Needed: A Better Way to Sweeten the Ravitch Plan

Wondering how the revised version of the Ravitch plan compares to what’s come before? Here’s a look at the tweaks proposed yesterday by the Ravitch Commission:

    1. East
      and Harlem River bridge tolls of $2.16 each way with
      EZ Pass, $2.50 without.
    2. 50-cent
      taxi fare surcharge.
    3. A higher
      tax rate on parking in Manhattan.
    4. Revenue
      from (2) and (3), an estimated $150 million, to fund “toll mitigation rebates,”
      with details decided by a new commission to be established by the
      legislature.
    5. (Unchanged: a regional payroll tax of
      33 cents on each $100 of earnings.)

I figure the net take from the tolls at around $600 million,
or a few hundred million less than from the original Ravitch
proposal
of $5 East River and $2 Harlem
River tolls. The higher tax on lots
and garages portends more cruising for parking, and, what’s worse, that new Toll
Mitigation Entitlement Commission would establish a bad precedent: bureaucrat-approved rebates for "deserving" bridge commuters.

It’s tempting to lay the blame for these moves on Albany, particularly the handful of senators who torpedoed the original Ravitch tolls and their colleagues who then backed away from the heart of the transit rescue package: the payroll tax being counted on to generate $1.6-$1.7 billion a year for the MTA. But in the past month, the Ravitch Commission has taken a pass on two proposed amendments that just might make its plan politically palatable.

One is to modulate the payroll tax rate so that the suburbs pay less. A source close to the Ravitch Commission estimates that lowering the tax rate to 22 cents per $100 for businesses in Nassau and Westchester and to 11 cents for the five exurban MTA counties (Suffolk,
Putnam, Rockland, Orange and Dutchess) would reduce the tax revenues by just 13%, or $215 million.
That’s a giveback that wavering lawmakers could sell as a win but that doesn’t torpedo the plan as a whole.

The other amendment would replace the Ravitch bridge tolls with a traffic-pricing plan that does three things the Ravitch tolls don’t do: (1) make Manhattan (and New Jersey) residents pay, (2) give drivers choices, and (3) save drivers time. Here’s how it works:

  • One-way tolls of $1 or $2 or $3 or $4 or $5 to drive into the CBD (Manhattan south of 60th Street); the toll rate varies with time of day and weekday vs. weekend (nets $690 million a year).
  • No cordon toll for taxis, but a 20% surcharge on all medallion taxi fares (nets $300 million, after assigning one-tenth of the surcharge revenues to drivers and owners)

(Click here for the Balanced Transportation Analyzer spreadsheet showing details.)

Why might this toll plan be a winner? First, drivers get a
toll choice, and their round-trip toll averages less than the proposed East River bridge tolls — around $3.50 versus $4.50.
Second, drivers get valuable time savings: the estimated 10% speedup in traffic
within the CBD means that on a typical peak-period (weekday 6-9 a.m.) trip into the CBD, a driver whose time is worth
$45 an hour saves enough minutes to more than offset the $5 toll. Third, “outer borough” residents and Long Islanders see their toll burdens drop by a quarter
to a half
, while Manhattan residents’
contribution to the revenues almost quadruples, from under 7% to 26%, and New
Jersey’s rises from 1% to more than 10%. Tourists
chip in too, through the taxi surcharge.

toll_charts.jpg

Neither the graduated payroll tax nor the traffic-pricing
proposal is exactly revolutionary. Indeed, both fit perfectly with the overall
Ravitch conception of rescuing the MTA through a three-part program of fare
hike + payroll tax + traffic tolls.

Pointing fingers at retrograde legislators has been
cathartic and by all means let’s hold them accountable. But it’s time to also
offer a better Ravitch Plan.

  • Boris

    Excellent plan. Do Ravitch and the Senators know about it? They don’t read Streetsblog.

  • J-Uptown

    I agree that you need to distribute the tolls most evenly, but it makes no difference if the fare hike fours remain categorically against any bridge tolls. I think that Patterson needs to make a bigger effort to reach out to upstate Republicans who may support this plan as the MTA supports local industry. From the article in the Observor today, at least 2 senators appear to be open to the idea, but they have been left out of all negotiations and are therefore not inclined to lend their support. Come on Patterson, if the Dems aren’t gonna support you, find someone else who will.

  • While everyone’s patting each other on the back for finally figuring out how to sock it to Manhattan residents (not all of whom are as rich as the popular imagination has it), has anyone given any thought to the fact that such a huge increase on all taxi fares will require big subway and bus service increases?

  • Larry Littlefield

    I don’t agree, for reasons I have explained and people are sick of hearing.

    But for one thing, the proposal appears to concede that those living in NYC (and in particular those in closer-in areas that ride the subway) are over-privileged beggars demanding that those elsewhere bail them out. For which they deserve to be hit harder.

    I’m really tired of that, particularly since it isn’t true.

  • vnm

    Rhywun, I’m not so sure. Yellow cabs move about 600,000 people per day. The subway moves 5 million and buses move 2.25 million. If cab ridership were to drop by 10% because of the surcharge (lose 60,000 trips per day) and those trips evenly distributed to subways and buses (30,000 trips to each mode), subway ridership would increase by 0.006% and bus ridership would increase by 0.013%.

  • Glenn

    I think the best political strategy at this point is to engage the upstate Republicans on issues like highway and road funding rather than negotiate with the downstate Democrats.

    Once the issue of tolling all the bridges is overcome with a toll similar to the subway/bus fare, the we can start to play with real-time variable pricing. But these pie charts ain’t gonna convince them.

    The Fare Hike Four are standing on principle of tolling bridges, not negotiating for slightly lower burden for their residents. Those in favor of bridge tolls should sidestep them and make them irrelevant. Maybe next time they’ll come back to the table.

  • Adding a payroll tax and then “modulating” it so the suburbs pay less is ridiculous. City residents already pay a higher cost of living and higher income taxes; my coworker, who does the exact same work as I do pays thousands of dollars less in income tax every year because I live across the East River and he lives over the Hudson. Business leaders aren’t afraid to get out there and argue that higher taxes will drive businesses out of the city; who’s going to stick up for city residents and argue that asking us to shoulder more than our share of the load will drive us to NJ or Nassau County?

    (You can tell it’s tax season because I chose that particular soapbox.)

  • uSkyscraper

    I would still like to see a discount added for residents who would live on the fringe, provided it was not near midtown or downtown (i.e. Inwood). What has been proven to work for London should work for New York, and the MTA already has such discounts in place for other tolls:

    http://www.tfl.gov.uk/assets/downloads/CC-discount-residents-leaflet.pdf

    http://www.mta.info/bandt/html/dscintro.htm

    Why is this not part of the discussion yet?

  • Rhywun: has anyone given any thought to the fact that such a huge increase on all taxi fares will require big subway and bus service increases?: The BTA indicates that the drop in taxi patronage due to my 20% fare surcharge will be offset by the increase in patronage from the 10% average improvement in speeds in the CBD. (I assume a 0.22 price-elasticity and 0.50 time-elasticity for taxi usage). Thus the surcharge will lead to little if any surge in demand for transit.

    Rhywun again: While everyone’s patting each other on the back for finally figuring out how to sock it to Manhattan residents (not all of whom are as rich as the popular imagination has it),: The 4-fold increase in Manhattan residents’ share of the toll burden under my plan is due almost entirely to the taxi surcharge. Since taxi use is a classic luxury good (its income-elasticity is greater than one), the surcharge will be income-progressive. Thus, the vast majority of poor Manhattanites will be made better off by having taxi riders (plus bridge drivers) help rescue the MTA.

    Larry Littlefield: I didn’t follow your comment. Are you suggesting that suburban and exurban residents benefit as much as do NYC dwellers from a viable transit system?

    Josh: This discussion shouldn’t be about whose taxes are higher, suburbanites or City residents (if it were, I’d suggest you include property taxes!), but about crafting an equitable and thus more politically palatable funding structure for city and regional transit.

    All: Please download (via < http://www.nnyn.org/kheelplan/BTA_1.1.xls> the Balanced Transportation Analyzer (the “BTA” I referred to above) spreadsheet that includes all the assumptions, algorithms, results, etc. You can craft your own transit-traffic-pricing-rescue plan!

  • gecko
  • christine

    I applaud the higher tax on parking . A study on Parking in the CBD performed by the city planning in 2005 showed that off-street parkers value convenience above all and are not sensitive to price. They are in vast majority high income commuters.

    Parking is much more accurate than tolls to limit the impact on lower income drivers. As such I would recommend a much higher tax on parking be included in the plan. Especially for cars dropping their cars before 9:30 a.m. ( commuters)

    Further the license to operate a parking could be priced much higher than it is today.

    As far as payroll tax, why not propose a very high tax on the salaries of employees who commute by car? This would give an incentive to companies to locate tehir operations close to a commuting hub and to incent their employees to use public transportation.

    Let’s not forget that our initial objective was to reduce driving and congestion. The MTA fundign was an afterthought.

  • Christine —

    The new Ravitch proposal to raise the off-street parking tax won’t even net $100 million … but will encourage parking cruising and thus more gridlock. In contrast, the $1-$2-$3-$4-$5 CBD toll, will net $700 million and improve CBD daytime travel speeds by 10%. (The taxi surcharge adds $290 million.)

    For reducing driving and congestion, no credible plan compares with the one I’m offering here.

    PS: Pegging the payroll tax to car commuting is an administrative nightmare as well as redundant once traffic pricing is in place.

  • J:Lai

    vnm:
    your response to Rhywumn is somewhat disingenuous. A bump in transit of a fraction of 1% sound very small, but it likely to be concentrated during peak hours and on the most heavily used routes.

    Can the #6 train handle an extra 15,000 riders between 8 and 9am on a weekday?

  • J:Lai —

    The entire subway system brings 389,000 passengers into the CBD during the 8-9 a.m. peak hour on an average weekday (2007 data). An extra 1% — which is merely hypothetical — is thus only around 4,000 riders. With about 20 lines serving the CBD, the increase would average 200 per line per hour, or 14-15 per train, or 1-1.5 per car. If you want to double that for any particular line, feel free, the increase is still only 2-3 per car.

    The dearth of informed, quantitative discussion on this subject (MTA bailout) is distressing. In a kind of Gresham’s Law of Politics, it contributes to ill-considered ideas driving out serious ones.

    It would be refreshing if more than just the odd policy wonk downloaded and looked at the Balanced Transportation Analyzer. The factoid of 389,000 peak hourly subway riders into the CBD is in the Subways worksheet, Cell D71. A list of subway lines into the CBD is in the O-Transit Capacity worksheet. There are 47 other worksheets covering autos, tolls, taxis, buses, etc. We’re sitting on a gold mine of data (the BTA) and hardly anyone knows it.

  • david

    Hi – Who should we email/write to with our support of the plan to help this go through?

  • David — Write your NY State Senator (find via this link) and Ravitch. I don’t know Dick’s e-mail address, but insofar as he’s on the board of the Regional Plan Association and is working closely with RPA, you could reasonably write to Neysa Pranger of RPA, , and ask her to forward your note to Dick. — Charles

  • david

    Thanks Charles!

  • Does the new CBD toll plan envision a camera system like London, which uses one-half of the revenue collected for operating costs? Also, London has narrow streets, while our wider streets will require overhead camera across the streets.

  • Russell —

    The answer is No.

    I’m surprised that wasn’t clear from my post: “…One-way tolls of $1 or $2 or $3 or $4 or $5 to drive into the CBD (Manhattan south of 60th Street)…” [emphasis added]

    Or, from the title page of the BTA spreadsheet: “The Central Business District (CBD): The ‘cordon’ area which motor vehicles will be charged a congestion fee to enter consists of all of Manhattan Island south of 60th Street. This 8.5-square mile zone, the commercial heart of New York City, is commonly known as the Manhattan Central Business District (CBD). For a further description, see the ‘Cordon’ worksheet tab.”

    In that worksheet tab (“Cordon”), I estimate that the annual amortization and operating costs of the tolling system will be $90 million a year. Yes, that’s reflected in my estimate of $990 million net revenues from my plan.

  • Why is the London system inefficient while our projections appear rosy? We are comparing the cost of a real world operation to projections. I assume that cameras will be required on the avenues along 60th street, or do we have a new scheme that is different from the original congestion pricing plan.

  • J. Mork

    The london system uses hundreds (?) of cameras that are meant to dectect any motorized movement anywhere within the congestion zone.

    The system proposed here is only charging you when crossing certain boundaries, which number, I’m guessing in the dozens.

  • Mork — Your answer to Russell Bartels (#20) is on the money. Thanks.

    Russ — I could use your help. I want to understand why it evidently was easier for you to speculate about London vs. my NYC plan in a new comment, rather than take my suggestion in my comment #19 to download the BTA spreadsheet (via link in my comment #14 or my original post), go to the Cordon worksheet, and see for yourself: (i) how many portals into the CBD would need to be tolled (19), (ii) how I prorated the capital cost of the 19 from the original Bloomberg plan w/ 340 camera locations (it came to $10 million), (iii) how and why I quadrupled doubled that number (for conservatism, to $40 million), how I amortized it and then added per-transaction fees, yadda yadda yadda.

    Folks — I know I’m being peevish and that it’s unattractive. But I’ve been tearing out what’s left of my hair over the fact that the plans I’ve been putting out with Ted Kheel have been developed in exquisite detail … yet they’re sometimes treated little better than the arrant nonsense from the Fare Hike Four. As if we didn’t allow for: the rebound in driving when traffic speeds increase; the increase in transit use when cordon fees are imposed; the costs to admin the toll system; etc.

    So Russell — Can you tell me what gives? Thanks.

  • I will pass on this issue until NYS and MTA decides on their plans. My interest is not in the current proposals that appear to be politically unacceptable and employ yesterday’s technology. tks, Russ

  • Larry Littlefield

    “Larry Littlefield: I didn’t follow your comment. Are you suggesting that suburban and exurban residents benefit as much as do NYC dwellers from a viable transit system?”

    Yes, for two reasons:

    First, the number of transit users is lower relative to the total population in further-out locations, but the subsidy per ride is higher. In the “play the game of chicken to the end” scenario with no one willing to pay, what would be left standing is the subway with some of its stations closed to cut costs. Which at this point is looking pretty good.

    Second, Local Area Personal Income for 2007 was released yesterday by the Bureau of Economic Analysis. And it showed (once again) that those working in Manhattan (who live in many places), if one excludes the Health Care and Social Assistance sector (which is substantially government-funded and tax exempt), accounted for over half of the private sector earnings in New York State. Not New York City. The whole state!

    Add in the economic activity generated by consumer spending elsewhere by those who work in Manhattan but live elsewhere (like every dime I spend in Brooklyn), and firms located outside Manhattan who service it (like the delivery people who oppose tolls), and you have perhaps three quarters or more of New York State’s private economy and tax base.

    And why are businesses willing to locate there and pay all those sky-high taxes, rents and wages? Because of the transit system that allows two million talented people out of a metropolitan area of 18 million to come together in one small area. Without it, New York State is Michigan or worse.

    Basically, at this point everyone in the suburbs, and exurbs, and even Upstate is living off Manhattan at least to an extent, once one thinks of not those who live in Manhattan but those who work there or are otherwise connected. And transit is what makes it what it is.

    We may be about to find that out the hard way. Again.

  • Larry Littlefield

    By the way, the second point I made, the importance of the Manhattan CBD and the transit system to the state’s economy, is not news. I slipped that particular factoid into a number of NYC Planning reports when I was there. And I also discussed it extensively on Room Eight three years ago.

    http://www.r8ny.com/blog/larry_littlefield/dont_forget_the_fastball.html

  • 1703geraldthorne

    Timely post – BTW , you want a KS DoR CR-16 , my kids saw a fillable form here http://goo.gl/ILDTAz

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