N.Y.-N.J. Port OKs Slimmed-Down $6.3B Budget

The Port Authority of New York and New Jersey passed an austere $6.3 billion operating and capital budget yesterday that keeps operating growth at zero in 2010. The agency also cut its 2007-2016 capital plan by $5 billion to $24.5 billion.

“The Port Authority grappled with some very difficult capital decisions as a result of the worldwide recession and the economic downturn,” said executive director Christopher Ward. “Our capital plan has been reduced and that has forced us to make some difficult choices. Building from the ground up our focus is on safety, security, state of good repair within all of our facilities [and] targeted regional investments remain critical priorities.”

The budget calls for $3.13 billion of capital spending, of which $1.86 billion will be financed through debt. Big-ticket capital items include $1.6 billion for World Trade Center development, $520 million for aviation, and $504 million for the Access to the Region’s Core project that is expanding a commuter train tunnel under the Hudson River.

The authority’s total outstanding debt is projected to rise to $16 billion in 2010 from an estimated $14.49 billion in the current year. The agency is counting on a one year extension of the Liberty Bond program to sell $700 million of tax-exempt private-activity bonds through the New York City Industrial Development Agency to partially finance the building of One World Trade Center, the 1776-foot tower that will be the centerpiece of development at the site. The House Wednesday passed an extender of the program, which was created following the Sept. 11, 2001, terrorists attacks.

“Now we’ll be working with the Senate,” Ward said. “Sen. [Charles] Schumer has recognized this as a critical issue for downtown and we remain optimistic with his help that we’ll have at least a one-year extension and will not have to go to some form of private placement.”

The Port Authority is considering the use of public-private partnerships to help meet its capital needs for bridges, tunnels, and aviation facilities. 

“We’re looking at all of them at this point,” Ward said.

The authority operates four airports in the metropolitan region, commuter rail, bridges, tunnels, maritime ports, and a bus terminal in Manhattan, and it owns the World Trade Center site.

Passenger traffic at its facilities is expected to fall from projections made when the authority adopted its 10-year capital plan in 2007: passenger traffic at airports by 10%; passengers on the PATH commuter rail system by 11.8%; vehicular traffic on bridges and tunnels by 6.1%; and cargo volume at ports by 15.6%.

Operating expenses in 2010, including debt service, total $3.22 billion. To keep operations spending growth at zero, the authority will cut: 150 positions, reducing its head count to 6,977 its lowest level in 40 years; overtime by 20%, saving $24 million; and the use of external consultants by 32%, saving $15 million. It also is closing the Ramada Plaza Hotel at JFK International airport.

“It’s a very conservative budget on the operational side,” said Moody’s Investors Service analyst Maria Matesanz. The Port Authority is “able to adjust its capital budget according to the strength in the local economy and also their strength or weakness of their revenue.”

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