No COVID-19 aid may force Port Authority capital program cuts
The Port Authority of New York and New Jersey may face further cuts to its capital program after receiving no relief in the second round of federal coronavirus funding.
The $900 billion CARES Act signed by President Trump Sunday allocated $14 billion for transit agencies, but did not include aid for the Port Authority because bi-state agencies weren’t eligible for traditional state transit formula funding in the final bill. The Port Authority requested $3 billion from Washington to help offset revenue losses forecast from March 2020 through March 2022.
“Meaningful state and local aid is badly needed but was not provided in the latest Covid-19 relief bill,” Port Authority spokesman Scott Ladd said in a statement. “The Port Authority projects more than $3 billion in revenue losses as a result of the pandemic which, if unaddressed, will have a severe impact on the agency and on the region. We will continue to advocate for substantial aid with elected leaders and the new administration.”
The first CARES Act passed in March and provided $450 million of funding for the Port Authority’s airports, but lacked aid for offsetting revenue losses on its PATH mass transit system or bridges and tunnels. The Port Authority’s $7.3 billion 2021 budget projects it will lose $1.7 billion in revenue by the end of the year.
The Port Authority adopted a fiscal plan Dec. 17 that trims the agency’s spending for infrastructure projects by 33% from its 10-year capital budget enacted in 2017. Overall capital spending was reduced by $2.2 billion over the next two years, which Port Authority Executive Director Rick Cotton said would be cut further absent additional federal aid.
S&P Global Ratings downgraded the Port Authority’s bond ratings one notch to A-plus from AA-minus in June citing plummeting usage levels at all its transportation assets during the pandemic. The Port Authority’s debt is rated Aa3 by Moody’s Investors Service and AA-minus by Fitch Ratings. It has about $23 billion of outstanding consolidated bonds and notes.
Howard Cure, director of municipal bond research at Evercore Wealth Management, said that while the Port Authority is hurt from the lack of federal funding for its struggling PATH system, its airports will benefit from aid provided to the major airlines. He said a key wild card in determining how much of the capital plan needs to be adjusted will be based on how quickly airline travel returns to pre-pandemic levels after the COVID-19 vaccine is widely distributed.
“They clearly have to recalibrate their capital programs, which was quite extensive,” Cure said. “It helps to be somewhat diverse in their revenue streams.”
The Port Authority has been prioritizing ongoing redevelopment projects at Newark Liberty and LaGuardia airports along with the restoration of Superstorm Sandy damage incurred on the PATH system and Holland Tunnel. The agency is also looking to tackle an overhaul of Kennedy International Airport, build a replacement AirTrain at Newark Liberty and a new AirTrain for LaGuardia. The capital program also includes funding for planning and designing an expanded Port Authority bus terminal.