Is New York congestion pricing happening in 2021?

April 2, 2021

The previous D.C. administration postponed a 2019 plan to establish a tolling system in Manhattan, but early indicators show it will soon be back on track. Things are moving fast with the new Biden administration, and there's a chance New York could enact congestion pricing by the end of the year.

But is this a realistic timeline?

A brief background

In 2019, state law defined a clear timeline to create New York City congestion zones by 2021. Designed to combat ever-increasing city traffic and generate revenue, New York is the first state in the U.S. to introduce this solution, following the models of international cities like London, Stockholm, and Singapore.

The New York City plan defines zones (Midtown and Lower Manhattan) where drivers will have to pay a fee to drive during peak business hours. The city will use the money to fund the public transportation system and improve the city infrastructure, which sounds like a win-win. Economists call it a "tax for environmental harm," which translates to using pricing mechanisms generated in peak demand to charge users of a public good for imposing negative externalities on third parties who do not incur the benefits. This basically means imposing tolls on the busiest roads for NYC drivers to benefit individuals who don't contribute to road congestion by instead using public transportation. Different toll fees will apply for cars, trucks, taxi drivers, and the expected yearly revenue is around 1.5 billion dollars. The first congestion tolls were initially scheduled to launch in January 2021.

Why was the plan postponed?

As you've likely noticed, it's now March 2021, and there's still no congestion tolling in NYC.  So why did officials push the deadline? There are several reasons, both political and bureaucratic.

1. U.S. DOT isn't rushing in.

N.Y. congestion pricing is a big deal, and as with many controversial government decisions, officials won't always rush in until they're entirely sure how it's going to work. The US DOT still needs to research how this change will affect drivers' behavior and start the necessary environmental review.

2. The pandemic changed driving behavior.

When the COVID-19 lockdown hit the city, New Yorkers started using their cars more for safety reasons. Driving a personal vehicle feels a lot safer than using a crowded subway train during peak hours and potentially exposing yourself to the virus. With that in mind, N.Y. officials decided to postpone the plan and avoid introducing the New York congestion tax for local drivers.

3. Political disagreements.

Sources confirm that the Governor of New York had disagreements with the Trump administration, resulting in the feds taking steps to undermine their approval of the congestion pricing plan.

The Biden effect

Right now, New York City officials are directing all of their hopes toward the new Biden administration. The feds have given the green light for the environmental review, but it's not yet clear whether the N.Y.C. congestion pricing plan will ultimately proceed. But with the Biden administration's return to the Paris Climate Agreement, it's clear that the new administration is more likely to work on projects with environmental benefits. 

So will it happen in 2021?

The short answer is not likely.

New York City officials say they only need federal approval to move forward, but getting that approval in 2021 seems unlikely even though the Biden administration has expressed the desire to expedite the N.Y.C. congestion plan. Still, with all of the other priorities in the new administration, project completion will likely move to 2022, according to the latest news and expert opinions.