BY RICHARD C. LEONE

COMMENTARY

With friends like these….

A recent Port Authority of New York and New Jersey (PA) commissioned audit indicates that the total cost of redeveloping the World Trade Center site will be in the neighborhood of $15 billion, a substantial mark up from some previous estimates. The whole enterprise has ballooned beyond the original conceptions and seems likely to be a massive financial burden on the PA going forward.

If that were not bad enough, the audit went on to allege that the PA’s senior management was dysfunctional and had made many mistakes. Both governors have been highly critical of the Port Authority, and they are likely to respond to this report with efforts to change it. They might begin by changing behavior in Albany and Trenton.

The Port Authority used to have a reputation of being one of the premier public agencies in the world. Visitors came from all over to learn how it functioned and why it was so successful. One of the cornerstones was insulation from politics and tight fiscal management. The agency was completely self-financing. The staff was professional and long-serving, focused on good public projects. Over the years that approach eroded as Governors, in addition to siphoning away more and more Port Authority revenues to fill state budget gaps, placed more and more people on the Port Authority’s payroll.

An active Democrat, I was appointed to the PA board in 1988 by a Republican governor. As Chairman of the Port Authority from 1990 to 1994, I was generally confident about the competence of its staff –and never pressured to find a job for a “deserving” party member.

All that has changed in recent years. Bit by bit, the agency’s non-political nature has been compromised. It was recently reported, for example, that New Jersey’s Governor Christie was placing 50 people who had been active in the Republican politics on the Port Authority payroll. The jobs involved everything from management to toll takers. The way these things work, you can bet that New York is getting an equal share of the patronage pie.

The Port Authority’s core missions remain transportation and, in wider sense, commerce. Those missions will be constrained by the additional tolls and fares required by the debt incurred by redeveloping the World Trade Center. Of old, governors of both states realized that the Port Authority was an asset and needed to be protected as well as critiqued. Governors might set the long term policies and priorities, but the agency should be free of political interference as much as possible in developing the actual practical programs and projects.

That conception began to erode as both states got into increasing budgetary problems and the Port Authority looked like a honey pot to help bail them out. They took substantial slices from the upside of the new tolls and other revenues. And when, after years of losing money the old World Trade Center finally became profitable, the states took all of the upside in rents, further narrowing the PA’s ability to undertake long term capital projects.

Looking ahead, as a result of delays, cost overruns, and also the elaborate nature of the development, the new Trade Center seems it is unlikely produce to pay for itself. Because of the debt service on the Trade Center, the PA is sure to be under more pressure than ever, it will need all the support it can get. While things weren’t always better in the good old days, it’s time to go back to a model of independent, non-political agency that serves the region. The governors’ goal and the public’s should be to “de-politicize” the agency and restore its reputation and mission.

Richard C. Leone is the former President, currently a senior fellow, of the Twentieth Century Fund, a non-profit public policy research institution supporting work on U.S. foreign policy, economic issues, media studies, and domestic affairs. From 1990 to 1994, he served as Chairman of the Port Authority of New York and New Jersey. The Port Authority operates the Hudson River crossings, the major airports in the region, the World Trade Center, port facilities, and numerous facilities ranging from a resource recovery plant to the World Trade Institute. During the 1980s, Mr. Leone was the President of the New York Mercantile Exchange and subsequently a Managing Director at Dillon Read & Co., Inc., and investment banking firm. He served as the State Treasurer (chief budget and financial officer) of New Jersey from 1973-1977. Mr. Leone earned his Ph.D. at Princeton University and was a member of the faculty there before and after his government service.

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