The Congestion Dividend

The problem

Road space in a city at rush hour is the scarcest public asset most people use every day, and almost everywhere it is free, which is why it is full. Economists have known the fix since the 1950s: charge for the road at the hour it is scarce. Singapore did it in 1975, London in 2003, Stockholm in 2006. The United States talked about it for two decades and did it once, in January 2025, when New York began charging $9 to drive into Manhattan below 60th Street at peak hours.

The results in the first year were about what the studies predicted. 27 million fewer vehicles entered the zone, about 70,000 fewer a day, an 11 percent drop. Traffic deaths in the zone fell 40 percent and crashes 7 percent. Fine-particle pollution fell 22 percent in the first six months. Buses ran faster, and the toll raised $550 million, about $50 million more than projected, enough for the transit authority to borrow $15 billion against it for repairs the subway had needed for a generation.

The politics were about what the studies predicted too. The plan was authorised by the state in 2019, paused by the governor three weeks before launch in June 2024, revived after the election, and then targeted by the federal government in 2025, which tried to withdraw the approval it had given. It survived. Most proposals do not. Stockholm's experience is the pattern: before its trial, a majority of residents opposed the charge; after seven months of living with it, a majority voted to keep it. The problem with congestion pricing is not that it fails. It is that it has to be imposed on people before they can find out that it works, and the people who pay it see the toll long before they see the benefit.

№ 038 answered the same problem for carbon with a cheque: a price nobody wants becomes a price people defend when the money comes back with their name on it. The road is the same problem, city-sized.

The proposal

The Congestion Dividend: any city may charge for road use in a defined zone at defined hours, without federal permission, provided that at least half of the net revenue is returned to the residents of the city as an equal annual cheque, and the rest is spent on transit and streets within the zone. Every dollar collected and every dollar returned is published. The toll, the zone, the hours and the cheque are the city's to set.

How it would work

1. The right to charge. Federal law today lets a state toll a federally funded road only under a pilot programme that requires federal approval, which is how a national administration came to hold a veto over a New York street. The proposal makes the authority general: a city or state may charge for the use of roads within a zone, at hours it chooses, on any road, and no federal approval is needed. The condition is the dividend.

1. Half back, by name. At least half the net revenue, after the cost of collection, is returned each year to every resident of the city in equal shares, on the same day, with the toll's name on the payment. A resident who never drives receives it. A resident who drives daily receives it and pays the toll, and can see the net. The other half is spent on transit and streets inside the zone, where the payers can see it.

1. Published, monthly. Vehicles entering, revenue collected, revenue returned, and the money spent, on one page, monthly, as New York already publishes its counts. The dividend is the argument, and the argument needs the numbers.

1. The city decides the rest. Zone, hours, rate, exemptions for the disabled and for low-income residents who must drive, and whether trucks pay more. New York's design is one answer and other cities will find others. What the federal law fixes is only that the road may be priced and that the residents share the price.

1. The transit half is not optional. The revenue not returned as a dividend goes to moving people through the zone without cars: buses, rail, bicycles, sidewalks. A city may not use the toll to fill a general budget hole, which is the other way these schemes lose public trust.

The numbers

New York, year one. $550 million collected. Under the rule, about $275 million returned to the city's 8.3 million residents, about $33 each, and $275 million to transit. That is a small cheque, and this proposal says so; the point is not the size but the receipt. A family of four receives $130 in a year in which it may have paid nothing, or $1,000 in tolls, and knows which.

The other half. $275 million a year still supports several billion dollars of transit borrowing, less than the $15 billion New York bonded against the full amount. That is the honest cost of the dividend: the transit authority gets half of what it would have. The answer is in the design, not the rule: a toll that returns half its money can be set higher than one that returns none, because the people paying it are also receiving it.

Stockholm. The charge cut traffic by about a fifth and has held it there for two decades. The referendum that kept it passed after residents had lived with it. The dividend is a way to run the trial with the benefit visible from day one.

Elsewhere. Los Angeles, San Francisco, Chicago, Boston and Seattle have each studied a charge and not adopted one, in most cases because the politics were judged impossible. A federal rule that pairs the charge with a cheque changes the question a mayor has to answer.

The honest objections

"The transit system needs every dollar, and a dividend halves it." The strongest objection and New York is its evidence: the $15 billion of subway repairs is real and the toll is what pays for it. The reply is that a toll which returns half its money is a toll the public will let a city set higher, and keep, through the election after next. A toll that returns nothing is one that a governor pauses three weeks before launch. Half of a durable toll is worth more than all of a fragile one.

"It's a tax on suburban commuters to pay city residents." It is a charge on driving into the zone, paid by whoever drives, and returned to whoever lives in the city that owns the streets. That is the design, and it is the same logic as a rent: the person using the scarce asset pays, and the owner is paid. The commuter who lives in the city receives the dividend; the one who does not is paying for a road that someone else's taxes built and maintain. A suburb that wants its residents to receive a dividend may charge for its own roads.

"Cheques of $33 are too small to change anyone's mind." In Alaska the dividend was about $1,000 and it made the fund untouchable. The scale here is smaller because the toll is smaller; but Stockholm suggests the mind changes with experience, and the cheque is the experience arriving early. If it proves too small, a city may return more than half.

"Low-income drivers who must drive are hurt most." The dividend is the answer in general and item 4 permits exemptions in particular. A low-income resident who does not drive, which is most of them in a city with transit, is a net gainer from a toll they never pay. A low-income resident who must drive receives the dividend, and the city may exempt them, as New York partly does.

"Removing the federal veto lets a city do this to federal highways the whole country paid for." The federal share of a city street was paid once, decades ago, and the country has been paying for the congestion on it every day since. The rule that a city needs Washington's permission to price its own roads is the reason only one American city has done it. A city that charges under this proposal keeps its federal highway funding and returns half the toll to its people. That is not a raid on a federal asset. It is a rent on one, shared with the tenants.

Sources

• Metropolitan Transportation Authority and Office of the Governor of New York, Congestion Relief Zone first-year results, January 2026: vehicle entries, revenue, bonding
• New York City Department of Transportation and NYU Marron Institute, analyses of traffic, crash and air-quality changes in the Congestion Relief Zone, 2025
• Eliasson, "The Stockholm congestion charges: an overview," Centre for Transport Studies, KTH (2014), on the trial, the referendum and the shift in public opinion
• Transport for London, Central London Congestion Charging: Impacts Monitoring, annual reports
• Federal Highway Administration, Value Pricing Pilot Program, 23 U.S.C. § 129 and § 149, on federal tolling authority
• Proposals № 024 (The Grid Dividend); № 038 (The Carbon Dividend); № 078 (The Mileage Fee, forthcoming)