APPLYING THE CASHING OUT APPROACH TO CONGESTION PRICING

Abstract

Congestion pricing is extremely difficult, perhaps impossible, for the public to accept in the form in which it is currently being proposed, for a variety of reasons. First, there are too many people who perceive themselves as big losers under congestion pricing. Second, congestion pricing is viewed by some as just another tax increase that will lead to bigger government. Third, others perceive congestion pricing as having a disproportionate impact on low-income groups, taking a larger share of their incomes. Interestingly, all of these objections to congestion pricing may be overcome and pricing made more acceptable by taking the cue from recent developments in parking pricing. Pricing of commuter parking has been made more acceptable through policies that out employer-paid parking subsidies (i.e., if an employer offers a parking subsidy to an employee, the employer is required to give the employee the option to receive, in lieu of the parking subsidy, the fair market value of the parking subsidy in cash). The cashing out concept could be extended to peak period road pricing, either to an entire regional system or to a specific corridor or bridge location. It would work as follows: Peak period tolls would be imposed on roads, and all peak period commuters would be provided with a credit or a card, which they could use to pay tolls during the peak periods. The value of the credit or the amount encoded on the smart card would be equal to the peak period toll each commuter would be required to pay each month after congestion pricing is implemented. Credits or smart cards could be exchanged for transit farecards or cash, thereby providing an inducement to solo drivers to carpool and pocket the cash or to take transit. Noncommuters, who would not be eligible for free credits or smart cards, would provide sufficient funds through their toll payments to fund all cash payments. Discussed are various implementation aspects of such a policy and its probable impacts on travel demand. It is demonstrated that sufficient funds would be received from noncommuters to pay those who want to out their credits. Fairness issues are discussed. Finally, a method to test the concept on a limited basis on an existing congested toll facility is suggested.

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