New York's elected leaders have approved a state budget that enables new tolls on vehicles entering midtown Manhattan that's designed to reduce traffic and increase vehicle speeds, as well as fund long-needed improvements to New York City's network of subway and train lines.

Commercial vehicles, including parcel delivery and other last-mile delivery trucks and vans, would not be exempted from the tolls.

"Commercial fleets have been focused on finding ways to handle the rising tolls and parking limitations of major metro areas for some time," said Dan Hannan, Merchant Fleet's vice president of fleet strategy. "These new charges focused on congested areas will continue to drive commercial fleets toward mobility and managed pool solutions, or even outsourced strategies for services, in the impacted areas."

The 2020 fiscal-year budget, which was approved by Gov. Andrew Cuomo on April 1, would allow the installation of tolling devices on the perimeter of the Central Business District, which includes streets south of 60th Street. It's expected to raise $15 billion for the Metropolitan Transportation Authority, and won't be implemented until 2021 at the earliest.

The funding will help MTA fund improvements to its transit infrastructure, including the Metro-North and Long Island Rail Road.

The program will be established, operated, and maintained by the Triborough Bridge and Tunnel Authority, working closely with the New York City Department of Transportation for installation. A six-member Traffic Mobility Review Board will be established by the authority to advise on tolls, exemptions, and credits to ultimately be determined by the authority based on recommendations from the board.

UPS and FedEx, which operate large fleets of vehicles in the area, would feel a significant pinch from the toll. A FedEx spokesman couldn't be immediately reached, and UPS officials are still assessing the situation.

"Obviously as a major freight and logistics company that services thousands of New Yorkers, UPS will be impacted by any congestion pricing scheme," said Tom Madrecki, UPS director of urban innovation and mobility. "That being said, it is far too early in our estimation to comment on that impact, chiefly because the six-person mobility panel that will decide on factors such as actual pricing per vehicle and exemptions has not even been named, let alone finalized any of those plan specifics."

UPS also maintains a logistics center in the area at 522 Greenwich St., near Hudson River Park.

"Interestingly, UPS is perhaps unique among some carriers insofar as one of our facilities being domiciled within the zone, and so that’s one of many considerations on our end, but again, it's just too early to assess real impact and what we can expect," Madrecki said. "We are looking forward to working with the state and city officials, the governor’s office and other stakeholders to realize a solution that works for New Yorkers while providing the kind of service that’s needed in such a dense metropolitan area."

Companies such as Verra Mobility and Bestpass that provide toll management services may be well positioned to help commercial fleets navigate the new toll, said John Andrews, Bestpass president and CEO.

"While we can't be certain how commercial fleets will react, especially in the short term, they do have an obligation to their customers to deliver goods and provide services as they are needed," Andrews said. "What is really important, and may have an impact in the longer term, is the need for commercial fleets to access and effectively manage their route and toll data. If they have all the information on how long their routes take and how much they cost, then they are empowered to make strategic business decisions."

Gov. Cuomo said the toll will help with his goal to overhaul the transit agency, and keep the additional revenue within the state.

"From the beginning, I said we will not do a budget that fails to address three major issues that have evaded this state for decades — the permanent property tax cap, criminal justice reform, and an MTA overhaul including Central Business District Tolling," Cuomo said. "I also said this budget must be done right — meaning it must be fiscally responsible and protect New York from the federal government's ongoing economic assault on our state. I am proud to announce that together, we got it done."

Additional funding for the MTA will be raised through a progressive mansion tax and an internet sales tax, which will provide a consistent framework for the collection of required sales taxes by internet marketplace providers, and is expected to annually generate $160 million in new revenue for local agencies and $320 million for the MTA capital plan lockbox, supporting up to $5 billion. Other changes in sales taxes will generate another $48 million in new resources for county governments outside of New York City.

Editor's note: Alex Roman, managing editor of Metro Magazine, contributed to this report. Metro is also published by Bobit Business Media.