Date: Aug 19, 2011
Press Release Number: 94-2011
Below are remarks as prepared for delivery by Port Authority of New York and New Jersey Chairman David Samson at today’s Board meeting:
A few months ago, the Port Authority of New York and New Jersey marked the 90th anniversary of its start when a group of business and government leaders from New York and New Jersey signed the enabling compact that created the Port Authority; the first of its kind in American history.
The agreement between our two states was an extraordinary one: Never before in American history had two states in this country agreed to join together to strengthen the commerce and industry of a single region.
This Authority, that was then created, was meant to stand on its own, without relying on tax dollars from either state, and to build great public works projects – think, George Washington Bridge and Lincoln Tunnel – for the benefit of the region in a way that would create jobs and promote economic growth.
The vision of those first leaders, and those who came after them, was profound, resulting in the growth of the greatest public authority in the nation’s history, not only in its building of today’s monumental infrastructure, but also establishing the Port Authority as the primary driver of economic growth in the region, which it is today.
Over the past 90 years, the Port Authority has faced many challenges: the Great Depression, World War II, two terrorist attacks on our nation and on the Authority’s own home, just a few blocks from here. Those past challenges made some question the Port Authority’s vision, but those difficult times never weakened the Authority’s resolve, nor did the Authority stray from its primary mission of stimulating economic growth and job creation. As a result, today our combined facilities support over 500 thousand jobs and $80 billion in economic activity. And today that mission – economic growth and job creation – continues and has never been more important.
At the same time, today, once again, the Authority, just like the federal government and state governments everywhere, faces significant challenges. The Port Authority’s annual net revenues in the last several years have not kept pace with the agency’s projected level of capital spending and the mix of projects required to meet regional economic and transportation needs.
This is the result of several factors:
• First, the severe impact of the world economic recession on agency revenues over the past few years, resulting in lost revenues of $2.6 billion;
• Second, the size and makeup of the Authority’s capital plan;
• Third, a disproportionate investment in non-revenue producing projects;
• Fourth, the increased subsidization of our deficit-run facilities and operations which are not being offset by other revenues at the same level as in the past;
• And fifth, our past dependence on various one-shot revenue sources that by their very definition do not sustain future capital capacity.
All these factors have contributed to our revenue losses and our financial outlook. Indeed, it was these very factors which caused Moody’s to issue a negative outlook on the Authority’s financial status in March of this year.
In addition, the Authority’s current financial constraints are not limited just to the magnitude of these revenue losses. The attacks on the World Trade Center in 2001, the 10th anniversary of which we will commemorate in three weeks, showed us that we need to strengthen our security at all Port Authority facilities to ensure that our passengers, our employees and the public are safe from terrorist attacks. Those improvements in security for our facilities alone have added costs of more than $6 billion over the past 10 years.
We are also rebuilding the World Trade Center site as a symbol of our nation’s success, strength and resilience, and as an economic force for the New York/New Jersey region. Of course, it is our moral obligation to the families of the victims lost that day that we rebuild, and we have committed more than $11 billion for the project.
So, it is the impact of those three factors:
• A slowed economy;
• The commitment to rebuild the World Trade Center site and our other infrastructure investments;
• And our responsibility to provide security for our travelers, our customers, and our commuters--all 3 factors have placed us in today’s financial situation.
Recognizing these trends, over the last several years the Port Authority initiated an aggressive program to efficiently manage its resources—
• For instance, over the past two years, the Authority deferred $3.5 billion in capital projects.
• In addition, the Authority held operating expenses at 0% growth for the past three consecutive years;
• And, additionally it reduced the number of employees to the lowest level in the past 40 years.
These efforts have helped but they have not been enough.
More needs to be done. On a going forward basis, this Board will direct, and closely oversee, management to review all aspects of our operations, including a comprehensive review of compensation and benefits, and a reevaluation of the Port Authority’s capital projects.
So given the Authority’s current financial situation, we are facing very difficult choices: business as usual is not an option because if nothing were to be done, hundreds of construction projects already underway would stop, and our financial standing in the market would surely suffer; at the very moment where our Authority should be creating jobs we would be stopping projects and costing people jobs. The very moment, as a nation and as a region, we should be moving forward by investing in infrastructure, we would be shutting down. And at the very moment where the economy of New York and New Jersey needs the Port Authority the most, we would be abandoning our historic mission of economic leadership.
It is therefore the judgment of this Board and the Governors we serve that we cannot allow that to happen.
Let me identify several projects that must continue.
• We are investing $6 billion to complete the World Trade Center site, which will include a world class transportation hub to serve 250,000 commuters a day, the iconic One World Trade Center that will house hundreds of new tenants, and, most importantly, the national 9/11 memorial.
• We are investing $1 billion in raising the roadway of the Bayonne Bridge in anticipation of the widening of the Panama Canal; every port on the east coast of the United States is upgrading its ability to accommodate larger ships, and we must do the same if we are to maintain the competitive leadership of our ports and the hundreds of thousands of jobs they support in the region.
• We are investing, along with the private sector, $1.5 billion in rebuilding the Goethals Bridge, a vital connector of people and goods to and from Staten Island, which is plagued with traffic congestion that costs travelers and businesses unacceptable amounts of time and money.
• We are investing more than $100 million in rehabilitating the entrance helix to the Lincoln Tunnel, which serves 40 million vehicles a year. The helix, which was constructed in 1937, if not soon replaced, will require costly emergency repairs and result in delays.
• And we are investing $700 million to replace the suspension cables on the 80-year old George Washington Bridge, the world’s busiest crossing. It is essential that these cables be replaced.
None of these projects is small; nor are they inexpensive. But we are called to continue our economic leadership, and these billions in project investments translate to hundreds of thousands of jobs and billions in sales and wages throughout the port region.
When the Port Authority began looking at both our vision and ou