New Jersey v. Congestion Pricing
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Congestion pricing aims to accurately reflect the true cost1 of driving within some of the most densely populated and transit-accessible areas. Cities like London, Stockholm, and Singapore, which have successfully implemented it, have observed a 25% reduction in traffic congestion and an improvement in traffic speed.
Congestion pricing for vehicles entering Manhattan’s Central Business District (CBD) – Manhattan below 60th Street – was passed by the New York state legislature nearly 4 years ago. After it was given final federal approval in June, New Jersey immediately sued to block it with some New Jersey lawmakers claiming that congestion pricing is an “unfair hit on New Jersey.” I have previously explored how congestion pricing is not a regressive tax on New York City residents, so I was skeptical of this claim. In this blog post I will examine how New Jersey residents are impacted by congestion pricing.
Does congestion pricing adversely affect New Jersey residents?
The economist Paul Krugman did an analysis of congestion pricing and concluded New Jersey’s lawsuit is “an act of vehicular NIMBYism.” Governor Murphy of New Jersey responded to Krugman stating that congestion pricing would “increase congestion near the George Washington Bridge.”
The US Department of Transportation’s Environmental Assessment (EA) on congestion pricing forecasts a marginal increase of less than 0.2% in vehicle miles traveled within New Jersey resulting from its implementation.
The extensive 958-page EA projects a daily vehicle increase of 5,000 to 12,500 in Bergen County near the George Washington Bridge, roughly a 5% uptick from 2019. The EA concludes that this would not adversely impact air quality or traffic conditions.
For comparison, the car and truck traffic in Lincoln and Holland tunnels has increased by 8.5% from 2019.
How many New Jerseyans work in New York City?
According to the Census Bureau’s commuting data from 20192, around 447,000 New Jersey residents worked in New York City, of which about 300,000 worked in the CBD. This means that out of the 4.7 million employed New Jerseyans, 7% were working in the CBD, with an additional 3% working in other parts of New York City.
How do they commute?
Census Transportation Planning Products Program has data on commuting flows categorized by how people commute, with the most recent data spanning from 2012 to 2016. With this I can get the mode of transportation of New Jerseyans who work in Manhattan3.
In 2016, 79% of New Jersey residents who commuted to Manhattan for work used public transportation, which was higher than the 75% reported in 2013. This increase is also corroborated from an NYC Planning report showing that with the number of jobs increasing in Manhattan, a larger share of New Jersey residents are commuting by public transit to work. Looking at the share of public transit commute to Manhattan by county, we see every single county, except for Salem4, has the majority of its Manhattan bound workers use public transit for commuting.
Since it’s easier to get to the CBD than other parts of Manhattan from New Jersey5, I estimate that the fraction of New Jersey residents who used public transit to commute to the CBD would have been higher than 79% in 2019. Data from NYMTC shows 82% of people entered the CBD from the New Jersey side6 using public transportation in 2019. So, this adds further strength to my estimate.
That is, less than 20% of the 300,000 New Jersey commuters to the CBD commute by car or truck. Thus the congestion fee would have been applicable to fewer than 60,000 New Jersey commuters in 2019. Krugman, citing the NYC planning report, also arrives at 60,000 New Jersey commuters subject to the congestion fee.
How has this changed since the pandemic?
In the fall of 20217, 64% of the people entering the CBD from the New Jersey side used public transportation. At that time, NJTransit trains and PATH ridership was only about 45% of the pre-pandemic ridership.
What about now in 2023? NJTransit and PATH ridership have rebounded to 55-60% of the pre-pandemic levels in Q1, meanwhile the car and truck traffic in Lincoln and Holland tunnels is 8.5% above pre-pandemic levels.
Using these figures, I estimate that roughly 70% of people commuting to the CBD from the New Jersey side in the first quarter of 2023 used public transportation. This would imply that the congestion fee would apply to approximately 65,000 New Jersey commuters in 2023.
For comparison, on an average weekday in May 2023, the PATH carried 78,000 people into Manhattan. Despite their significant shortcomings, public transportation is still how the majority of New Jersey residents get to Manhattan.
Is congestion pricing taking money from New Jersey to pay New York?
If I were to ask about the transit agency that faced budget cuts from the state during the 2010s and saw its century-old tunnels severely damaged by Hurricane Sandy, would you think of NJTransit or the MTA? Unfortunately, it’s both of them. The MTA secured long term capital funding8 through the congestion pricing legislation in 2019, and additional post-pandemic, guaranteed operating funding for the next four years through increase of fares, tolls, and payroll tax. In contrast, NJTransit lacks a dedicated source of funding, leaving its budget vulnerable to the decisions of the state legislature and governor.
The lawsuit is likely a move by New Jersey to secure a portion of the congestion pricing revenue. Governor Murphy hints at this in concluding his response to Krugman:
If New York officials had meaningfully engaged us as partners in developing this plan, which has significant impacts outside of New York, we would be in a completely different position today. Without a seat at the table, we were left with no choice but to file a lawsuit.
In 2019, less than 20% of the people working in the CBD resided outside of New York state, with approximately 14% living in New Jersey. Looking at it another way, of all the cars, taxis and trucks entering the CBD, 12% of them did so from New Jersey6. So, congestion pricing is not targeted exclusively at New Jersey residents.
While vehicles from New Jersey are subjected to congestion pricing, the state’s transit systems doesn’t benefit from a share of the revenue. And New Jersey does have a case to make for it, after all Metro North and Long Island Rail Roads each receive 10% share of the revenue9.
In conclusion, about 65,000 New Jerseyans would be subject to the congestion fee during their daily commute; while the other 70% of New Jersey commuters use public transportation to get to Manhattan’s Central Business District. At the same time, public transit improvement in New Jersey depends on the state allocating guaranteed funding or obtaining a share of congestion pricing revenue for its transit systems.
This factors in the negative externalities associated with driving such as congestion, air pollution. ↩
The last year before the pandemic for which commuting data is available. ↩
I couldn’t figure out how to get data for those who work specifically in the CBD. ↩
Salem County, which is right across the Delaware river from Wilmington, had only 4 people working in Manhattan in 2016. ↩
The PATH and NJTransit to Penn Station and Port Authority Bus Terminal are all designed towards transporting people to the CBD. ↩
This includes anyone entering the CBD from New Jersey, not just New Jersey residents. ↩ ↩2
Fall 2021 is the latest available data from NYMTC. ↩
Capital funding is money for structural improvements, subway expansion etc.; not for day-to-day operation costs of running the transit system. ↩
NYC Transit, the agency that runs the subway and the buses in New York City, gets the remaining 80%. ↩