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/ April 8, 2014
Wagner Proposes Reforms To Ailing Port Authority

Last week, NYU Wagner’s Rudin Center for Transportation Policy and Management released a new report that lays out a vision of reform for the Port Authority of New York and New Jersey. The Port Authority is an interstate agency that manages much of the regional transportation infrastructure in the New York Harbor area, from JFK Airport to the Lincoln Tunnel to PATH trains and more.

The Fort Lee lane closure scandal, which resulted in the resignation of the chairman of the Port Authority, refocused attention on the agency recently in the context of corruption, patronage, and political abuse. As such, the Port Authority has adopted some modest political reforms, like increasing transparency in voting and forming a new oversight committee. But the NYU report focuses instead on revising the Port Authority’s business model.

The report, written by Professor Mitchell Moss of NYU Wagner and Hugh O’Neill of economic development consulting firm Appleseed, highlights the major financial drains on the agency. They especially detail the $800 million spent by the Port Authority from 2002 to 2012 on “regional projects,” which are essentially the governors’ offices’ version of earmarks. These projects, like parks built in Yonkers and the Bronx, are funded by canceling projects with actual transportation purposes like a rail tunnel underneath the Hudson River. The resulting waste of money has had the agency desperate for revenue, resulting in increased toll prices on bridges and tunnels.

Another financial sinkhole, according to the report, is the PATH rail system, which lost $370 million in 2012. Between 2002 and 2020, PATH will have cost the agency $4.6 billion, plus the $1 billion being spent on a new PATH station at the World Trade Center. The PATH system, unlike every other major rail system in the US, is funded entirely through ticket sales and transit subsidies rather than taxes. This narrow funding base hikes up prices and draws money away from other agencies, and will end up sharply reducing the services PATH is able to provide, the report predicts. The report also notes, PATH was never intended to be a revenue-generating business, or even one that could cover its own costs, when the Port Authority took over the struggling private rail system in the 1960s as part of a World Trade Center development deal.

Other major financial drags on the system include the Port Authority Bus Terminal, which is the busiest bus station in the world and managed a net loss of over $105 million in 2012. The agency had also invested a great deal in the World Trade Center, which went from $33 million net revenue in 2000 before the 9/11 attacks to a $46 million net loss in 2012 — but the report encourages the Port Authority to continue redeveloping the area in hopes of returning to its previous economic value.

Moss and O’Neill offer several reformative suggestions. Zero-return state projects must be abandoned, to start, which should be reinforced by structural changes within the agency to ensure the executive director, not a state governor, is in charge. The PATH rail system’s revenue base must also be reconsidered, as well as the Port Authority’s investment decisions. In short, the report offers a very simple solution: the agency should only do what the agency can pay for.

More dramatic solutions are being floated at the state level. New Jersey governor Chris Christie commented that he was “intrigued by the idea of dismantling the Port Authority.” Dismantling the agency would call into question ownership of facilities run by both states, like the George Washington Bridge, and possession of their revenues, to say nothing of wider division of labor issues. Meanwhile, New York governor Andrew Cuomo said “structural changes are a possibility” at the Port Authority, which is in line with his January announcement that the state rather than the agency would be taking on construction projects at JFK and LaGuardia.

According to the New York Times, the Port Authority will not be commenting until officials have reviewed the report in full.

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