With New York City facing a budget gap estimated at around $7 billion, new Mayor Zohran Mamdani would prefer to tax the rich. But lately, Mamdani and his administration have conceded that other ways to raise revenue for the city need to be considered, from higher property taxes on homeowners to a long-talked-about idea that would upend a feature of life in the Big Apple many residents have long considered a right: ample free parking.
New York has about 3 million curbside parking spaces, and roughly 97% of them are free. Eliminating this perk has been floated, unsuccessfully, many times. However, given an overall annual municipal budget over $100 billion and Mamdani’s need to close the budget gap, there may be more momentum. It would follow in the footsteps of many other U.S. and European cities where using more public parking space as a way to raise revenue is already common. The topic has assumed a higher profile within public policy discussions across the U.S. at a time of widespread municipal financial strain.
For New York, the idea of charging for parking gained renewed public interest this month following remarks by Dean Fuleihan, first deputy mayor of New York City, at a Center for New York City and State Law event. The topic came up in response to an audience member’s question about raising additional revenue by changing the city’s approach to street parking.
“Yes — we should be looking at all those things,” Fuleihan told audience members. He emphasized, however, that parking fees wouldn’t fix the totality of the budget problem. In a statement the following day, Mamdani echoed this sentiment. “Our administration is committed to filling the budget gap by ending the drain on New York City and taxing the rich,” he said, adding that “we need structural change at the scale necessary to put our city back on firm financial footing.”
City officials aren’t the only ones thinking about ways to increase revenue. Last May, the New York Senate introduced a bill that would authorize the city of New York to provide for a residential parking permit system. The bill was sponsored by Brad Hoylman-Sigal, who is now Manhattan borough president, and it remains in committee.
This past week, New York State legislators proposed a comprehensive state-level budget package that would increase taxes on the wealthiest individuals, as well as businesses. If the tax changes are approved by New York Governor Kathy Hochul, it would enact a similar approach to Mamdani in seeking ways to increase revenue and close the budget gap in New York City. However, negotiations are expected to last until at least April, and Hochul is in a tough reelection fight and has to date said she will not approve a tax increase.
There is a separate political cost to consider for a mayor who ran on taxing the rich, as parking fees are considered a form of regressive taxation, hitting lower-income earners harder on a percentage basis. But most urban policy experts say the idea of generating more revenue from parking makes sense.
“New York City real estate — street space — is being given away for free in many parts of the city,” said Nicholas J. Klein, associate professor at Cornell University, who teaches classes on city planning. “It’s one of the most valuable resources, and the city is just giving it away.”
What makes NYC unique, how other cities handle parking
In fact, New York City is one of the only major U.S. cities that allows people to park on residential streets completely free, says Zhan Guo, associate professor of urban planning and transportation policy at New York University’s Robert F. Wagner Graduate School of Public Service. “It doesn’t make economic sense,” Guo said.
What’s more, the percentage of metered parking spaces in New York is significantly below other large U.S. cities, including San Francisco, Washington D.C. and Los Angeles, said Brenden Beck, associate professor at Rutgers-Newark, and a sociologist who focuses on policing, city budgets and housing. “It should be much higher when you consider that New York City has a much more robust public transit system. The working class and the middle-class system of Los Angeles, for example, might have a case if they were to say, ‘Please don’t meter us; we have no other way to get to work.’ There’s less of a case to be made in New York,” he said.
There are multiple approaches. Washington, D.C., is heavily metered, for example. The city also issues residential parking permits. San Francisco, meanwhile, has demand-based pricing for its parking meters, meaning rates vary based on usage levels at different times of the day. It also charges residents for a residential permit. In Boston, there are meters throughout the city. Additionally, many residential streets are now permit-only. Residents have to apply for a permit, but there’s no charge.
New York City’s options
New York could take several paths to raise parking revenue. One option is to increase the number of parking meters in the city and charge an hourly rate for usage, said Terrance J. Regan, adjunct professor in Boston University’s city planning and urban affairs department. Thanks to technology, cities no longer have to install physical meters. They can turn entire streets into metered parking by having people pay online or through a revenue box on the street, he said.
Another option is for the city to institute resident parking permits. This could be either for the whole city or only certain boroughs.
A combination of both revenue-raising ideas could be ideal, according to urban planning professionals. “Lots of cities charge for parking,” and it’s not hard to implement, especially with digital parking meters, said Klein. “We already do this in lots of places, and people know it and expect it,” he added.
The cost to car owners
The cost to drivers would depend on the particulars New York decided to implement.
According to Michael Lewyn, director of the Institute on Land Use and Sustainable Development and professor of law at Touro Law Center, the city could keep its existing fee structure for parking meters, with rates that vary by zone, or implement demand-based pricing like San Francisco, which relies on in-ground sensors to estimate parking occupancy.
To determine the cost of a residential permit, New York could look to other cities for guidance. In Washington, D.C., for example, a permit costs $50 for the first vehicle, $75 for the second vehicle, $100 for the third vehicle and $150 for each vehicle beyond the first three vehicles. San Francisco, meanwhile, charges an annual fee of $215 for a residential permit on a passenger vehicle. Notably, a 2013 study by New York University’s Guo found that 52.5% of respondents would be willing to pay an average of $408 per year for a parking permit.
How much revenue it could raise
The amount of money the city could raise depends largely on the specifics of the program, but it certainly has the potential to chip away at the budget issue. “Can you finance the whole city off it? No, of course not, but you could make a sizable amount of money,” said Michael Manville, professor of urban planning at the UCLA Luskin School of Public Affairs.
A 2020 study from UCLA estimated that New York is losing at least $114 million a year, on the Upper West Side alone, by allowing unmetered curb spaces.
More broadly, if New York decided to make two-thirds of its free parking spaces “resident permit parking” and charged a $100 a year fee for a permit, it would raise about $200 million a year, said Boston University’s Regan. Obviously, you can raise more if you make the permit more, he said. If the city also added 250,000 new meters and collected $20 a day, 300 days a year, it could raise $1.5 billion, on top of revenue from existing meters. “You’ve got a lot of tools to play with here to raise money,” he said.
Pricing parking appropriately has other benefits as well, said Justin de Benedictis-Kessner, Emma Bloomberg Associate Professor of Public Policy at Harvard Kennedy School. This includes time savings for drivers cruising for parking, reduced traffic congestion and less pollution, he said.
The politics of paid parking
The big barrier to introducing these types of initiatives is political because leaders are concerned that constituents won’t see the benefit, de Benedictis-Kessner said. In reality, it doesn’t have to be expensive in relation to the incomes of city drivers to make a meaningful difference.
It’s economics 101: “If you offer New York City land at the price of zero, then you’re going to have a shortage of it because the price is well below its value,” said UCLA’s Manville. If you price the curb to keep one space on a block always open, it solves the problem. The city might also be able to loosen its alternate side parking rules since “you can clean the street around parked cars,” he said.
The upshot: “You price it so that it’s a better service for people who do want to park, and in addition, you raise some revenue.”
But whatever New York does, there’s an approach not to take, said Erick Guerra, associate professor of regional planning at the University of Pennsylvania. Chicago inked a multi-decade deal in 2008 to privatize parking meters. The intentions were to raise revenue, but it bombed in part due to poor execution, and the city is still dealing with the aftermath, Guerra said. Chicago should have gotten way more money than it did, and the city has lost the ability to gain revenue from an important asset for many years. “They really dug themselves into a hole,” Guerra said.
