The Port Authority of New York and New Jersey proposed a record $3.3 billion of capital spending in 2009 as part of a $6.71 billion preliminary budget released yesterday. Slightly more than half of the capital program would be financed through bonds and notes.
Under the proposal, capital spending would increase 28.1% over the current year's $2.51 billion, primarily due to increased spending to rebuild the World Trade Center site and for a tunnel under the Hudson River. The authority board expects to vote on the budget Dec. 17.
"We have made disciplined decisions to zero-out growth on the operating side of our budget so we can spend more on the capital side," Port Authority executive director Chris Ward said in a press release.
In October, the agency estimated that the projects it is financing at the World Trade Center site will cost $6.93 billion and will be finished by 2014. Authority spending at the site will increase to $1.43 billion next year from $980 million this year, under the proposed budget.
The Port Authority was allocated $701.6 million of Liberty Bonds to be issued by the New York City Industrial Development Agency to build the 1,776 foot-Freedom Tower on the site. Those bonds were authorized by the federal government to help rebuild the city following the Sept. 11, 2001, terrorist attacks and must be sold by the end of 2009, unless the authorization is extended.
Spending on an $8.7 billion tunnel under the Hudson River connecting New Jersey and Manhattan that is being built in collaboration with the New Jersey Transit Authority will increase to $340 million next year from $40 million under the proposed budget.
The Port Authority plans to sell $1.4 billion of bonds and $200 million of commercial paper to finance a portion of its capital spending next year as well as use $230 million of unspent bond proceeds. Spokesman Ron Marsico said that for the purpose of budgeting, they assumed all bonds to be sold by the authority but that amount would be reduced if Liberty bonds are sold because they would be issued by the IDA.
The authority has sold less new debt this year than budgeted. The 2008 budget identified $1.32 billion of "bonds, notes, and other" as a source of funds but the projected actual estimate for the year is $731 million.
Despite selling less debt, capital expenditures are projected to come in at $2.51 billion, just $68 million less than budgeted.
The difference is partially due to the difficult credit market - the authority received no bids for a $300 million competitive taxable notes sale earlier this month. But it also received additional funds that offset the need for borrowing, including receipt of more insurance proceeds related to the attacks at the World Trade Center than originally expected and a $260 million projected increase in toll revenue following a toll hike in January, according to Marsico and budget documents.
The authority operates four airports in the metropolitan region, commuter rail, bridges, tunnels, maritime ports, and a bus terminal in Manhattan, and owns the World Trade Center site.