A D.C. Council committee has approved a plan that would allow city officials to manage the demand for parking spaces and reduce traffic in busy neighborhoods across the city, a program that would lead to higher costs during periods of peak demand.

“Depending on which part of town you go in, there are places where it’s just completely parked up. People are having to double-park, park illegally,” said Charles Allen, chief of staff for council member Tommy Wells (D-Ward 6). Current parking policies, he said, choke “off customers’ ability to get to their neighborhood business and retail.”

The program was approved Thursday by the council committee that oversees transportation as part of Mayor Vincent C. Gray’s 2013 budget proposal. Under the plan, city officials would be able to adjust parking meter rates, length and times of operations, parking fines and residential parking regulations.

Called “performance parking,” the program has been tested in the H Street NE, Capitol Hill/Ballpark and Columbia Heights neighborhoods in recent years.

Business owners in the Capitol Hill area found that the trial program gave “customers some level of confidence that there’ll be a parking spot on the block so they can get their errands done,” Allen said.

The parking plan also directs that money raised by the program be used locally to improve bus service and to foster the use of alternative transportation.