Posted on November 24, 2020
Budget introductions by transportation agencies usually are upbeat affairs where officials talk about construction projects and the bright future they promise for travelers.
That wasn’t the case when Port Authority of New York and New Jersey officials spoke about the $7.3 billion austerity budget proposed for 2021 on Thursday.
Representing a $1.3 billion reduction from the $8.6 billion 2020 budget, the sobering spending plan stops funding on any project not already under construction. It also slashes 626 jobs through early retirements, attrition and voluntary buyouts, reduces overtime by 15% and continues a hiring freeze.
“It is the worst financial downturn in recent Port Authority history, driven by the coronavirus,” said Rick Cotton, executive director. “Consistent low volume of activity at airports, PATH and bridges and tunnels have generated revenue losses of unprecedented proportions.”
The authority expects revenue losses to hit $1.7 billion by the end of 2020 as travel traffic remains depressed by the virus, Cotton said.
Officials said the agency is on track to record a $3 billion revenue loss by March 2022 due to declining passenger volume and traffic.
“If the region has a rise in infections and it forces reimposition of restrictions, our activity could decline even more,” he said.
Unlike its sister agency, the Metropolitan Transportation Authority, the port authority is not considering increasing tolls, fares and fees again or reducing services, Cotton said. Tolls, fees and fares were increased in Sept. 2019 to fund an expanded $37 million capital plan.
Port operations were the only bright spot, with cargo volume expected to rise slightly over last year’s record levels. Bridge and tunnel traffic has rebounded over the summer, only to dip slightly again in the past few weeks.
“Bridges and tunnels and the ports have proven to be more resilient as they move essential workers and goods,” said Elizabeth McCarthy, authority CFO.
While the operating budget has been held flat, the agency still has to fund an added $119 million in costs for coronavirus prevention and sanitation, McCarthy said.
“It extends cost reductions put in place in 2020 and has other reductions to offset revenue (losses) and expenses,” Cotton said.
The 2021 capital budget also will be reduced to $2.2 billion, less than projected spending levels would have been before COVID-19 hit. That budget allocates $1.2 billion for continuing construction of Terminal One at Newark Liberty airport, LaGuardia airports continuing redevelopment and AirTrains at both, Cotton said.
Other projects in the Capital Plan are not likely to move into construction, unless the authority gets positive news from Washington, D.C., that its request for $3 billion to offset revenue losses is coming in the next CARES act. Officials declined to say which projects will be shelved until a decision is known about further federal aid.
Because the authority doesn’t receive reoccurring funding from either state or the federal governments, it relies on revenue from tolls, fares, rents and other fees, McCarthy said.
The authority will slow capital spending, review the projects in its 10-year capital plan and reduce operating expenses, she said.
The 2021 budget is scheduled for a final vote at the Dec. 17 meeting and the public can email comments to the authority about the 2021 budget by Dec.10 at https://publiccomments.panynj.gov/proposed-budget/.