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Commentary By Steven Malanga

Business as Usual at the Port Authority

Cities, Cities Infrastructure & Transportation, Public Sector Reform

What Jersey taxpayers ought to be demanding is real reform of the Port Authority including better budgeting and spending discipline that allows it to build necessary projects at reasonable costs and without giant subsidies in the form of outrageously high tolls.

New Jersey legislators and other groups representing local commuters congratulated themselves late last month after the Port Authority of New York and New Jersey approved a plan to build a new bus terminal in Manhattan. But there is no money for the project and little research on how it could be done at an affordable cost by the financially strapped agency.

“What Jersey taxpayers ought to be demanding... is a real reform of the agency, including proper planning, better budgeting and spending discipline”

What might seem like a victory for Garden State residents, in other words, was really an example of the kind of expensive horse-trading that characterizes the way the Port Authority’s board does business.

It wanted to approve a major overhaul of LaGuardia Airport at a Manhattan meeting March 24, and New Jersey interests used that project, seen as a priority of New York’s, as leverage to get the agency to commit to the bus terminal, too, with little consideration of how it can be done sensibly and economically. That could backfire on Jersey residents, who already pay among the highest tolls in the nation at the Hudson River crossings thanks to decades of poor planning and unwise spending that have put the Port Authority deeply in debt.

What Jersey taxpayers ought to be demanding, instead, is real reform of the agency, including proper planning, better budgeting and spending discipline that allows the Port Authority to build necessary projects at reasonable costs — and without giant subsidies in the form of outrageously high tolls. That’s not what we got last month.

The two states formed the Port Authority in 1921 as an interstate compact to manage assets that both shared, especially the gigantic Port of New York and New Jersey. Over the years, however, politicians on both sides of the Hudson River pushed the Port Authority to take on new projects within each state. Often board members representing one state would approve a project beneficial to interests on other side of the Hudson River only if their state got something in return. Sometimes that meant that two unwise, expensive projects wound up getting built.

Construction of World Trade Center

The quintessential example is the deal that former New York Gov. Nelson Rockefeller brokered with his Jersey counterpart, Gov. Richard Hughes, in 1962 to allow the Port Authority to build the World Trade Center in Lower Manhattan in exchange for the agency taking over the operations of the bankrupt Hudson tubes. It’s difficult to estimate which state got the worst end of the deal.

“In the last decade alone the Port Authority’s debt has more than doubled, and it now owes about $25 billion.”

The Port Authority has subsidized PATH to the tune of billions of dollars in fares that Jersey residents would have otherwise had to pay. However, the World Trade Center has received its own share of eye-popping subsidies over the years, including for heavy losses during its early years, and for its steep, bloated expenses during the current rebuilding of the WTC site. The new, $4 billion PATH station in lower Manhattan — so extravagant and over-budget that the executive director of the agency refused to attend a ceremony celebrating its opening — is one example of just how much money the Port Authority can waste given the opportunity.

Debt has doubled

In the last decade alone the Port Authority’s debt has more than doubled, and it now owes about $25 billion. To fund any further capital spending, the agency has had to increase Hudson River tolls sharply, from $6 for a peak-hour trip in early 2008 to $15 for the same trip today. The Port Authority will collect about $800 million more from people using the bridges and tunnels this year than it did before the increases began in 2008.

The Port Authority also uses our area airports to subsidize its overspending by diverting millions of dollars to money-losing operations. United Airlines, for instance, says its fees at Newark Airport are among the highest in the nation — nearly 60 percent higher than what it pays at Chicago’s O’Hare. Those are costs that airlines pass on to flyers.

Overcrowding

The PA clearly has to do something about its Manhattan bus terminal, which is overcrowded and inefficient. But Jersey’s representatives panicked when, after an initial study estimated it would cost $10 billion to replace the facility, some transportation experts began proposing cheaper alternatives, including constructing a terminal in New Jersey and having bus riders switch to a train for the final leg of the trip.

Instead, New Jersey lobbied heavily for quick approval of a Manhattan terminal, with the details to be worked out later.

“Reform has to be at the top of the agenda of every new project at an institution like the Port Authority because it controls so much of our crucial infrastructure, but misuses public resources so consistently.”

The problem is that giving the Port Authority that kind of latitude has almost always turned out badly. A far better alternative would have been to study ways of constructing a Manhattan facility at lower costs, then bind the agency to that plan. Experts have proposed various ideas, including having the Port Authority sell some of its Manhattan real estate to defer building costs, and using a public-private partnership to build a new terminal with incentives for completing the work on time and on budget.

Reform

Reform has to be at the top of the agenda of every new project at an institution like the Port Authority because it controls so much of our crucial infrastructure, but misuses public resources so consistently. It should no longer be acceptable merely to argue that "They have to build it, so we must approve it" at an agency with such a bad track record.

Last month’s meeting suggests that despite all the criticism of the Port Authority’s performance over the decades, and especially in recent years, it’s still business as usual there. Remember that next time your tolls go up.

This piece originally appeared in The Record (North Jersey)

This piece originally appeared in The Record