With Green Light from Biden, New Traffic Tax Under Review in San Francisco

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Posted by Dennis Hull on Tuesday, August 3rd, 2021, 3:58 PM PERMALINK

Small businesses in downtown San Francisco are still struggling to get back on their feet after the pandemic. But city transportation officials are barreling ahead with a congestion tax plan that will drive businesses, customers, and dollars out of the city center.

Since 2004, San Francisco has considered implementing a “congestion pricing” system to alleviate worsening traffic in the busiest parts of downtown. By charging a fee to drivers who enter the city during rush hour, officials say traffic could be reduced by up to 15% as drivers switch to public transit for their commute.

Multiple scenarios are under consideration, but each would tax drivers a fee of $6.50 to enter congested pricing zones during rush hours, from 6–9 am and 3:30–6:30 pm. To advance “equity,” the fee would only be levied on commuters making over $100,000 annually. Anyone making under $46,000 is exempt from the tax entirely, while those in the middle of that range pay a discounted rate. The physical boundaries for the tax are yet to be decided, but one zone would include the financial district and the immediate downtown area. At the same time, another proposal expands the zone north and south to include Fisherman’s Wharf and Mission Bay.

Regardless of where and how the tax is implemented, congestion pricing is sure to impact economic growth at a critical point in the city’s recovery. Remote workers and empty offices will likely stick around for years. But with a hefty new fee to enter the downtown area, executives and businesses will decide to hold off on bringing workers back to the office. After crippling small businesses with some of the harshest Covid lockdowns in the country, the local government now plans to use a new tax to hobble the ability of those businesses to bounce back.

A congestion tax would also price families out of the downtown area, essentially forcing those people to use a failing public transportation system. Many people in the suburbs who commute to the city center will find themselves unable to afford the added cost of driving to work every day.

Those people will have no choice but to use the San Francisco public transit system, which ranks pitifully low compared to peer cities like D.C. and Chicago. San Francisco is at the bottom of its peer group for the most problem-prone transportation. The city also ranked last or second to last in average speed for every category, reflecting above-average density and congestion on railways and buses. Despite this failing infrastructure, 34% of San Franciscans already use public transportation, compared to an average of 17%. But the proposed congestion tax to drive on city roads will coerce thousands of additional residents to hop on a train or take a bus, with no plans to make the troubled system more efficient.

Meanwhile, local businesses – primarily the tourism industry – will undoubtedly suffer. Fewer people visiting the downtown area, directly as a result of the new tax, means fewer dollars flowing into the city’s economy at a time when the city desperately needs that cash for economic recovery. Several families say the tax would discourage them from visiting downtown, including Ben Flores of Manteca: “As a visitor and as someone who regularly comes here to see the sights, and to eat at restaurants and just to walk around and have fun, knowing that I have to spend money on everything else… really would maybe kind of drive me away. And if not me, I’m sure other families.”

Though it will take at least three years to implement a congestion tax, things are moving faster with the Biden administration’s recent approval of a similar program in New York City. Now that the Trump administration is no longer an obstacle, New York is set to become the first city in the nation to tax drivers, specifically those who enter the busiest parts of Manhattan. Suppose the San Francisco Board of Supervisors gives the green light at the end of the year and the California legislature grants its blessing. In that case, the Golden City may soon have its own version of a congestion tax that will stymie growth and harm local businesses. 

Rather than charge new fees on residents already beleaguered with high taxes, San Francisco should encourage the use of public transportation by improving the system itself. Funds for such a project can be pulled from one of the city’s many unnecessary social programs. For example, a ludicrous “safe sleeping” program costing tens of millions of dollars provided just 260 tents for the city’s homeless, adding up to $60,000 per tent. That money could have been well-spent improving the city’s metro system to reduce downtown congestion instead of wasting taxpayer dollars on tents that cost more than double the price of an average San Francisco apartment.

San Francisco is notorious for wasteful spending of this sort. City politicians often call for new investments in underfunded services like public transportation, roads, and city cleanup. Instead, however, many of those funds are ultimately directed toward unproductive new offices and initiatives. For example, the Office of Racial Equity, created in 2019, sucked more than half a million from the city budget last year. In San Francisco public schools, students are now required to take two full semesters of “ethnic studies” classes, costing taxpayers $2.3 million in 2020. Meanwhile, the “Instruction, Innovation, & Social Justice” section of the school district’s budget receives a comfortable $1.04 million each year.

These millions in city funds should have been directed toward the city’s woefully inept public transit system, but city officials prioritized their political agenda over solving real problems in the city. Indeed, hundreds of department heads and city commissioners are required to complete “Implicit Bias Training” at the cost of $250 per head – an expense that San Francisco reimburses in full. Moreover, a new tax on CEO pay approved by voters last November will raise between $60 and $140 million, but Supervisor Matt Haney wants to spend most of it on health services. The money to improve public transit and solve downtown congestion is there, with no need for an unproductive new tax.

Forcing residents to leave their keys at home by imposing a heavy tax does not create a long-term solution to congestion. Instead, officials should focus on incentivizing public transportation by ending silly programs and directing the money toward much-needed rail improvements and bus repair. New taxes will only burden the businesses, residents, and employees of San Francisco with a prolonged recovery and even shoddier public transportation in the long term.

Photo Credit: Cmichel67

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