In my last post on using parking taxes to fund transit in Cleveland, I exclusively focused on private, off-street parking lots, largely due to space and for the sake of a coherent argument. Unfortunately, this meant that I left out the other side of the equation – how to properly manage public parking lots in response.
One of the potential consequences of increasing private parking fees is to increase the relative demand for public parking lots and on-street parking. While there is a long-standing tradition of having the public sector provide certain services at a lower cost than their private sector counterparts (e.g. electricity), the social costs of ubiquitous, cheap (or free) parking are so substantial as to overwhelm its potential benefits.
Accordingly, the first step towards instituting the parking tax policy I proposed is for the agencies that own and operate public parking lots and meters to raise their prices to market rates. Not only does this mitigate the risk that people will simply move from more expensive private lots to cheaper public lots, it may also increase the odds that commercial parking lot operators will go along with this tax proposal. As Todd Litman of the Victoria Transport Policy Institute wrote (PDF), “Commercial operators tend to be more accepting of a parking tax if governments are already maximizing income from other parking-related revenue sources, such as meters and enforcement of parking regulations.”
Coincidentally, Cincinnati has done just this. As part of a plan to modernize its parking system last year, Cincinnati officials raised rates in the Over-the-Rhine district, extended hours for metered parking (including weekends), and stepped up enforcement. While Cleveland also raised its rates last year, the maximum hourly rate for parking meters is still half of Cincinnati’s ($1 compared to $2), and we do not charge on weekends. (This is where I break from Councilman Zach Reed on transportation policy.)
The other essential component of correcting parking policy in order to justify tax increases is to eliminate mandatory parking minimums. Because the imposition of excise taxes on parking lot area can generate a new source of revenue for local governments, this could give them a perverse incentive to actually increase the minimum parking requirements for private developers in order to capture additional funds. In order to address this, legislators need to eliminate mandatory parking minimums within their jurisdiction.
While Cincinnati officials have failed to do the latter – in fact, their minimum parking requirements continue to undermine development in the city – their decision to raise public parking prices has paid off. Yesterday, city officials announced that parking revenues will make up the single largest share of the FY2017 operating budget of the new Cincinnati Streetcar. Funds generated from parking fees will make up $2.2 million of the $4.2 million total budget. Clearly, Cleveland leaders don’t need to look to Australia or the United Kingdom for examples of cities funding transit on the back of parking, given that it’s happening just 250 miles south on I-71.
This approach – taxing a public bad (excess parking) to fund a public good (reliable public transit) – is at the heart of good public policy. It’s no different than taxing cigarette sales to fund smoking cessation and public health programs (not professional sports stadiums) or taxing carbon emissions from coal-fired power plants to fund clean energy. Cleveland should take the baton from Cincinnati and run with it.