New York City faces an estimated $7 billion budget shortfall, and new Mayor Zoran Mamdani wants to tax the wealthy. But Mamdani and his administration recently acknowledged that they need to consider other ways to raise revenue for the city, from raising property taxes on homeowners to a long-talked-about idea that upends a feature of life in the Big Apple that many residents have long considered a right: ample free parking.
New York has about 3 million street parking spaces, about 97% of which are free. Removing this benefit has been proposed many times, but has failed. But given the city’s overall annual budget of more than $100 billion and Mamdani’s need to close the budget gap, it could gain even more momentum. This would follow in the footsteps of many other U.S. and European cities, where increasing public parking spaces is already common as a way to raise revenue. This topic is gaining more prominence in public policy discussions across the United States as the financial burden on local governments becomes more widespread.
In New York, the idea of charging for parking was brought back to the public eye this month after remarks by New York City First Deputy Mayor Dean Freihan at an event at the New York City and State Law Center. The topic was brought up in response to an audience question about increasing additional revenue by changing the city’s approach to on-street parking.
“Yes, we should consider all of these things,” Freihan told the audience. However, he stressed that parking fees do not solve the entire budget problem. In a statement the next day, Mamdani echoed this sentiment. “My administration is committed to closing the budget gap by stemming the drain on New York City and taxing the wealthy,” he said, adding, “We need structural reforms of the scale necessary to put the city back on solid financial footing.”
City officials aren’t the only ones thinking of ways to increase revenue. Last May, the New York Senate introduced a bill that would give New York City the authority to establish a residential parking permit system. The bill, introduced by current Manhattan Borough President Brad Hoylman-Sigal, remains in committee.
Last week, New York state lawmakers proposed a comprehensive state-level budget that would increase taxes not only on corporations but also on the wealthy. If approved by New York Governor Kathy Hochul, this tax change would implement a similar approach to Mamdani’s in finding ways to increase New York City’s revenue and close budget gaps. But negotiations are expected to last until at least April, and Hochul, who is in a tough re-election bid, has previously said he would not approve the tax increase.
Parking fees are considered a form of regressive taxation, hitting low-income people even harder on a percentage basis, so mayors who advocate taxing the wealthy have to consider other political costs. 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, an associate professor at Cornell University who teaches urban planning classes. “This is one of our most precious resources, and the city is simply giving it away for free.”
What’s unique about New York City and how other cities handle parking?
In fact, New York City is one of the only major U.S. cities that allows parking completely free in residential areas, according to Zhan Guo, an associate professor of urban planning and transportation policy at New York University’s Robert F. Wagner School of Public Service. “It doesn’t make economic sense,” Guo said.
Additionally, the percentage of metered parking spaces in New York is significantly lower than in other large U.S. cities such as San Francisco, Washington, D.C., and Los Angeles, said Brenden Beck, an associate professor at Rutgers-Newark University and a sociologist who specializes in police, city budgets and housing. “The amount should be much higher, given that New York City has a much more robust public transportation system. For example, if a working-class or middle-class system in Los Angeles says, ‘Please, don’t meter me, because I don’t have any other way to get to work,’ you might get sued. In New York, you don’t get many lawsuits,” he said.
There are multiple approaches. For example, Washington DC has strict metering practices. The city also issues residential parking permits. In San Francisco, on the other hand, parking meter pricing is based on demand, with rates varying depending on usage levels at different times of the day. Residents may also be required to obtain a residence permit. Boston has meters installed throughout the city. Additionally, many residential areas are now permit-based. Residents must apply for a permit, but there is no fee.
new york city options
New York State could take several steps to increase parking revenue. One option is to increase the number of parking meters in the city and charge an hourly fee for usage, said Terrence J. Regan, an adjunct professor at Boston University’s School of Urban Planning and Studies. Thanks to technology, cities no longer need to install physical meters. Entire streets can be turned into metered parking by having people pay online or through a collection box on the street, he said.
Another option is for the city to issue resident parking permits. This may cover the entire city or just a specific borough.
Urban planning experts say combining both ideas to generate revenue could be ideal. “Many cities charge parking fees, and it’s not difficult to implement, especially with digital parking meters,” Klein said. “We’re already doing this in many places and people know it and expect it,” he added.
Costs for car owners
The cost to drivers will depend on what New York State decides to implement.
Michael Lewin, director of the Institute for Land Use and Sustainable Development and professor of law at the Touro Law Center, said the city could either keep the existing parking meter pricing system, which has different fees for each zone, or adopt a demand-based pricing system like San Francisco’s, which relies on underground sensors to estimate parking occupancy.
To determine the cost of a residence permit, New York state could look to other cities for guidance. For example, in Washington, D.C., permits cost $50 for the first vehicle, $75 for the second vehicle, $100 for the third vehicle, and $150 for each vehicle after the first three. San Francisco, on the other hand, charges a $215 annual fee for a vehicle occupancy permit. Notably, a 2013 study by New York University’s Guo found that 52.5% of respondents were willing to pay an average of $408 a year for a parking permit.
how much profit can you make
The amount the city can raise will largely depend on the specifics of the program, but it certainly has the potential to alleviate some of the budget problems. “Could we use it to raise citywide funding? No, of course not, but we could make a significant amount of money,” said Michael Manville, a professor of urban planning at the Luskin School of Public Policy at the University of California, Los Angeles.
A 2020 UCLA study estimated that New York City loses at least $114 million annually on the Upper West Side alone by allowing unmetered curb spaces.
More broadly, if New York City decided to designate two-thirds of its free parking as “resident permit parking” and impose a $100 annual fee on permits, it would raise about $200 million a year, said Boston University’s Regan. Obviously, more permits could raise more money, he said. If the city added another 250,000 new meters and collected $20 a day for 300 days a year, it could collect $1.5 billion on top of revenue from existing meters. “There are a lot of tools here that you can leverage to raise money,” he said.
Justin de Benedictis-Kesner, the Emma Bloomberg Associate Professor of Public Policy at Harvard Kennedy School, said there are other benefits to pricing parking appropriately. This includes saving time for drivers heading to parking lots, reducing traffic congestion and reducing air pollution, he said.
The politics of paid parking
De Benedictis-Kesner said the major barrier to introducing this kind of initiative is political, as leaders worry that voters won’t see the benefits. The truth is, it doesn’t have to be more expensive than urban drivers earn to make a meaningful difference.
That’s Economics 101. “If you offer land in New York City at zero price, you’re going to run out of land because the price is well below its value,” UCLA’s Manville said. Setting the curb price so that one space on the block remains open at all times would solve the problem. He said the city might also be able to relax rules on alternating parking because it would “allow us to clean the streets around parked cars.”
As a result, “we set our prices to be a better service for people who want to park, and we also get some more revenue.”
But no matter what New York does, there are approaches it shouldn’t take, said Eric Guerra, associate professor of regional planning at the University of Pennsylvania. The city of Chicago signed a decades-long deal to privatize parking meters in 2008. The goal was to raise revenue, but poor enforcement led to the bombing, and the city is still dealing with the aftermath, Guerra said. Chicago could have gotten far more funding than it did, and the city has lost the ability to generate revenue from key assets for years. “They really dug a hole for themselves,” Guerra said.
