Executive Summary

Traffic congestion frustrates millions of American motorists every working day. The delay and wasted fuel from being stuck in traffic cost over $40 billion a year. Moreover, vehicles mired in traffic jams increase air pollution. With travel demand far outpacing the provision of highway capacity, there is little prospect that congestion will be eased simply by building new highways or transit systems. After billions have been spent on new highway and transit systems during the last two decades, it has become clear to many that America 's metropolitan areas cannot build their way out of congestion.

Transportation policy is increasingly focused on managing the demand for transportation to alleviate adding capacity on new highways for use by solo drivers. Demand management measures include efforts to encourage ridesharing, telecommuting, walking, and use of transit. This shift in policy, combined with motorist frustration with congestion, environmental goals for cleaner air, and rapid advances in electronic toll collection, has renewed interest in an old idea—congestion pricing.

Congestion pricing would charge a premium to motorists who wish to drive during peak travel periods through strategies that could include tolls on roads or bridges, fees to enter congested areas, or changes in the structure of parking and transit pricing. When faced with a congestion fee, some motorists would decide to drive to another destination, at another time, or on another route; share a ride; switch to transit; or find some other



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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion Executive Summary Traffic congestion frustrates millions of American motorists every working day. The delay and wasted fuel from being stuck in traffic cost over $40 billion a year. Moreover, vehicles mired in traffic jams increase air pollution. With travel demand far outpacing the provision of highway capacity, there is little prospect that congestion will be eased simply by building new highways or transit systems. After billions have been spent on new highway and transit systems during the last two decades, it has become clear to many that America 's metropolitan areas cannot build their way out of congestion. Transportation policy is increasingly focused on managing the demand for transportation to alleviate adding capacity on new highways for use by solo drivers. Demand management measures include efforts to encourage ridesharing, telecommuting, walking, and use of transit. This shift in policy, combined with motorist frustration with congestion, environmental goals for cleaner air, and rapid advances in electronic toll collection, has renewed interest in an old idea—congestion pricing. Congestion pricing would charge a premium to motorists who wish to drive during peak travel periods through strategies that could include tolls on roads or bridges, fees to enter congested areas, or changes in the structure of parking and transit pricing. When faced with a congestion fee, some motorists would decide to drive to another destination, at another time, or on another route; share a ride; switch to transit; or find some other

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion option. These changes in driving patterns would reduce congestion and save time for motorists willing to pay the fee. Congestion pricing could substantially reduce congestion, but it is and has been controversial. Motorists have become accustomed to paying for transportation through fuel, property, and sales taxes, and may greet congestion pricing with the same enthusiasm they have for new taxes generally. Groups representing motorists and commercial carriers at the local and national levels have long opposed tolls of any kind on roadways. Federal law restricts tolls on federal-aid highways and prohibits introducing new ones on Interstates (with the exception of congestion pricing pilot projects, which are discussed later). Americans have long supported gasoline and other user taxes as a means of financing and maintaining highways. Because user taxes charge for a service provided, such taxes are perceived to be fair —even though users with different incomes have different abilities to pay. Charging a premium for road use during peak periods, however, is perceived by many to be unfair to low-income motorists. Some may prefer to continue to use congestion delay as a “tax” that falls on rich and poor alike. Because of interest in and controversy about congestion pricing, the Federal Highway Administration and the Federal Transit Administration requested that the National Research Council form a study committee to (a) assess the critical issues surrounding congestion pricing and (b) recommend the potential role of congestion pricing as a tool for congestion management, guidelines for evaluation, and fruitful areas for further research. The Research Council's Transportation Research Board and Commission on Behavioral and Social Sciences and Education formed a committee of 14 members. The committee commissioned 17 papers, which were discussed at a symposium held at the National Academy of Sciences in 1993. These papers, and one other commissioned after the symposium, are contained in Volume 2 of this Special Report. Volume 1 contains the committee's overview of the commissioned papers, its conclusions about the prospects for congestion pricing in the United States, and its recommendations. BACKGROUND A motorist who uses a freeway when it is severely congested pays the same money price to use that road as a motorist who drives outside the peak period. Whenever the price of using some valued good does not increase as

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion demand increases, that good will be in short supply. Shortages will be acute if supply cannot be readily enhanced. This problem is typical of goods or services in industries with high capital or fixed costs. Throughout the economy, premium prices are charged when the demand for some commodity or service exceeds the supply. This happens, for example, with telephone services, rooms at seasonal resorts, restaurant meals, and airline tickets. If businesses that have high fixed costs and variable demand provided capacity to serve all peak demand without raising their prices, their capacity would be grossly underutilized during off-peak periods and they would risk bankruptcy. Businesses subject to peak demand and high fixed costs also try to balance demand and minimize capacity expansion by luring consumers to the off-peak period with lower prices. Telephone companies offer discounts for calls made at midnight. First-class restaurants offer lower prices for “early-bird” dinners. Resorts have lower rates during the off season. Air travelers willing to accept a less advantageous departure time or less direct routing can find cheaper flights. Consumers are quite accustomed to this kind of pricing, even if they do not always like it, and it keeps society from overconsuming the resources needed to satisfy its wants. Americans are not accustomed to thinking about road use as a consumer good, but aside from the current lack of variable pricing, the analogy between use of a public good, like roads, and private goods and services, like telephones, airlines, restaurants, and resorts, is appropriate. They are all subject to demand that varies over time or space. They experience congestion when prices are not allowed to vary with demand. And in all these cases consumers have alternatives. Just as airline passengers can make choices about when to fly, which airline to select, or whether to fly at all, automobile users can vary the timing of trips, alter the route taken, carpool, use public transit, choose alternative destinations for some trips, or avoid certain trips altogether. These alternatives exist for many motorists even in the case of peak-period trips, because nearly one-half of these trips are not work related. If only a small fraction of the drivers in the peak shifted the timing of their trips, congestion would be greatly diminished. In the absence of efficient pricing, motorists who drive on congested facilities are not required to pay for the delays they cause each other, and these delays are substantial. The wasted time and fuel are estimated to cost $40 billion annually. The environmental damage caused by the excess pollutants emitted during stop-and-go conditions drives the cost even higher.

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion CONCLUSIONS ABOUT CONGESTION PRICING The essence of congestion pricing for transportation is to charge a fee that varies according with demand. Congestion pricing is usually thought of as charging a premium for the use of a particular road or bridge during peak travel periods. It also includes charging fees for entering a congested area or charging a premium for parking at certain times and places. Congestion pricing might well be part of a package of policies that would reinforce one another. That is, it could be combined with changes to the structure of prices for parking and transit services and the provision of alternative modes. The committee's conclusions regarding implementing congestion pricing on U.S. roads and bridges are as follows. Congestion pricing would cause some motorists to change their behavior. Peak-period pricing has been successfully applied in long-distance telephone service and in many other sectors of the economy. Although specific changes in travel cannot be predicted with certainty, on the basis of estimates derived from past toll and parking increases, it appears that peak-period fees averaging $0.06 to $0.09/km ($0.10 to $0.15/mi), or $2.00 to $3.00 per daily round trip, would reduce total travel during the peak period by roughly 10 to 15 percent. This reduction would vary depending on the availability of alternate routes and modes, the amount of the charge, and the period during which a fee was charged. Most motorists are expected to continue to drive during the peak and pay the fee, but some would elect to share rides; change routes; drive at other times; change destinations; shift to transit, cycling, or walking; or forgo the trip. Congestion pricing would result in a net benefit to society. The shift in travel choices by a relatively small percentage of motorists would save time for the majority. These changes could be substantial: the average automobile commuter in a congested metropolitan area could save about 10 to 15 min per round trip. Such savings would cut the duration of the average commute trip by roughly 20 percent. Society as a whole would benefit. The aggregate value of the time savings would outweigh the added tolls. The hundreds of millions of hours that are currently wasted in traffic congestion each year could be spent in much

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion more productive and pleasant ways. In addition, existing resources could be used more efficiently. In order to compete in a global marketplace, all sectors of the U.S. economy are being pressed to become more productive. Without relying on pricing strategies to reduce peak-period congestion, society will be urged to finance new facilities costing billions, which will be raised from taxpayers, with the likelihood that these facilities alone would not reduce congestion. In contrast, if congestion pricing were adopted in all metropolitan areas, it would result in net savings on the order of $5 to $10 billion annually. Alternatively, to dampen demand in order to meet clean air goals, society would have to regulate travel behavior in ways less efficient than pricing. A pricing strategy would result in a more efficient use of resources and a more productive economy. By reducing the demand for capital while increasing output, the productivity gain for transportation would contribute to a more competitive U.S. economy. Congestion pricing is technically feasible. Congestion fees could be collected on existing toll roads in much the same way that users currently pay tolls. Alternatively, users could indicate that they had prepaid by displaying windshield stickers. Surcharges for parking in congested areas would not be complicated. The concept of congestion pricing has been rejected in the past, in part because of concern that queueing at toll stations would itself contribute to congestion. Existing technologies in use on toll roads, however, allow tolls to be collected electronically without requiring motorists to stop. Emerging enhancements to this technology would also allow charging to take place without requiring individual records of the time and place traveled, thereby protecting motorists' privacy. Although these more sophisticated technologies are expensive, they would require 5 percent or less of the potential revenues in a regionwide application. Electronic pricing can be made readily compatible with the intelligent vehicle-highway system (IVHS) technologies that are to be phased in over the next decade or so. Institutional issues are complex but can be resolved. A variety of existing institutions could implement congestion pricing projects on individual routes or bridges. Congestion pricing on facilities throughout a region would be more difficult to administer because of jurisdictional issues and the lack of existing regional institutions to develop and implement such a plan. Metropolitan special districts,

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion which are used for a variety of purposes in most states, could serve this role. Given the differences in existing laws and customs across states and metropolitan areas, institutional forms suited to each area would likely emerge if and when metropolitan areas are ready for a regional approach. All income groups can come out ahead given an appropriate distribution of revenues. Congestion pricing would generate substantial revenues. For example, by applying congestion pricing on all thoroughfares in the greater Los Angeles area during peak travel periods, over $3 billion in congestion fees would be raised annually. To ensure that all income groups benefit, some of this money would have to be returned in some way to road users. On the basis of values of time derived from average wages, the highest-income motorists would value the time savings more than the toll. Whereas many middle-income motorists would pay the toll (if the alternatives were worse) and thereby save time, the time savings would not be valued as highly as the cost of the toll. In other words, before the revenues are distributed, the average automobile driver would be disadvantaged by congestion pricing. Sufficient revenues would be earned from congestion pricing, however, to ensure that middle-and lower-income groups could benefit, if the revenues were distributed with this goal in mind, for example, by using some of the revenues earned to replace other regressive taxes collected to support transportation. (Alternative uses of the revenues are discussed further below.) Some motorists would lose. Inevitably some motorists who pay the fees would not be in a position to receive the full benefits of the revenues that were spent. Likewise, other motorists would receive the benefits but still be disadvantaged. Some of them would switch to alternate routes, destinations, or modes to avoid the toll, but could then have trips of even longer duration and with less privacy and schedule flexibility. The revenues earned from congestion pricing can be used to ensure that all income groups benefit, but disadvantages to some individuals within these groups cannot be avoided. Congestion pricing would reduce air pollution and save energy. Congestion pricing has side benefits that come at no extra cost. It would reduce peak-period travel and save time, and simultaneously it would reduce air pollution and fuel consumption. The air quality and energy

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion benefits of congestion pricing would vary widely across different areas depending on the amount of congestion, level and type of the charge, the characteristics of the transportation system, and the behavioral response. The results from simulation studies illustrate the possible benefits. A $0.06/km ($0.10/mi) congestion pricing fee charged during the peak period on all major routes in the San Francisco Bay Area is estimated to reduce total trips by 2.2 percent. Such reductions in travel are estimated to reduce emissions of precursors to ozone (oxides of nitrogen and reactive organic gases) by 3 to 5 percent, and carbon dioxide by 6.5 percent (see Table 3-1) . Fuel consumption would decline by 6.5 percent. In the greater Los Angeles area, a $0.09/km ($0.15/mi) fee charged during peak periods on all congested facilities is estimated to reduce total trips by 4 percent, precursors to ozone by about 8 percent, and carbon dioxide by 9 percent (see Table 3-2). Fuel consumption would decline by about 9 percent. Charges of $3.00/day to park in congested areas are estimated for both metropolitan areas to reduce trips by about 1.5 to 1.8 percent and reduce emissions of various pollutants by about the same percentage (Table 3-1 and Table 3-2). Fuel savings would range from 1.2 to 1.7 percent. Although the percentage reductions in total trips and emissions may appear modest to some, the air quality and energy benefits of congestion pricing strategies are much larger than those of other travel demand management policies. The estimates presented above are for pricing throughout a metropolitan area. The first congestion pricing projects likely to occur in the United States, however, would involve individual facilities. The air quality and energy conservation benefits of such smaller-scale projects would, by their nature, be considerably smaller than those from an areawide strategy. A peak-period toll on the San Francisco –Oakland Bay Bridge, for example, is estimated to reduce regional emissions of ozone precursors by 0.10 to 0.15 percent. Even if the effect on total regional emissions is modest, pricing on individual facilities could have pronounced health benefits by reducing concentrations of carbon monoxide. When individual facilities are priced, it is very important to design projects such that they do not divert congestion to other, unpriced facilities. Doing so could reduce or negate the air quality and energy benefits of pricing on individual facilities. The political feasibility of congestion pricing is uncertain. Congestion pricing demonstration projects are moving forward in the United States. The Intermodal Surface Transportation Efficiency Act of

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion 1991 (ISTEA) authorizes up to $150 million to support up to five congestion pricing pilot projects. The Federal Highway Administration has selected a proposal from the San Francisco Bay Area. Two separate, privately funded proposals are being developed in southern California. Whether congestion pricing will prove politically feasible on a larger scale remains to be seen. Public and political perceptions about fairness and motorist resistance to paying for services formerly viewed as free continue to be significant obstacles. A complicated program for distributing revenues could be required to compensate disadvantaged groups. The substantial revenues that congestion pricing can generate provide an opportunity to improve the efficiency of the transportation system, ameliorate the negative impacts on disadvantaged groups, and result in a net benefit for society. Some individuals would still be hurt, however, and whether they would be more motivated to resist congestion pricing than the majority who would benefit will only be demonstrated in actual practice. The adoption of congestion pricing as a demand management policy would be a drastic change from the current operation of the road system. The public would also need to be convinced that the government could successfully and fairly manage a change of this magnitude. The distrust of government prevalent in most areas of the country is an additional barrier. For this reason, there are advantages to using private-sector initiatives, such as the ones under way in Southern California, to introduce congestion pricing. Evaluation of early projects is crucial. If implemented, congestion pricing projects will remain controversial. The quality of the debates about these efforts would be substantially enhanced by reliable information about how traffic flows change, by careful analyses of winners and losers, and by survey research regarding motorist perceptions before and after the change. The opportunity to improve on early efforts would be greatly enhanced by such careful evaluation. An incremental approach is appropriate. The risks associated with congestion pricing and the nature of policy development in a pluralistic society imply that this policy will only progress in small steps. Given that congestion pricing represents a substantial change from the current operation of the road system, such small steps are appropriate. If individual projects succeed, they will help

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion convince policy makers and the public of the benefits of congestion pricing. This process will take time, however; thus it may be many more years before congestion pricing would be applied throughout a metropolitan area in this country. Whether congestion pricing will evolve to this level will depend on how it is implemented, how well it works, and how much motorists and voters come to accept it. Only time, experimentation, and careful evaluation will tell. RECOMMENDATIONS Congestion pricing would improve the efficiency of the transportation system and, if the projects are properly implemented, the benefits would outweigh the costs. The benefits are sufficiently promising that local and state governments, toll authorities, and private investors should experiment with congestion pricing. Removal of federal restrictions on experimentation would create more opportunities at the local level. Federal Government Through the congestion pricing pilot projects authorized under ISTEA, the federal government has demonstrated considerable leadership. It is not too early, however, to consider improvements in the pilot program that would enhance the opportunity for trials of congestion pricing to go forward. Congress should extend the pilot program when ISTEA is reauthorized in 1997. Congestion pricing proposals have a long development period. The Bay Area project, for example, had a head start of several years in proposal development. A metropolitan area beginning to consider congestion pricing seriously in 1994 may not have a proposal together by the end of the ISTEA authorization period. Public officials (state, local, or regional depending on who has authority) should be given discretion regarding the use of revenues collected by congestion pricing pilot projects. ISTEA restricts the revenues earned from congestion pricing pilot projects to transportation purposes permitted under Title 23 of the U.S.

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion Code, essentially those eligible for federal transportation aid. This is unduly restrictive. Whereas it makes sense to condition the funding provided by ISTEA to purposes eligible under Title 23, the revenues actually earned in the pilot projects would be local funds raised from local users. A careful economic analysis could show that the most efficient and fair uses of the funds may be for purposes in addition to those allowed under Title 23. Moreover, state or local officials may well require considerable latitude in the use of the funds raised from congestion pricing in order to make a proposal politically feasible. (The committee's suggestions for appropriate uses of the funds are discussed in the next section.) Congress should allow congestion pricing on urban Interstates or other federal-aid routes if called for in state implementation plans [as required by the 1990 Clean Air Act Amendments (CAAA)] or if local or state authorities can demonstrate the need to manage congestion on these facilities through pricing. The CAAA requires metropolitan areas that are unable to meet CAAA standards to use travel demand management policies, such as pricing, to reduce air pollution from automobiles. Federal law, however, also significantly restricts the ability of state and local governments to impose congestion tolls on federal-aid routes, especially the Interstates. Given that urban Interstates are often the most congested facilities during peak periods, they could be prime candidates for congestion pricing. Only through the pilot program is congestion pricing now allowed on an Interstate (ISTEA authorizes experiments on no more than three Interstate routes). The current allowance for congestion pricing on Interstates could be expanded as part of the recommended extension of the congestion pricing pilot program provisions of ISTEA when this legislation is reauthorized. The federal government should provide additional incentives to encourage pricing on more than just single facilities by giving substantial grants or additional housing, transit, or community development funds to any metropolitan area with significant congestion that is willing to experiment with broader pricing strategies, for example, a regional parking management program. Parking pricing for congestion relief is not considered eligible as a pilot project because it can be implemented now without ISTEA. There are no federal prohibitions against the development of a regional parking management program, but implementing one would be very difficult.

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion For one thing, all jurisdictions within a region would have to support such an effort to avoid any one entity's gaining a competitive advantage over the others. Moreover, the development of a regional program would require considerable time to educate regional officials about the time saving and economic benefits of such a strategy, build a coalition of public supporters, and engage in the necessary public education throughout a region. Grant amounts should recognize the time and cost required up front to develop support for regional approaches to congestion pricing. In cases where high-occupancy-vehicle (HOV) lanes on federal-aid facilities have clearly failed to induce ridesharing, or in cases where local officials can show that adding congestion pricing on existing HOV lanes would not undermine the region's HOV strategy, experiments should be allowed that would convert underused HOV lanes to tolled lanes while allowing HOV users to continue to travel at no charge. In the first round of solicitations for congestion pricing pilot projects, several proposals requested permission to price underused HOV lanes. This option would allow solo drivers to pay a fee to use available capacity on HOV lanes and continue to allow HOVs to travel free of charge. The federal interagency review panel responsible for selecting potential congestion pricing projects rejected these proposals because the panel believed that Congress intended a narrower definition of congestion pricing. Other arguments have been advanced against this option. It may encourage solo driving, which is at variance with the goal of the CAAA to increase vehicle occupancy. It could weaken support for HOV lanes before sufficient time had passed for them to become accepted. (Where HOV lanes have been successful, it has taken several years to build regional support to allow the HOV policy to go forward and for the public to accept and begin to use the lanes.) There would be merit, however, in allowing experiments with converting underused HOV lanes to priced lanes while letting HOV users operate free of charge in ways that would test whether congestion pricing can be a complementary policy to encourage HOVs. In these experiments, the price for solo drivers to use the HOV lane would have to be set sufficiently high that use by solo drivers did not reduce free-flow conditions for HOVs. Continuing to allow HOVs to travel free as a premium service while allowing solo drivers to pay to use the facility

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion could better utilize existing capacity. It would thereby reduce the criticism that HOV lanes are underused and sustain support for the HOV policy. Allowing solo users to use HOV lanes in exchange for paying a fee would also obviate the complaint that something was being taken away from motorists and would thus help build support for congestion pricing. Such experiments could be restricted to cases in which it is clear that an HOV lane is underused and in which there is little prospect of inducing ridesharing or in cases in which local officials can demonstrate that the experiment would not undermine a long-term regional strategy to increase ridesharing. Allowance of such experiments may require legislation to amend ISTEA, which sets forth minimum passenger requirements for federally funded HOV lanes. Because of the unique opportunities offered by congestion pricing projects to learn about behavioral responses to variable pricing and how they affect travel demand, the federal government should bear the bulk of the cost of extensive evaluations. The ISTEA pilot program incorporates sufficient funds and requirements for evaluation. Other congestion pricing projects may well go forward, for example, those on the two private toll roads in Southern California; these projects deserve full-fledged evaluation as well. Extensive, multiyear evaluations are expensive. They could easily cost several million dollars, but they are also well-justified public expenses. Metropolitan areas throughout the nation could learn the efficacy of such projects through evaluation research. Because of the broad applicability of evaluation research, the expense should be borne by the federal government rather than states or localities. Matching project development grants should be made available to local governments, states, toll authorities, and metropolitan planning organizations funded out of the congestion pricing pilot program section of ISTEA. The federal government should give grants to local governments, states, or MPOs that would encourage these entities to examine the potential of congestion pricing, develop detailed proposals, and begin testing the practical and political feasibility of congestion pricing. In order to ensure that there is genuine local interest, the grantees should be willing to invest their own funds at a level that would equal that of the federal government.

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion Federal law should treat the tax-exempt status of parking and transit subsidies equally and should require employers who provide parking subsidies to give employees the option of taking this subsidy in the form of cash. Current federal tax law has a built-in bias that encourages employers to provide parking as a tax-exempt benefit and thereby encourages driving to work. The current tax-exempt status of employer-provided parking is limited to $155/month, whereas transit and vanpool subsidies are limited to $60/month. No tax benefits are provided to employers for employer-provided subsidies to encourage employee ridesharing, bicycling, or walking to work. California has enacted an innovative law that requires employers who lease parking from third parties to give employees the option of taking the parking benefit as a cash option (referred to as “ cashing out” employee parking). This law has been designed so that there are few, if any, disadvantages and many advantages. Employees who want to continue to drive and park are allowed to do so. Employees who can find other options for getting to work can take the benefit in cash. Employers bear little or no additional expense, and governments receive taxes on the benefit when given in cash rather than in kind. This policy is another incremental step toward reducing the incentives to drive during peak periods. The federal government could encourage the adoption of the cash-out option by defining qualified parking as a tax-exempt fringe benefit. Such parking would be defined as that parking provided to an employee on or near the business premises of the employer if the employer offers the employee the option to receive, in lieu of the parking, the fair market value of the parking, either as a taxable cash commute allowance or as a mass transit or ridesharing subsidy. The Clinton administration endorsed this proposal in its Climate Change Action Plan of October 1993. State and Local Governments The substantial revenues that congestion pricing can generate could be used to replace other taxes, compensate those who lose, or operate the transportation system more effectively. The most effective and efficient uses of the funds, however, will depend on local circumstances. The committee does not have a specific recommendation to offer on the use of

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion revenues; authorities that develop congestion pricing proposals should consider the following suggestions. To ensure that all groups benefit and to help clarify that congestion pricing is not just another tax, some of the congestion pricing revenues could be returned to road users by reducing taxes that support transportation (gasoline, property, and sales taxes in some areas). This would offset criticism of congestion pricing, and the replacement of regressive taxes used to support transportation would help address equity concerns, particularly in areas where transportation is supported from sales taxes. This revenue-neutral approach is desirable but may not always be achievable. In some metropolitan areas, for example, such an approach may not benefit users most directly affected. This would be the case particularly when congestion pricing is limited to a single facility. In the case of pricing on a single facility, the revenues could be used to improve alternative facilities or to subsidize transit services in the same corridor. Once implemented, congestion pricing might well improve bus transit service by reducing congestion. This would allow bus service to become faster and could allow for more frequent or expanded service. Furthermore, the imposition of a fee on motorists would induce some to shift to transit, which would thereby improve transit revenues and would make transit more cost-effective by using available capacity more efficiently. In order to provide for improved service when congestion fees are imposed, there would be justification for subsidies to purchase additional buses. The availability of alternate routes or modes for those unwilling to pay a congestion fee on a priced segment will be critical to the public acceptance of projects; thus authorities may need to provide for such alternatives in advance, with the cost reimbursed from future revenues. Subsidies for transit services should be targeted at services that would directly benefit residents in negatively affected geographic areas or groups who would use this mode. Revenues raised by congestion pricing in general should be returned to the geographic area from which they are raised. State governments should adopt statutes similar to the California law that requires “cashing out” employee parking. As noted earlier, the California law applies only to employers who lease parking from third parties separately from office space. State legislatures could take the cash-out option one step further by requiring leases that combine building space and parking to be separated when they are

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CURBING GRIDLOCK: Peak-Period Fees To Relieve Traffic Congestion renewed; this would then make a higher proportion of leases subject to the cash-out option. RESEARCH PRIORITIES Careful and extensive evaluation of any congestion pricing program introduced in the United States is the highest priority for research. Research is also encouraged in other areas: The impact of congestion pricing on business logistics and commercial carriers; The extent to which transit services and revenues could be improved as a result of congestion pricing and how this might benefit lower-income users; Development of improved models for simulating household travel changes in response to pricing and other travel demand management strategies; Improved measures of congestion; Efficiency and productivity benefits of congestion pricing; Development of a program to ensure that the United States learns from current and emerging experiments with road pricing in other parts of the world; Measurement of long-term land use changes that might occur in response to congestion pricing; Studies of how the benefits and burdens of policies such as congestion pricing shift over time through labor, land, and retail markets; Constituency building and the local politics of implementation; and The efficacy of distributing tradable permits to all motorists for driving during peak periods as an alternative to charging congestion tolls (this option would allow motorists to be “bought off” of congested routes rather than being “tolled off”).