The US Department of Transportation yesterday announced it would divert $354.5 million in federal gas tax funds to help New York City, New York impose a billion-dollar congestion tax on commuters. The funds are part of a larger $848 million effort designed to encourage major cities around the country to move quickly to implement new methods of collecting money from the motoring public.

"Our commitment was to allocate the federal contribution in a lump sum, not in bits and pieces over several years -- an approach meant to get these projects off the drawing board and into action," U.S. Transportation Secretary Mary E. Peters said in a statement.

New York Mayor Michael Bloomberg (I) will use the money to charge motorists $8 and truck drivers $21 per day to enter or leave downtown Manhattan during peak periods. Based on the experience of London, however, the daily tax will double within a year to $16 and increase to $50 a day for politically unfavored vehicles such as SUVs or sports and luxury vehicles.

The large federal grant is meant to present the New York state legislature with "an offer it can't refuse." If 90 days after it reconvenes the legislature fails to adopt legislation to implement the congestion charge, the federal funds disappear. This guarantees an intense lobbying battle in Albany.

"We've worked very hard to secure these funds," Bloomberg said. "Now we'll work with the state legislature and city council to seize this golden opportunity."

Despite the large sums involved, the proposal remains controversial. In July, a key assembly committee chairman issued a report slamming Bloomberg's proposal. Another report issued last year by the Queens Chamber of Commerce concluded the congestion charge would cost the city's economy $1.9 billion in lost business. The DOT set a deadline of March 31, 2009 for implementation of the New York tax.

The DOT also will hand San Francisco $158.7 in federal gas tax money if the city imposes an extra $1.50 tax on commuters using the Golden Gate Bridge during peak periods. This new fee would be added on top of existing tolls of up to $5. The federal funds would purchase a camera system to track and record the movement of motorists for billing purposes.

The other areas selected to receive gas tax funds to implement new taxing schemes were Seattle ($138.7 million), Minneapolis ($133.3 million) and Miami ($62.9 million).