Port Authority NYNJ in panic over bond rating - but state guvs block toll hike plan

August 7, 2011
By Peter Samuel

A day after the Port Authority NYNJ announced huge toll increases for September, after a panic over a threatened bond downgrade, the Governors of New York and New Jersey conferred Friday and agreed to block the PANYNJ plan. NY Gov Andrew Cuomo and NJ Gov Chris Christie issued a joint statement in which they referred to the PANYNJ toll increases as "indiscriminate and exorbitant."

The toll increases ranging between 50% and 125% were announced at the board meeting Thursday were approved unanimously, subject only to a single day's public hearings August 16 and confirmation by the board August 19.

The governors however have the final word!

They each appoint each state's six commissioners subject to state senate approval. The commissioners serve overlapping six year terms during which they are independent and not removable except for "cause" - the nice word for criminality.

But the governors each have the power to "veto" or override the board actions of commissioners from their own state. So acting together they can simply undo any board of commissioners decision. It is a power seldom used, but it is there for use when the issue is big.

Joint statement

The joint statement by the governors - not yet reported by the New York Times or to our knowledge other local media - refers to the previously undisclosed threat to the PA bond rating unless tolls are increased.

It says the governors "understand the Port Authority leadership's concerns about a potential downgrade to its bond rating if toll increases are not instituted."

And the two governors concede a downgrade "does indeed pose a potentially disastrous result on a transportation network that millions of residents of the states of New Jersey and New York rely on and would be unacceptable."

But the governors say their "primary concern with this proposal is its impact on our respective states' residents and commercial users of the crossings."

They continue:

"We will review the proposal with that in mind but have obvious and significant concerns.

"The Port Authority is facing financial issues but so are families in the states of New York and New Jersey, and the answer cannot always be an indiscriminate and exorbitant increase in the cost to the taxpayer, or in this case, toll payer.

"As families must carefully and effectively manage their finances at this difficult time, so must government.
 
"It is our joint intention to cooperatively address this issue without regard for partisanship or parochialism, as was the intention and spirit of the creation of the Port Authority as a regional entity in 1921." End quote from governors' statement

No previous mention of bond rating issue

The PANYNJ in line with a general secrecy about its affairs did not mention the threat of a bond downgrade in discussing or announcing the toll increases. Apparently top PANYNJ officials only told the two governors in conversations after the board decision and the announcement of the big toll increases.

It seems Port Authority officials panicked last week after being told by a rating agency they could not sustain their present bond rating without a drastic improvement in the Authority's financial situation.

The leadership of PANYNJ  - CEO Christopher Ward basically - hurriedly put together the move to increase toll rates September 1 by between 50 and 125 percent, plus a second round of hikes in 2014.

This was done without any financial plan. At least none has been disclosed. And without so much as a powerpoint presentation.

Ward's action, seemingly precipitate and unilateral, is somewhat surprising given his experience in politically sensitive government agencies and lobbying - he worked as director of planning and external affairs at PANYNJ for five years 1997-2002, was Mayor Bloomberg's head of environment, chief exec of a stevedoring company in Brooklyn, then ran the New York General Contractors Association.

COMMENT: Maybe this is not the political fiasco it seems at first glance? Maybe it hasn't been "panic" as we've written. Maybe it is Ward's calculated way of catching the governors' and the public's attention and beginning a high stakes bargaining process. Expecting a strong reaction maybe he deliberately pitched toll rates very high, higher than really needed to maintain the port authority's finances, but beginning a dramatic public bargaining process that will eventually see tolls increased, say 35%. Maybe that way the PANYNJ gets the toll increase it needs, while the governors get to be seen defending the public from a predatory bistate toll authority - editor.

joint statement by GovsNY&NJ:

http://www.governor.ny.gov/press/08052011HikePlan

Ward bio:

http://www.panynj.gov/corporate-information/leadership.html

previous report:

http://www.tollroadsnews.com/node/5425

TOLLROADSnews 2011-08-07

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