The Congestion Pricing Battle: New York’s Toll War and the Future of Urban Roads

New York’s congestion pricing plan—once stalled, then revived, now in limbo again—has become a battleground for state versus federal power. The $9 toll for driving through much of Manhattan, which finally launched in January after years of legal and political hurdles, now faces another threat: the Trump administration.

Secretary of Transportation Sean Duffy recently rescinded federal approval for the program, echoing Governor Kathy Hochul’s own arguments from 2024 when she temporarily suspended it. Calling the tolls “a slap in the face to working-class Americans and small business owners,” Duffy ordered an immediate halt to the program. But Hochul maintains that the decision should be New York’s to make and has filed suit along with the Metropolitan Transportation Authority to challenge the federal move. The courts will now determine congestion pricing’s fate, but the saga exposes deep flaws in government-run transport systems and raises a crucial question: what if roads operated more like a business than a public utility?

The Trump administration argues it can cancel this congestion pricing plan because it affects federally-funded roads and was approved under a federal pilot program designed to test congestion pricing models. Duffy claims the Biden administration erred in approving the plan for two key reasons:

1. It does not provide a “free highway alternative” for drivers entering the congestion-priced zone.
2. The program’s primary goal is raising revenue for the MTA rather than reducing congestion, which was the intended purpose of the federal pilot program.

These arguments are shaky. The courts had already upheld the policy, and legal experts note that reversals based purely on political shifts are rare. Moreover, a congestion pricing system can simultaneously reduce traffic and fund public transit without contradicting its core purpose. If anything, the administration’s argument appears disingenuous—true congestion reduction would require even higher tolls, not their elimination.

Philosophically, Trump’s stance against congestion pricing is just as misguided as Hochul’s initial resistance. In practice, congestion pricing benefits workers who rely on road access the most, such as tradespeople who can complete more jobs per day when traffic decreases, or delivery workers who use bikes. In fact, some workers have praised the policy for precisely this reason. Ironically, had Hochul not wavered on congestion pricing to begin with, the policy would have gone into effect months ago, and might have faded from national attention, avoiding Trump’s intervention altogether.

This conflict highlights a fundamental problem with using federal funds for local infrastructure: it creates multiple veto points where decisions can be blocked or overturned at the highest levels of government. The situation also underscores how political grandstanding influences transportation policy more than rational economic principles.

A Proven Concept Stymied by Politics

Congestion pricing is not a new or untested idea. London, Stockholm, and Singapore have successfully implemented such programs, reducing traffic and improving urban mobility – traffic dropped 20% in Stockholm and 43% in Singapore. New York City, on the other hand, has struggled through the predictable results of underpricing access into and through the city. From 2010 to 2018, average speeds in Manhattan slowed from 6 mph to 4 mph. 

Despite this, New York has struggled for decades to establish its own system. Proposals to toll Manhattan’s busiest areas date back to the 1950s, resurfaced in the 1960s and 1980s, and gained renewed momentum in 2007 under Mayor Bloomberg. Even after the state approved congestion pricing in 2019, the program faced relentless lawsuits, regulatory reviews, and political delays.

This bureaucratic quagmire begs the question: what if transport systems were operated as businesses rather than public goods? In a market-driven model, road pricing would be seen as a normal household cost, much like airfare or utilities. Private road operators would be incentivized to manage congestion efficiently, balancing accessibility with profitability. Urban roads might generate revenue from commercial property rents instead of tolls, while rural roads would focus on throughput efficiency.

A Market-Based Alternative: Special Administrative Zones for Roads

Full-scale road privatization is unlikely, but a more likely approach could involve creating “special administrative zones” for urban transportation. Similar to special economic zones that ease regulatory and tax burdens, these areas could:

• Operate without municipal, state, or federal funding.
• Generate revenue from user fees, commercial rents, or internal financing.
• Have full autonomy to implement congestion pricing or other road management policies.
• Be governed by local stakeholders, such as business improvement districts (BIDs), which already fund and oversee infrastructure projects in some cities. Some BIDs, like the National Landing BID in Arlington, VA, have taken active roles in street design. Expanding their authority could allow for transportation policies that are more responsive to local economic needs rather than political whims.
• Public-traded companies: that is, different assets within a transport system (such as the section of the Manhattan street grid under question) could be rolled into a company that is sold on stock exchanges and distributes profits to shareholders. Consolidated Edison, for example, provides energy for New York City. It’s a private company whose mix of monopoly status and regulated pricing has helped it enjoy gradual price appreciation and pay a stable dividend for decades. 

The essence with any of these models is to privatize certain aspects of public infrastructure so that they’re isolated from the inefficiencies of public governance. It is done sporadically in the U.S. for highways and bridges, and is even rarer for local street grids. The Battery Park City Authority, which is run by New York State, manages about 36 acres of streets in Lower Manhattan, maintaining them through ground rent from nearby property owners. This isn’t a for-profit venture, per se, but other parts of the Manhattan street grid could be if that’s the route the state ever wants to go.  

Lessons from the Congestion Pricing Debacle

The ongoing congestion pricing battle underscores a critical reality: political resistance to tolling and user fees remains strong, even though they are the most effective tools for managing congestion. The answer lies in reducing government interference—starting with minimizing federal involvement in local transportation decisions. More broadly, cities should explore new ownership and funding models that treat roads less like untouchable public goods and more like dynamic economic assets.

Ultimately, if policymakers want to improve mobility, they need to embrace solutions that remove the bureaucratic immobility that now dominates the actual roads. New York’s congestion pricing fight is just one example of how difficult that shift will be—but also why it is necessary.

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