By now, just about everyone who does business in the For-Hire Vehicle (FHV) industry knows about the Congestion Pricing Plan set to go forward by the Metropolitan Transportation Authority (MTA).
If some readers do not, let me back up a bit. In April 2019, the New York State enacted the MTA Reform and Traffic Mobility Act (the Act), which states that the MTA’s Triborough Bridge and Tunnel Authority (TBTA) needs to design, develop, build, and run the Central Business District (CBD) Tolling Program. An Environmental Assessment was required by the federal government to look at the potential environmental effects of the CBD Tolling Program. The Federal Highway Administration must issue final approval to the environmental plan before the project can go forward, likely in January 2023.
A five-person Traffic Mobility Review Board (TMRB) was created to recommend toll rates and exemptions to the MTA’s TBTA Board, which has the final say on what the rates will be. The TMRB shall recommend a plan for credits, discounts, and/or exemptions for FHVs that are already subject to a surcharge imposed by Article 29-C of the Tax law for a for-hire transportation trip and must take other factors into consideration, including but not limited to, initial market entry costs associated with licensing and regulation, comparative contribution to congestion in the central business district, and general industry impact.
According to the plan, motorists entering Manhattan below 60th Street would be charged a toll electronically, with the exceptions being the West Side Highway and FDR Drive, which would not be part of the tolling plan. The MTA released seven different scenarios for the tolling plan with a variety of exemptions, with peak-period toll rates to enter the “Central Business District” below 60th Street of anywhere from $9 to $23, depending on the version implemented. In virtually all configurations of the plan, “peak” would run from 6:00am to 8:00pm on weekdays and 10:00am to 10:00pm on weekends.
The MTA’s study outlined the options that the toll board will consider, including: a $9 fee during peak time – typically defined as 6:00am to 8:00pm – which commuters would pay once per day when they exit the West Side Highway or FDR into Midtown or Lower Manhattan. There would be no discounts for commuters who pay tolls on tunnels or bridges into Manhattan. A $23 fee during peak time, which would be paid by all drivers. But New Jersey and outer-borough commuters would be allowed to subtract the tunnel tolls they pay to cross into Manhattan from that congestion fee.
The MTA is facing a deficit, and their congestion plan is designed to raise significant amounts of money for various infrastructure projects and upgrades. The coronavirus pandemic also hurt ridership and revenues. The congestion plan was implicitly designed to force riders out of FHVs and into the subways.
While the MTA claims that this will reduce traffic and be better for the environment, I propose we call the plan what it really is… a big money grab. By 2025, the MTA expects a $2.5 billion deficit, approximately 12% of its operating budget. This plan will not only raise over $1 billion annually but will generate a new source of revenue for the MTA.
I have no doubt there will be many other articles on this topic, but I want to point out a few things that may not be so obvious. First, the MTA could very well be the most dysfunctional state-run agency in the history of the State of New York. Outdated management practices, nonsensical contract requirements, the dysfunctional structure of the MTA, and bureaucratic resistance to innovation have all made the MTA into an agency that does not know how to operate in an effective and cost-efficient manner. If the MTA operated like a private entity, it would have been out of business a long time ago.
Putting billions of dollars into the hands of the MTA to invest in infrastructure is like giving a teenager the keys to a billion-dollar trust fund. Would you trust these funds to an entity with a history of bad investment decisions, poorly executed plans, and projects that have perpetually gone grossly over budget? Of course not.
Next, let’s not forget that as of February 2019, FHVs have been paying a congestion surcharge for trips that pass through the Central Business District. The current cost is $2.75 per FHV trip and $2.50 per taxi trip. These costs have made the FHV industry contribute approximately $393 million dollars per year to the MTA. With almost one billion dollars already contributed by the FHV industry, I believe that not only has the FHV industry been paying its fair share, but that a further tax/surcharge upon FHV trips will result in double taxation.
Wouldn’t it be fair and appropriate to exempt FHVs from this congestion pricing plan? Of course, it would be fair, but the MTA is not out to mete out fairness. The MTA is out to get as much money as possible and to drive ridership away from the streets and back to the subways.
The MTA will never come out and say it, but their intention is to increase the cost of an FHV trip so the average rider will have no alternative but to take the subway because the price of taking an FHV will be cost-prohibitive for many. All of this comes at a time when the City is not issuing new FHV licenses, and over 30,000 licenses have been surrendered since COVID started. The MTA knows how disastrous their proposals would be for the tens of thousands of New Yorkers who drive an FHV for a living.
In fact, the MTA report admits that hundreds (possibly thousands) of largely immigrant drivers will lose work. Those who remain will be left with significantly less money in their pockets. The MTA’s stated solution for FHV drivers is to become bus drivers. They have agreed to waive the $70 fee required to apply. This is an insult to the hard-working individuals who break their backs everyday transporting people to and from home and work, and at the same time, they are currently just able to make a living. It is unconscionable that the MTA not only plans to double-tax FHVs but, at the same time, put thousands of FHV drivers out of work.
This is not a situation where I believe FHVs should be exempt and pay nothing. But the MTA must recognize that FHV’s are already paying their fair share of the congestion surcharge. I am simply advocating for the FHVs to continue to pay according to the current structure and thus, be exempt from the new surcharge. Double taxation is not only inequitable but will have disastrous consequences for the FHV industry.
It is one thing for the government to take money out of the hands of hard-working individuals. It is an entirely different matter when a governmental entity sets out to destroy an entire industry so that it can stay afloat all while trying to engineer how they believe is best for people to be transported across the city. Time will prove that throwing money at the MTA’s problems will not solve it. The time is now to speak up and speak out.
Industry leaders are doing all that can be done to speak to the relevant elected officials and to get the word out to drivers and other stakeholders. Still, ultimately everyone in the FHV industry must partake in the effort to ensure that FHVs are not double-taxed and that the MTA’s new surcharge does not destroy the FHV industry. I understand that the MTA needs money, but let’s not be fooled into believing that the proposed congestion surcharge will reduce traffic and/or help the environment. This is a money grab. Pure and simple.
The FHV industry can only withstand so much harm in a short period of time. If FHVs are not exempted from this new surcharge, we will see more base owners and drivers, who are still reeling from the effects of COVID on the industry, go out of business and find new jobs. This will only make the FHV industry less vibrant and will lead to fewer transportation options for city residents and visitors. Unfortunately, time will tell what carnage will lie in the wake of the MTA’s decisions.