Why the Port Authority Is an Unmanageable Mess
Mired again in scandal — this time allegations of favor-trading with airline executives — the unwieldy Port Authority of New York and New Jersey desperately needs reform.
“Port Authority has long since become a swamp of mysterious accounting practices, patronage, favoritism, self-dealing, political retaliation and mission creep.”
The agency was established in 1921 as a relatively modest initiative to standardize rates of cross-Hudson freightage. Its originators, steeped in Progressive-era faith in technocratic management, envisioned an agency run by disinterested professionals, insulated from the pressures of day-to-day politics.
In the 94 years since its founding, however, the Port Authority has proved anything but politically disinterested. It has long since become a swamp of mysterious accounting practices, patronage, favoritism, self-dealing, political retaliation and mission creep.
Though the Port Authority has become unmanageable and unaccountable, reform efforts to date have proved fruitless, in part because the agency’s hold on the New York metro area economy is tentacular. If major American financial institutions proved “too big to fail,” the Port Authority seemingly has become too big to change.
A key reason is that its profitable divisions subsidize the less successful ones — meaning that reforming any part of the Port Authority will affect in some way its other parts.
The primary generators of cash in the Port Authority portfolio are its three main airports: Kennedy, La Guardia and Newark. They generated approximately $2.5 billion in cash from 2007 to 2011.
Over the same period, the George Washington Bridge generated $1.4 billion.
On the other side of the ledger, though, the Port Authority lost $2.3 billion running the PATH. The PATH has high fixed costs for personnel and maintenance and mostly static revenues.
Unlike most major American commuter-rail systems, the PATH receives no subsidies. Since raising fares to match the real cost of ridership is politically infeasible, the PATH is essentially subsidized by the tolls and fees on bridge crossers and airplane travelers.
So it should come as no surprise that the Port Authority has been borrowing billions to fund its current operations, and is deep in debt.
The PA borrowed $8 billion alone to pay for its share of the World Trade Center redevelopment, but it has other pressing projects that will cost enormous sums — such as replacing the bus terminal on Eighth Avenue.
“Figuring out where to begin reforming the Port Authority is almost as vexing as imagining where to end.”
The agency plans to raise part of the money needed for these major projects and also to fund ongoing expenses through toll increases. Even with these higher fares, it’s clear that, for the near future at least, the Port Authority will need to issue a great deal more debt to manage its current needs.
Figuring out where to begin reforming the Port Authority is almost as vexing as imagining where to end.
The most ambitious approach would be a complete dismantling of the entire structure, with the airports spun off to individual management; the PATH system made part of New Jersey Transit, which operates its own commuter-rail system into Manhattan already; the bridges and tunnels handed over to MTA Bridges and Tunnels, the successor organization to Robert Moses’ Triborough Bridge and
Tunnel Authority; and the real-estate portfolio being sold off to private bidders.
Short of dismantling the Port Authority, major reforms could be pursued within the existing structure. In 2014, the legislatures of New York and New Jersey tried. Reform bills passed in both houses, in both states, unanimously. No one dissented.
Then, just before the bills were set to become law, Govs. Cuomo and Chris Christie vetoed the bills simultaneously, on the Saturday between Christmas and New Year’s Day. With their eleventh-hour intervention, Cuomo and Christie set back a golden chance for positive change; their watered-down versions of the original reform bill have gone nowhere in the New York and New Jersey legislatures.
This shouldn’t discourage further efforts to remake the agency, however. The unanimous legislative votes clearly indicate public support for serious change at the Port Authority.
The agency has become a formidable political force in its own right, often more powerful than the institutions that gave it life. Only concerted effort to rein in its abuses and formulate a more sensible vision for its future can ensure that the Port Authority lives up to its original mission — to provide smooth, nonpolitical administration of what should be nonpolitical matters.
This piece originally appeared in New York Post, adapted from the Winter 2016 Issue of City Journal
This piece originally appeared in New York Post