Port Authority budgets elevated debt service levels
A new fiscal plan adopted by the Port Authority of New York and New Jersey last week increases debt service payments by 8% to support large-scale infrastructure efforts at the transportation agency.
The Port Authority Board of Commissioners approved a 2020 budget featuring $3.4 billion for operating expenses, $3.6 billion of capital spending and $1.4 billion for debt service. Port Authority CFO Elizabeth McCarthy said a $100 million increase in debt service levels is necessary because of increasing borrowing undertaken recently to finance major capital projects with the agency’s airports, bridges and tunnels.
“This is reflective of the continued progress we make on delivering projects in the capital plan,” McCarthy said during her budget presentation at the Dec. 12 board meeting. “As we place assets into service the debt service with respect to those will grow.”
The 2020 debt service budget allocates $1.2 billion on consolidated bonds, a 9% jump from 2019. The Port Authority is projecting to have roughly $22.1 billion of consolidated bonds outstanding as of Dec. 31, 2019 and $23.5 billion for 2020, according to agency’s budget document.
The Port Authority has sold just over $24 billion of bonds in the last decade including $2.4 of total tax-exempt issuance in 2019, according to Refinitiv. The bi-state agency is rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
The capital budget allocates $2.1 billion in aviation spending including $1.5 billion toward the Port Authority’s continued redevelopment of its three major airport facilities, LaGuardia, Kennedy and Newark Liberty. The Port Authority is in the midst of an $8 billion overhaul of LaGuardia that includes plans for an AirTrain project projected to cost around $2 billion. The bi-state agency is also tackling a $13 billion JFK Airport redevelopment project and a $2.7 billion modernization at Newark Liberty.
The Port Authority approved higher user fees in September to fund a nearly $5 billion hike in its ongoing 2017-2016 capital plan to $37 billion attributable to rising construction costs. In addition to airport spending, the Port Authority’s 2020 capital plan targets $739 million for improvements to tunnels and bridges along with planning for a new Manhattan bus terminal. It is also investing $389 million for the PATH as part of an overall $1 billion investment aimed at raising capacity on the century-old rail transit system.
“This budget is a prudent, fiscally sound spending plan that drives the agency’s ongoing commitments to safety and security, customer experience, sustainability and building new facilities to replace ones that have outlived their useful lives,” Port Authority Chairman Kevin O’Toole said in a statement. “I’d like to commend the staff for their hard work and diligence in crafting a budget that supports all of the agency’s strategic initiatives while maintaining core expense growth at an inflation-based 1.9%.”