Port Authority Proposes Fare Increases, Facing Revenue Shortfall

(Mark your calendars: RealShare New York, Oct. 12, 2011 in New York City and RealShare New Jersey, Sept. 12, 2011 in New Brunswick, NJ)

NEW YORK CITY-Faced with rising construction costs at the World Trade Center, Port Authority Bus Terminal and Bayonne Bridge, the Port Authority of New York and New Jersey shocked commuters after proposing fare and toll increases on its bridges, tunnels and PATH system shortly after Standard & Poor’s downgraded the nation’s credit rating late Friday. The authority proposed a new 10-year, $33-billion capital plan that will fund infrastructure improvements and redevelopment projects through the extra revenues generated from tolls and fares over two phases.

The impetus behind the proposal comes on the heels of three consecutive years of little-to-no growth in operating expenses, $5 billion in cut projects and billions deferred from the agency’s original capital plan due to the recession, such as $11 billion to reconstruct the WTC and another $6 billion in required security costs there, according to a Port Authority statement.

The Port Authority, which does not receive tax revenue, says “failure to act risks 240 infrastructure projects, a loss of 3,900 construction jobs and $438 million in investment in 2011 alone.

 The plan calls for:

• PATH fares to increase from $1.75 to $2.75 in 2011. The 30-day unlimited pass will increase to $89 from $54.
• Car tolls to increase from $8 to $12 peak and $6 to $10 off-peak using E-Z Pass at Port Authority crossings like the Holland and Lincoln Tunnels. An additional $2 increase during peak and off-peak hours will be phased in 2014.
• A cash toll surcharge of $3 to increase the cash rate from $8 to $15 in 2011 for the 25% of toll-payers who still use the optional cash system, similar to the MTA. The surcharge is expected to increase the E-ZPass market share to approximately 85% and reduce traffic by 10 to 20 minutes.
• Truck tolls to increase from $7 to $13 round-trip off-peak and peak from $8 to $14, with an additional $2 per-axle-increase in 2014 for both off-peak and peak hours, using E-Z Pass. However, the same overnight charges of $11 will apply for trucks in order to reduce peak congestion.

On the CRE side, New York Building Congress president Richard T. Anderson supports the proposal, noting that tolls and fares must keep pace with the economy’s need as infrastructure ages and the population grows.

“The Port Authority made the difficult but wise decision,” Anderson says, in a statement. “The Metropolitan economy is the growth engine for both New York and New Jersey, and Port Authority investments drive that growth. In an era of dwindling resources and shrinking federal support, the additional revenues generated by these increases are necessary to fund billions of dollars in urgently-needed investments in the region's vast transportation network.”

Kathryn Wylde, president & CEO of the Partnership for New York City, is also in favor of the plan, explaining that construction projects are necessary to keep the city competitive on a global scale. “No one likes higher tolls, but without them, key infrastructure projects to improve how New Yorkers get around will come to an abrupt stop,” Wylde says, in a statement. “Over the last decade, the Port Authority has spent more than $11 billion doing the important work of redeveloping the World Trade Center site. This has left the agency with less money for other projects. And with the federal government doing significantly less on infrastructure, this toll hike is needed to raise funds that will allow work to continue on vital projects that aim to make New York more competitive.”

The fare hikes are contingent upon several projects, such as the $1-billion replacement of all 592 suspender ropes at the 80-year-old George Washington Bridge; the $1.5-billion replacement of the Lincoln Tunnel Helix; the $1-billion raising of the Bayonne Bridge between Staten Island and New Jersey; an $800-million bus garage at the Port Authority Bus Terminal; $360-million in security barriers at the region’s airports; and improvements to the PATH system altogether.

In a joint statement from New Jersey Governor Chris Christie and New York Governor Andrew Cuomo, the two states said they understood concerns about a potential downgrade to the Port Authority’s bond rating if toll increases are not instituted, but their primary concern involves impact on residents. 

“We will review the proposal with that in mind but have obvious and significant concerns,” both governors said in a statement. “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."

According to local media, residents are expected to protest the increases during a series of nine public hearings on Aug 16 in Newark, Jersey City, Manhattan, Staten Island, Fort Lee and Jamaica. For a complete list of meetings, click here.