A bad business model and declines in certain facilities' revenues are at the heart of problems at the Port Authority of New York and New Jersey,
Since the 1930s the authority has used more profitable facilities to subsidize less profitable facilities. However, since the late 1960s the practice gotten out of hand, Mitchell L. Moss and Hugh O'Neill wrote in a report from NYU's Rudin Center for Transportation Policy and Management.
The Port Authority took over the PATH trans-Hudson subway system in the late sixties knowing that it would always generate significant losses. Around this time, the authority also started economic development and New York and New Jersey governor-suggested projects. Both of these sorts of projects turned out to generate little or no money.
In the eighties and nineties PATH's annual operating deficits grew larger. In the last few decades, the authorities' marine terminals went from nearly breaking even to losing more than $100 million a year in 2012. And building governors' projects led the authority to more losses.
"The increases in bridge and tunnel tolls that the authority has implemented in recent years are a direct result of its continuing reliance on its bridges, tunnels, and airports to fund its money-losing operations and to finance both its own and the state's capital projects," Moss and O'Neill wrote. These fees have more than doubled since 2007.
Among the authors' suggestions are that the authority's resources be used solely for projects in its core mission. All projects should be subject to rigorous cost-benefit analysis.
New York and New Jersey governments must cease dividing the authority into "political fiefdoms," they wrote, saying the executive director must be given full responsibility for managing the organization.
Finally, the authors suggest that a new funding stream be found to support PATH.
