Testimony at NJ Senate on Port Authority Reform

Testimony of Thomas K. Wright, President, Regional Plan Association

New Jersey Senate - September 23, 2015

Good morning. My name is Tom Wright. I am the President of Regional Plan Association, an 86-year old research, planning and advocacy organization that prepares long-range strategic plans for the tri-state New York/New Jersey/Connecticut metropolitan region.

Thank you for this opportunity to testify on the important legislation concerning the Port Authority of New York and New Jersey.

In the 20th century, public authorities were created to plan, finance and build the massive infrastructure projects that our modern metropolitan regions needed to grow and prosper. From the Port of Los Angeles to the Tennessee Valley Authority to the TriBoro Bridge and Tunnel Authority, they provided the capital, assembled the land, and implemented ambitious projects that provided us with seaports and airports, electricity and flood control, highways, bridges and tunnels and commercial and residential development.

To provide these critical investments, these entities were invested with several capabilities unique in the public sector. Each of these capabilities was necessary to carry out their ambitious goals.

First, they could borrow money from capital markets and not have it count against a city or state’s debt limit, since their finances were “off budget.” The interest they paid against these debts was very low, because it was “triple tax exempt” – from federal, state and municipal taxes – and because the underlying assets that would repay the bonds – the bridges, tunnels, airports, etc. – were considered extremely safe investments.

Secondly, they could assemble land for redevelopment either by purchasing property or, in the event of hold-outs, using eminent domain to condemn and acquire land.  And as State entities exempt from municipal zoning and land use controls, they had much freer rein to utilize the land as they wanted.

And finally, they were governed by independent boards, appointed by Governors, mayors, legislators or other political leaders, but having terms that explicitly went beyond the current term of the elected leaders who had appointed them, so that they would have a measure of independence from political interference, providing “governance without politics” in the memorable description by Professor Jameson Doig.

So that was the critical basis for these institutions: ready access to cheap capital, control over land, and political independence.

For much of the last century, the Port Authority of New York and New Jersey stood among the greatest of these institutions. Originally conceived to expand and coordinate commerce across the Hudson River, over 80 years it expanded into new business lines, such as constructing bridges and tunnels across the Hudson River; managing a unified regional airport system; and famously building commercial office space in Lower Manhattan and acquiring and maintaining a bi-state subway system.

Among the great metropolitan institutions around the world, the Port Authority was exemplary for its sheer size and it’s ability to get things done. Managing the largest cargo port on the Eastern Seaboard, operating three major airports that move more than 100 million passengers a year, maintaining a subway system, and of course rebuilding the World Trade Center after the attacks of 9/11.

In recent decades, the Port Authority’s focus on infrastructure and commerce drifted. It began investing in pet projects on either side of the Hudson River and neglected its key assets. It’s leadership structure became fragmented – with each state claiming certain staff positions, rather than a unified team. And it became more beholden to politicians, rather than setting priorities based on unbiased analysis and research.

Everyone here is familiar with the even sadder, more recent history of the Port Authority, and I want to especially thank the members of this panel and the reporters and civil servants who uncovered the scheme to close the lanes to the George Washington Bridge in September 2013. By exposing this gross misuse of public assets, you exposed systematic corruption and a co-mingling of personal and political exploitation that might have been limited to a small circle of individuals, but had enormous repercussions for the 23 million people who live and work in this metropolitan region.

I think it is important to note that despite the efforts of a small group to undermine and pervert the Port Authority, the vast majority of the staff are exemplary public servants, and that it has benefited from outstanding leadership in its recent Executive Directors and most of its Chairmen. Some people say that as long as good people are appointed to these positions, the Authority should be fine. I would counter that even during the years that these abuses were happening, the Port Authority had exemplary people in key positions, but that was not enough to prevent illegal activity from happening. So clearly, reform is needed.

The task before this committee today is to help establish new rules governing the Port Authority which will ensure that these abuses never happen again. There are two bills which propose a variety of oversight mechanisms, from subpoena power to mandatory appearances of senior leadership before legislative committees.

In terms of these specific policies, my first recommendation to this committee would be to not jeopardize reform efforts. As you know, to have standing over future Port Authority functions, any bill will need to be adopted by both the New Jersey and New York legislatures, either by veto-proof majorities or in a form that is acceptable to both Governors.

A bill has been passed in New York that accomplishes many of the shared goals of this committee. I would strongly urge this body not to let the perfect be the enemy of the good.

I would also point the Committee to the Special Panel report released last December, which addresses many of the concerns about the agency. More than any other single recommendation, I believe that restoring the position of a strong CEO who reports to the Board of the Port Authority – and not either Governor – is the most important reform that can be undertaken.

In comparing the two bills before this committee, I agree with many elements of the bill proposed by Senators Gordon and Weinberg, including subpoena power and requesting that senior leadership of the Port Authority appear before legislative committees. In other areas, such as requiring legislative approval before the Port Authority can create a subsidiary corporation, I do not agree with this bill. And I worry about the effort to place a senior transportation policy officer from each state within the agency. This seems to me to perpetuate the original mistake of having politicized positions within the agency.

I would be happy to answer questions about the Port Authority or its role in the region, but again, I will conclude with a caution. The recommendations which came out of the Port Authority Special Committee are substantial, and your key priority should be to help reestablish a professional and independent leadership structure within the Port Authority, with appropriate oversight and transparency.