Credit risks for the Port Authority of New York and New Jersey are shifting because the agency is relying more on toll collections than aviation revenue to pay off debt, according to Moody's Investors Service.
Moody's noted in a May 20 report that the Port Authority's ability to increase revenue from toll facilities is weaker than its opportunities to increase revenue from its airports.
In 2013, the authority depended more on revenue from the aviation business, where there is better capacity to increase fees from airlines under cost recovery agreements. Last year, toll facilities, which have more uncertain prospects for raising future fees, contributed $938 million to total Port Authority operating revenue compared with $856 million from aviation facilities, according to Moody's.
A series of recent toll hikes on Port Authority bridges and tunnels may make future increases more challenging, according to Moody's. Port Authority traffic has decreased the last seven years and is down around 10% from its 2007 peak.
Also reducing the Port Authority's ability to increase tolls, according to Moody's, are recent "high-profile governance issues" including a 2013 controversy involving
Moody's emphasizes that the Port Authority has the ability to delay debt issuance and capital spending, which mitigates some of its increased risks relying on toll revenue. The authority's large capital plan has "flexibility" in terms of implementation and timing," which will help accommodate minor delays a achieving revenue increases, according to Moody's. The Port Authority's $3.6 billion
Port Authority spokesman Steve Coleman emphasized in response to the Moody's report that the agency's high credit rating is still intact. Moody's rates the Port Authority Aa3 with a stable outlook.
