The Port Authority of New York and New Jersey’s Board of Commissioners has approved a preliminary $7.1 billion combined operating and capital budget for fiscal 2012 amid complaints that the agency overspends on World Trade Center redevelopment at the expense of bridge, road and tunnel improvements.
Just over half the budget, or $3.7 billion, is for capital expenditures, with $2.6 billion to operate the agency’s facilities; $832 million for debt service on outstanding bonds, notes and other obligations; and $45 million for other expenditures, which are deferred and amortized in future periods.
More than half the capital budget, which the board approved Thursday, is for reconstruction of the World Trade Center site in lower Manhattan.
The WTC budget consists of $684 million for One World Trade Center, $600 million for the World Trade Center site, $470 million for the transportation hub, $189 million for retail development, and $58 million for the Port Authority portion of Towers 2 and 4.
The authority, meanwhile, also warned about debt-service spikes in 2019, 2024 and 2029 to as high as $1.3 billion.
The spikes “are the result of issuing taxable consolidated debt during the depths of the economic recession under extremely unfavorable bond market conditions,” it said.
The budget is subject to an agency-wide review and audit led by a special committee of the board, which Govs. Andrew Cuomo of New York and Chris Christie of New Jersey ordered when they signed off on a series of toll and fare hikes that the board approved on Aug. 18.
KPMG LLP will replace Deloitte LLP as the Port Authority’s new independent auditing firm, the board voted Thursday. Deloitte had served the agency since 1981.
“KPMG is one of the world’s leading experts in the auditing of public entities and we are pleased to move forward with them,” audit committee chairman David Steiner said of the Netherlands-based firm.
Authority bylaws require an independent accounting firm to annually audit the consolidated financial statements of net assets and related statements of revenues, expenses and cash flows, as well as assist in the assessment of the accounting principles and significant estimates used in the overall presentation of financial statements.
The authority, meanwhile, adjusted its discount plan for frequent commuters who cross the Bayonne, Goethals and Outerbridge Crossing bridges between New Jersey and New York City’s Staten Island borough.
Also on Thursday, proceedings began in a lawsuit that challenged the Port Authority’s use of money from the recent toll increases for World Trade Center reconstruction.
The Automobile Club of New York and New Jersey had initiated the litigation in the U.S. District Court for the Southern District of New York in Manhattan.
According to Patrick Foye, the authority’s new executive director, the additional toll money enhances its credit rating and enables it to borrow money more cheaply.
Commissioners, when voting on the fare and toll increases in August, cited concern over a January outlook change by Moody’s Investors Service to negative.