Providence should pass a parking tax

Cities with less parking do better economically and environmentally, so getting Jorge Elorza firmly behind a parking tax should be one of our top concerns.

When asked whether he would support a parking tax during his administration, Jorge Elorza blew a dog whistle for potential supporters and opponents, saying in effect “not now.” On balance, Elorza’s reply makes me confident that the mayor-elect’s administration will institute a parking tax if Providence voters push him on the issue. A parking tax is one of the most important economic development and transportation initiatives that the mayor could take on, and progressives should ready themselves to ask for its passage.

I feel comfortable trumpeting the impending passage of a parking tax because of the particular caveats Elorza had with passing one. He at first said “we can’t adopt it right now”, but then added this:

The larger reality is that our citizens are already over taxed, and we can’t consider adding anything new to that burden. Over the long term, if we can manage to lower some of the other taxes – property tax, the car tax, etc. – I would consider a parking tax, because it’s much more progressive tax. First, it requires visitors to the city to share a portion of the tax burden, unlike the property and car taxes, which only impact residents. It also incentivizes other forms of transportation and ride sharing. (my emphasis)

Why do I think such a seeming non-answer is hopeful? Because the caveats are built into the proposal itself. Proponents of a parking tax ask that the city tax parking, and use 100% of the revenue to reduce other taxes. A parking tax means a tax cut on your house or apartment. We should take this as a yes and start pushing Elorza to keep his promise. Yours truly much prefers a lowered property tax to a lowered car tax for obvious reasons, but even a lowered car tax in return for a parking tax wouldn’t be a non-starter.

Pittsburgh currently has the highest parking tax in the country, at 40% of value, and it brings in more revenue than income taxes for the city (I would favor a parking tax arrangement that also taxes “free” parking–see article here–but getting commercial lots to pay a tax would be a start). Allowing Providence to tax parking could create the right balance that would both favor development and create a fairer environment for ordinary people.

As a type of de facto carbon tax, a parking tax works much better than, say, the gas tax, because if the mechanism that discourages driving works to actually reduce vehicle miles traveled, the result will be an economic situation that favors less driving even more. When drivers reduce their vehicle use, gasoline tax revenues are reduced, and programs like public transportation budgets suffer. Raise the tax to get more revenue, and driving is reduced yet again. But drivers who shun the parking tax by driving less will leave lot owners with less revenue, not transit agencies. The owners of lots, who previously may have calculated that it was worth developing nothing and taking a fee each day from commuters, might get a different idea. On the other hand, if drivers continue to park, the city collects revenues which can be put into property tax reductions. This, too, would encourage infill. So we have a positive feedback loop.

A parking tax dodges some of the objections people could have to a land tax. Residents with big yards don’t need to worry that the city is going to try to punitively charge them for green space*. And a parking tax would favor smaller businesses that often struggle to compete with big boxes, but which produce more benefit with less cost to cities. Big business need not even worry so much, since catching up would simply mean following the set of incentives the city is offering. Got parking you’re not using? Build another store on it, or lease it out to developers for housing.

The parking tax, unlike the car excise tax, has the advantage of taxing non-residents as well as residents, making it a more progressive way of pricing the cost of automobiles to society. This set up also answers a critique I’ve heard of the car tax, which is that some people may find themselves unable to give up a car due to long exurban commutes out of the city. A parking tax would inherently tax those who work in the urban core the most, meaning that city residents who normally drive from nearby neighborhoods to their jobs in the core out of convenience would likely be the first to change their habits and use other methods to get to work, while those who live on the South Side but work out in the boonies at a Walmart would be unaffected. Since a parking tax would raise the effective cost of driving to the core while lowering the cost of living there, many residents would experience the parking tax as a break-even tax or even a tax reduction.

A parking tax, by lowering property taxes, would encourage infill. Currently, the city frequently awards tax stabilization agreements (TSAs) to downtown developers to help ameliorate the city’s huge parking crisis and get new building stock. TSAs have a built-in logic that makes economic sense, but residents nonetheless have good reason to feel annoyed at them. With very high property and commercial taxes (Providence has the highest commercial taxes of any city in the country, in fact), it just doesn’t make sense to develop parts of Downcity without some reduction in cost, so TSAs get something where the city might have gotten nothing. But instituting a parking tax will help to lower these overall tax burdens in a more equitable way. Now, not just those with connections to City Council, but also renters or homeowners in every  neighborhood of the city, will see a reduction in their taxes.

The parking tax should also please progressives because it asks for as much as it gives back. TSAs fundamentally lower taxes for certain people without any immediate short-term plan for revenue. In a city facing yet another fiscal shortfall in the coming year, that’s a problem. Raising revenue for the city from a parking tax while giving that revenue back would be a more balanced approach.

The immediate challenge for the parking tax will be getting a City Council resolution in favor of its passage. Based on my best advice from talking to a variety of city and state officials, I understand that the legislature would have to give Providence authorization to institute a parking tax. I know there are some who have said they’re interested in helping with this effort, but first City Council has to move forward.

I’m going to be working with City Council to build support for a parking tax in the coming year, and I hope that RI Future readers will join individually and as organizations to call on Council and the mayor-elect to pass it.

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*I don’t contend that this is something that really happens under a land tax, as, in fact, land taxes often effectively act as parking taxes, but what I would say is that this clarifies the issue in voters’ minds.