever comes to axiomatic: Society is made better off when the negatives (sometimes called externalities) of goods or activities are covered — that is, included — in their price. 

That is true with taxing cigarette purchases and pricing emissions from coal-fired power plants. And it is proving particularly true in the case of Manhattan driving, where each minute of using a car in the eight-square-mile district south of 61st Street subjects the other vehicles in the vicinity to a collective two-minute time loss (to say nothing of obstructions and worse to people on foot or bicycling) — an unpriced harm that, until a year ago, had never been systematically priced in any U.S. city.

The toll and taxi levies have been set at a small fraction of what a cold calculation of New York City driving’s costs would dictate. That is fine. Also fine, I venture to say, is that the toll was pared back by 40% when New York Gov. Kathy Hochul postponed its start-up from June 2024 to this past January. While a $15 toll may have been closer to a transportation sweet spot, the actual $9 charge during most hours hews closer to governing reality.

Here are what I consider the key metrics from tolling’s inaugural year (some figures necessarily extrapolated to all of 2025 from the first three quarters), followed by a look at ways New York City and State can extend congestion pricing’s reach and expand its bounty.

Key metrics 

Any policy as far-reaching and innovative as congestion pricing will manifest in diverse ways. Net toll revenues and faster vehicle travel speeds are especially salient politically as well as substantively. The statutory pledging of toll revenues to transit investments guaranteed the full-throated backing of New York’s vocal transit-advocacy community. While the promise of faster car and truck trips wasn’t enough to secure similar support from motorist interests, it served as an important public and political talking point during the nearly six-year span from legislative enactment to the start of toll collection.

Shortly after the tolls launched a year ago, I expected them to net $60 million or more a month and boost traffic speeds by 4 to 5% in the congestion zone and 1 to 2% outside. Those figures came from my Excel traffic model, which I continually update, that state officials used in writing the 2019 authorizing legislation.

Results thus far are more humdrum. According to MTA figures, monthly revenues minus expenses are struggling to reach $50 million. As for traffic flow, the early euphoria of freer-flowing streets has dissipated. While some rebound in traffic was expected, data culled from Ubers and yellow cabs in motion suggest that travel speeds within the zone today are barely surpassing those from a year earlier. 

Nevertheless, transit trips are up, as are broader economic indicators from foot traffic to storefront leasing rates. Bonds secured by the toll revenues are enabling the MTA to install subway station elevators and speed its system-wide overhaul of track signals, promising faster and more-accessible transit which in turn portends further ridership gains and car reductions.

Countering the traffic current

Traffic's seeming imperviousness to the congestion toll hasn't happened in isolation, but in a very car-centric society at a particular point in time. America is chronically awash in traffic, and driving’s post-COVID’s “recovery” has been relentless. Thanks to cheaper gas, bulkier vehicles, housing shortages in city centers and burgeoning next- or same-day delivery, gridlock is worsening in most U.S. metro areas. New York’s Manhattan core is additionally seeing surging e-commerce trucking, more bicycle-borne food deliveries over ever-longer distances and even what looks to the naked eye to be a rise in obstructive driving behaviors abetted by slackened enforcement. And even as the combined number of fare trips in taxis and Ubers hasn’t budged, taxi cruising for fares has grown, along with the number of waiting Ubers taking up road space.

For a decade now, New York has required GPS devices in taxis and Ubers to upload each fare trip’s co-ordinates to municipal computers. From crunching some 200 million trip records, I determined that during the three years from the start of 2022 to the end of 2024, travel speeds in the Manhattan congestion zone (south of 60th Street) fell at an average rate of 5% a year.

Had that pattern continued unabated, speeds in the zone would have fallen another 5% in 2025. Thanks to the new toll, Manhattan defied the trend, even as congestion pricing’s power to combat gridlock was obscured by the moving baseline built on the new traffic stressors.

Is there a shortfall in congestion revenues?

Yet those traffic forces can’t explain a seeming shortfall in the toll revenues: the $10 million or more gap between my projection of $60 million a month in net revenue and the $50 million monthly net that the MTA is reporting.

More data sharing by the MTA could shed some light. To its credit, the authority maintains a web dashboard of digital revenue collection at each toll “portal.” What the authority hasn’t made available is uncollected revenue as well as toll expenses, such as:

• The number of car entries to the zone that qualify as same-day “repeats,” which are exempt from a second toll. I modeled these at just 1%. If the true number is much higher, say 10%, that would trim the congestion revenues by $3 million a month.
• The number of vehicles avoiding the congestion toll altogether by virtue of official status, license plate tampering or detection failure. I assumed a 4% rate, consistent with established non-toll-paying rates at MTA bridges and tunnels. Recent reporting on insurance and registration fraud suggests the rate may be much higher. Tripling my figure to 12% would translate to $6 million less revenue each month.
• How are tolling expenses being booked, and how big a cut is going to the tolling contractor? Are the toll system’s nine-figure capital costs being front-loaded? Same question for MTA’s planning costs during the tortuous approval process. Ditto the mitigations promised to low-income drivers and South Bronx residents facing potential traffic spillover (which evidently has not materialized).

Some of this data may already be public. But until the MTA assembles it, no one on the outside can fully validate the extent to which congestion pricing is hitting or missing its revenue targets. 

Juicing up congestion pricing

Some help on the twin fronts of traffic and revenue will come via the $3 increases in the congestion charge planned for the start of 2028 and 2031. By my modeling, each upward bump will immediately add one to two percentage points to the travel speed gain and also bring in $20 million more in monthly tolls. 

Also on the horizon is the congestion charge “carrot” of better subways paid for by the congestion revenues. The prospective impact is immense: a doubling or even tripling of the single-digit speed gains from the toll “stick” alone. 

But the timeframe for transit improvements is often more generational than overnight. To improve traffic flow sooner and help congestion pricing live up to its full promise, New York needs to get more creative — and assertive — in imposing price discipline on use of its streets and roads. Here are four ways to do that:

1. Reconfigure the taxi and Uber surcharges as a per-minute charge: The same in-vehicle GPS that demonstrated the pre-2025 Manhattan traffic slowdown makes it child’s play to peg the taxi and Uber congestion surcharges to trips’ in-zone minutes. Replacing the flat-rate $0.75 charge on yellows and $1.50 on Ubers with a nickel-a-minute zone charge for yellows and a dime for Ubers would boost vehicle travel speeds in the congestion zone by almost a full percentage point while keeping the total take the same. 

2. Uber stockpiling fee: Yellow cabs still largely “cruise” for fares, but Ubers trawl — sitting while waiting to be pinged. Charging Ubers an additional 5 cents for each non-fare minute spent within the zone would free up enough curb and road space to trigger another one percentage point rise in speeds. (Self-driving Waymos, if they’re ever allowed in the city, should be subject to a similar charge, with revenues going to transit.)

3. Charge e-commerce delivery vehicles for occupying zone space: The e-commerce industry is largely immune to congestion pricing: its vans and trucks enter (and pay) just once but take up space all day. Charging e-commerce vehicles for each minute they are inside the zone would close that loophole. The inevitable changes in truck logistics would also tilt some consumers back toward brick-and-mortar retail.

4. Per-mile food-delivery fee: Charging app companies like DoorDash and Uber Eats for each mile their food orders must be delivered (beyond an initial free mile) would incentivize customers not just to order from nearby but also to pick up or even make their own dinner. The deliverista sector might shrink, but everyone’s safety and sanity — the cyclists’ included — would get a lift. 

These are just starters. Our governor and mayor could also: tie the congestion charge more closely to vehicle size, as Paris does with parking fees; institute curb pricing, beginning in the congestion zone, where space is most dear; and finally do away with parking placards — as New York State’s “Fix NYC” report recommended in 2018. 

A year in, congestion pricing is a work in progress. Its supporters can bemoan Gov. Hochul’s downscaling the toll to $9 from the intended $15, but without that concession, the toll might not have come to pass at all. The apparent disappearance of the ballyhooed initial traffic gains, though disappointing, need not spell stasis over the long haul. Slightly lackluster revenue is a concern, but transparency, tweaks and the $3 toll bumps will help mightily on that score.

That the groundbreaking congestion toll exists at all in the face of such intense opposition is no small miracle. Transit advocates met the dark moment in June 2024 with uproarious rallies demanding the governor “flip the switch.” She did, and both congestion pricing and New York transit are now moving fully into the light. 

You can download the author's congestion pricing spreadsheet at http://www.nnyn.org/kheelplan/BTA_1.1.xls. The spreadsheet tab “Run-up to CP” derives many of the figures in this post. The author acknowledges the analytical contributions of Todd Schneider and Jeffrey Zupan.