News Briefs - Hungary, India, USA

Hungary - Budapest unlikely to introduce congestion charge in short term

Following on from the report last year that the Hungarian Government had suspended development of a congestion pricing scheme for Budapest (which had received money for its metro system from the European Commission contingent on introduction of such a scheme), Caboodle reports that the Budapest Public Transport Centre, CEO David Vitezy, says that it wont happen in the next two to three years.

He says that until there is more public transport capacity, it can't be done.  He wants the fourth metro line (under construction) and some new tram lines built first.  I'm slightly curious about this, given Budapest functioned for many years with the existing public transport network and much less car traffic, and has had relatively static/declining public transport usage for some years.

However, I suspect the politics around this are too difficult for now.

India - Andhra Pradesh state may establish hypothecated roads fund

According to The Hindu, the Andhra Pradesh Road Development Corporation (APRDC) is considering replicating what has been done in four states (Assam, Kerala, Maharashtra and Uttar Pradesh), by setting up a dedicated roads fund which would receive revenue from motoring specific taxes.  The primary reason being to allow for better quality and longer term funding decisions on road infrastructure, than ad hoc annual funding decisions competing with other public spending.   In addition, it is intended to support the autonomy and accountability of the APRDC in delivering improvements to the network.   Taxes on motor vehicle ownership and fuel, tolls, and other revenue sources may be dedicated to the roads fund.  A key priority is to fund major safety improvements to reduce the high accident and road fatality rate on the state's roads.

USA - Texas - article on tolling

The Texas Tribune has an excellent four part series of articles on toll roads in the state.

- Part One. Includes an interactive map of toll roads in Texas, which looks like not much given the size of the state, but are clustered around major cities.

- Part Two.  Describing the rise of tolling in Texas.  Noting that fuel taxes have not risen in Texas in 20 years, that more than 150 miles of toll roads have been built in the past six years and the growth in private sector interest in building, owning and operating such roads.

- Part Three. Focusing on HOT and other toll lanes in Texas.

- Part Four.  On the failed Trans-Texas Corridor proposal and what came after.

Budapest congestion charge suspended by Hungarian Parliament

Budapest's plans for congestion pricing look set to be delayed, as the Hungarian National Assembly voted against changing the law for it to be implemented, according to the Budapest Times.

14 members of the Hungarian National Assembly voted in favour of the law change, but 305 opposed it. Of those voting for it, most were from the LMP, a leftwing environmentalist party.  It is likely this move was driven by populism, as congestion charging was unlikely to be widely supported in advance of its introduction.

 

The implications are potentially serious, as congestion charges were a precondition of EU funding already provided for the new metro line (M4) currently under construction.  Given that the Government had previously supported abolishing all central government subsidies for public transport in the city, it leaves the Mayor of Budapest, István Tarlós, in a difficult position.   He faces having to drastically increase public transport fares to maintain services, which will no doubt exacerbate traffic congestion as some users will switch to driving.  Other options include increasing parking charges, or drastically cutting services.   You see congestion charges for Budapest were, in effect, replacing central government funding to subsidise public transport. 

He is unlikely to directly face the wrath of the European Commission, as central government will have to deal with that, but it is likely to be highly embarrassing, and Hungary may face a cut in any future funding if it doesn't match its promises with actions.

I've previously commented on how I thought Budapest faced an uphill struggle to implement congestion pricing in such a short time frame.  Yet I believe it should be implemented, albeit on a more considered timetable, with time taken to develop it in an integrated way, that prices rationally and deals with changes in traffic patterns appropriately.

This now all looks like a potential mess.   An earlier report indicated that tolls on the Danube river crossing bridges might be implemented instead.   This would be simple, although obviously create concerns about being unfair on those from Buda entering Pest.   Yet it is unclear whether this is allowed under current laws.

What is certain is that the issue wont be going away because:

-  The politics of raising public transport fares and cutting services rival those of introducing congestion pricing;

-    Budapest will remain congested, regardless of what is done with public transport funding;

-    The EC will not look kindly upon Hungary breaching one of its conditions for funding for its new metro line.

UPDATE:  Hungary Around the Clock reports that Budapest Mayor István Tarlós says that the subsidy contract with the European Commission for the Metro 4 line, which included the condition that congestion charging be introduced, should now be renegotiated.  The report noted that it was the previous Socialist-Free Democrat leadership and former mayor Gábor Demszky that pledged to introduce the charge by late 2013.

Budapest Business Journal notes that the Mayor has said final decisions on funding for BKV (the Budapest Public Transport Company) will be made in September, including "alternative options". 

Another article noted that while the Metro 4 project is going well, the congestion charge needed a series of park and ride stations on the periphery, and nothing has been done about it.  It has also been noted that it will be virtually impossible to procure and install a system within the planned time.

Is Budapest congestion pricing heading for disaster?

That’s a question raised by Erik D’Amato in an article on the English language Hungarian website “Pestiside”. He also includes a good map of the proposed cordons.

He fears the following:

- Corruption means that the money set aside to implement the system gets siphoned off before it is completed, leaving it half finished;

- Technical failures;

- Mass evasion due to poor design;

- It is too successful.

Interesting perspective, and given I’ve been to Budapest a few times I thought I’d respond.

1. I can’t comment on possible corruption around funds for the system. I have heard plenty of anecdotes over the years about suppliers and operators of toll systems bribing their way into contracts, but none of it is hard evidence to report (of course if anyone actually has any, I’ll publish it). I wouldn’t have thought Hungary was necessarily worse than its neighbours though.

2. The risk of technical failure is real, and that’s because the timeline to get it designed, installed, tested and for publicity to users to be presented is ridiculously short. London’s scheme was designed to be deliverable in less than three years and be foolproof. Budapest cannot do it in one year without throwing serious money at it and using expensive expertise from other countries. I haven’t seen evidence that either is going to happen. HUF 15 billion (US$66 million) is a tight budget in that timeframe. My view is that one needs at least two years from a decision to operation to get a reasonable chance at reliable operation, assuming there are no legal or planning restraints in the way.

3. The risk of mass evasion due to poor design is for the same reason as technical failure. The timeline is too short. The article cites risks of people falsely registering as residents inside the cordon and of vandalism of equipment. Both are real, and need to be addressed by design. These are not the only risks of evasion and fraud, but you need a good six months of intensive design work on the ground and at desktops, with consultation of traffic and parking enforcement bodies (and staff) to identify and address these issues. Answers could include changes to policy, boundaries or may not be easily addressed with changes to the law.

4. The “too successful” risk is easier to address, as it is a function of price and design. That should be dealt with by modelling demand, which takes into account the likely higher value people put on paying to drive on what were free roads, compared to the parallel use of the same money for discretionary purposes. Again, this needs some work and should result in the design of the cordons, and pricing of cordons in a way that optimises traffic flow rather than bluntly just charges all that crosses. In Budapest, I would have thought that charging in evenings and most of the weekends would be undesirable, and that charges during the middle of the day should be much less than at peaks. However, that requires some work, which I doubt can be completed in a year in time for a system inauguration.

I would like Budapest to succeed with congestion charging, because the city does have a congestion problem and it is a positive step to shift towards such charges as a way of supporting transport infrastructure. It also would be a good demonstration of how it can succeed in a major post-communist era city. However, I share concerns that there are big risks that this can go badly wrong, not least because the timeframe for its introduction is short, I’ve seen little evidence of sufficient work having been carried out to allow it to proceed or for major issues to be confronted.

I hope I am wrong or that the city takes at least 12-18 months longer to get some help to address those issues.   Although it is important that the city address its looming funding shortfall for public transport, it would be worse if its main attempt to do so becomes a disaster, embarrassing the Mayor, city officials and those charged to get it right. 

Budapest Mayor confirms congestion pricing to come

Portfolio.hu reports that Budapest mayor István Tarlós confirmed last week that Budapest is to get a congestion charge and it will be in the form of a single or double cordon with pricing of HUF400-500 (US$1.73-2.16). 

 The necessity is due to central government abolishing subsidies for the Budapest Transport Company (the municipal company responsible for the metro, tram and bus networks), and the condition attached to the loan for funding of the number 4 metro line. 

 The report indicated a number of dimensions of the proposed charge:

- Residents within the charging zones would be exempt; 

- Operating hours are not determined, but it has not been ruled out as being applicable 24 hours a day; - Motorcycles and scooters might be exempt;

- The charge will not be a single access pass, but will charge according to the number of cordon crossings undertaken in a day.

Apparently the exact location of the charging cordon, as well as the range of exemptions and discounts (and products) are yet to be determined.  

For a "summer 2013" introduction, it means Budapest has a lot to do to ensure a successful introduction.  Very courageous (or foolhardy). Furthermore, if it turns out to be a 24/7 charge, there it wont be earning the "congestion charge" moniker, as it will clearly not be about congestion, but revenue.

Budapest congestion charge in 2013?

Hungarian financial paper, Napi Gazdaság, leaked a draft budget last week suggesting that the Budapest owned public transport company, BKV, is to cease receiving central government subsidies from next year. The speculation is that the city of Budapest will be expected to make up the difference with a congestion charge. Budapest is already required to have a congestion charge as part of a deal it struck in receiving European Commission funding for new metro line M4.

According to the Budapest Times, Mayor István Tarlós said that around 15 Billion Hungarian Forints (about US$64 million) is needed to make up the difference, and options for congestion pricing for the city are likely to raise between 20 and 40 billion Forints (US$85 million and US$170 million) per annum. Budapest does have chronic traffic congestion, as car ownership has increased significantly in the past 20 years, road capacity in the city has not. Although the public transport network is to a good standard, the simple point is that with car ownership, people prefer to drive even if they face considerable delays. A congestion charge for Budapest intrinsically makes sense, the primary issue (as always) is what sort of system should be installed, where and what the structure of a charge should be. The Mayor suggests the cordon should be the one identified below, following one of Budapest’s inner ring routes. 

 

However, I suggest it may be more worthwhile to have lower charges for crossing a wider number of zones, to better target congestion by spread the charge equitably according to time of day, location and direction of travel. 

 

However, if it is intended that something be operational in a year’s time, it is already too late to get started. Even if an option was selected today, it should take no less than two years to get installed, tested and operating a reliable system for users, including providing the necessary information and publicity (and enforcement systems) so that it operates in a way that is most acceptable to users. Given rumours that the Hungarian government is highly resistant to the use of overseas consultants and contractors, it seems unlikely that Hungarian only companies could do this quickly, given that road pricing experience in Hungary of this nature is limited to the (admittedly reliable, efficient and well functioning) motorway only electronic vignette system. 

Work is apparently underway on the “limits” to a congestion charge, suggesting that it has already been decided that it will be a single cordon based scheme, although decisions on whether it is an area charge, whether it will charge inbound AND outbound traffic, and at what times and rates, do not appear to have been made. 

 For Budapest congestion pricing to proceed, it needs work done not just on traffic flow (which will change in multiple ways once pricing is introduced), public transport capacity and technology, but also customer service, enforcement/compliance and business rules necessary when dealing with people who have little exposure to paying to use roads that were previously uncharged. 

 If it can do it well, it will not only help provide funds for public transport, but also the city’s road network, significantly reduce congestion, improve the attractiveness of walking, cycling, river, metro, tram and bus services, and improve air quality. It also would be the first large city in the east of Europe to have taken such a bold step forward. Given that it has to happen, the city and the national government need to move fast to make sure it can happen in a way that delivers the greatest gains for the city in terms of congestion reduction, improve air quality and generating net revenue. At present, there is not much evidence of the right amount of action needed to ensure this will happen. 

In my previous article on Budapest congestion pricing around a year ago, I noted the city does not have legal authority to introducing pricing in itself – there needs to be national legislation to permit it. Until that is passed, nothing much is likely to be able to happen beyond planning. 

Local support?

Curiously, a website has been set up by economist Szilárd Erhart, which appears to be promoting the idea (the English sections appear to not have been updated for a few years, but Hungarian is kept up to date). It isn’t common to find private citizens advocating for road pricing, but good on him.

Budapest mulling congestion charging

According to two reports from Budapest Business Journal (BBJ), there is an increased likelihood that the City of Budapest will implement some form of congestion charging in the next few years, primarily for budgetary reasons.

In January, it was reported by BBJ that the Mayor's chief financial advisor, János Atkári, said urgent steps would need to be taken to avoid the city becoming bankrupt by 2012. This included congestion charging. The key financial problem being the ongoing heavy losses for the city's public transport system, and the financial commitment to expand its metro.  In June, BBJ reported that when the Metro 4 line starts operation, Budapest is legally obliged by the EU to commence a congestion charging system.   With the Metro expected to be completed no later than 2015, a charge would start at the same time.  Work undertaken for the city previously indicated that revenue could be HUF13 billion (US$68.7 million) p.a., presumably based on a modelled charge of between US$2 and US$4 per vehicle.

The Mayor has also indicated (according to ITS International) that:

New park-and-ride (P+R) car parks will need to be opened, the number 1 and 3 tram lines will need to be extended and the city's parking system will need to be unified.

Certainly Budapest does get severe congestion, as car ownership has soared and people have preferred the freedom of driving to the city's albeit well developed public transport network.   The dramatic decline in patronage for the public transport system due to increased car ownership has been accelerated by the increase in congestion slowing down buses and trams (where they do not have exclusive right of way).  In effect, charging for driving into Budapest should boost patronage and help ease revenues for the public transport system.

My question is whether Budapest is best served by a small cordon/area charge, by having charges on vehicles transiting the city (but not using motorways), or in a wider approach to be taken to charge vehicles by distance across the country.   There have been firm proposals in the past to charge heavy vehicles by distance (they are now charged by the day on motorways only, along with cars), which have been stymied by government indecision and reluctance to use international consultants.  I can hope that Budapest thinks carefully about any new system to avoid boundary distortions, minimise operating costs, maximise economic benefits and be able to be integrated into any wider road pricing options.   However, it is clear that Budapest is further ahead on its thinking in road pricing than other capitals in the former socialist bloc countries.

The biggest barrier for Budapest is that national law does not give the city the legal authority to introduce a congestion charge, so the matter will be up to central government first.  However, I would have thought concerns over the potential bankruptcy of the capital would be a strong motivator (along with the clear issue of high levels of congestion in downtown Budapest, with pre-existing good public transport alternatives).