Politics

01.21.14

Inside the Port Authority, the Corrupt Powerhouse Behind Christie’s Bridgegate Scandal

Inside the Port Authority’s dirty politics: the agency behind Bridgegate and Christie’s demise has a reputation as a patronage clubhouse and an ATM machine for unaccountable spending.

“I feel violated,” Leon Keylin of Fort Lee, New Jersey told USA Today, describing his reaction to the dirty details behind the Bridgegate traffic jam that choked his town for four days last September. New Jersey Governor Chris Christie’s office has taken most of the heat for screwing citizens by playing dirty politics, but there’s another party responsible that has so far evaded most of the blame. The Port Authority of New York and New Jersey, the government agency that directly caused the gridlock, is an enormously powerful bastion of patronage that violates all commuters every day of the year.

It would be easy to discount the George Washington Bridge scandal as a case of a few bad apples abusing their power. But it’s actually just one example of how an organization that was supposed to rise above politics became a tool for politicians to act out their worst impulses. The episode is an indictment of the very concept of the Port Authority—and the Progressive-Era ethos that good public policy is all about entrusting smart people to run things.

A bi-state agency that controls a good share of the transportation infrastructure around New York City and North Jersey, the Port Authority squanders its wealth and mismanages its assets; it charges high tolls and puts off necessary maintenance work; and it’s a cesspool of dirty politics. How ironic that an organization designed to be the antithesis of old school Tammany Hall machine politics, would be turned into a patronage mill forced to absorb dozens of New Jersey Gov. Chris Christie’s cronies—“they came in like cockroaches,” quipped one Port Authority staffer—including a deputy executive director willing to create a phony traffic jam at the behest of a gubernatorial aide seeking political retribution.

Founded in 1921, the Port Authority was tasked with breaking through the logjams that made building big projects so difficult, and in its early years the agency was successful in this regard. Before the founding of the Port Authority, cities generally financed bridges, tunnels, and roads with bonds backed by tax revenues, which required direct approval from voters. This was a major obstacle to getting even the most worthwhile projects past the planning stages. The Port Authority, modeled after a similar organization in London, raised money by issuing bonds that would eventually be paid back through user fees like bridge tolls. That meant projects didn’t require direct voter approval, and mayors and governors didn’t have to account for infrastructure projects in their budgets.

The agency was also designed with the idea that cities were hampered by too much democracy, as Jameson Doig details in his excellent history of the Port Authority, Empire on the Hudson. Julius Henry Cohen, the visionary behind the Port Authority’s founding, wanted to create an organization shielded from “the hurry and strife of politics,” to borrow Woodrow Wilson’s phrase, run by wise technocrats empowered to carry out the best plans for society without politicians and party bosses getting in their way. The Port Authority was supposed to have all the efficiency of a private firm, but with the higher aim of furthering the public good.

“The Port Authority has been a money tree, an ATM machine…a place [the governors of New York and New Jersey] can go to do projects that they can’t get through their budgets.”

But the key to efficiency is competition, and commuters have few alternatives to the Port Authority’s bridges and airports. So, like any monopolist, the agency ballooned into a bureaucratic monstrosity that spends much of its wealth on itself. Today the organization’s ranks are flooded with middle managers (PDF) paid handsome salaries based on the time they’ve served, not how well they do their jobs. The compensation package for the average Port Authority employee exceeds $143,000, stemming in part from out-of-control overtime payments and rich perks. David Wildstein, Christie’s high-school classmate who worked for the Port Authority and ordered the bridge closure on behalf of the governor’s office, was making a base salary of $150,000 before he resigned in disgrace.

Over the years, the Port Authority’s portfolio grew into a hodgepodge of assets that no wise technocrat would ever recommend putting under the aegis of one agency, including airports, a bus terminal, seaports, bridges, tunnels, and the World Trade Center. This allows it to drain money from some holdings to float others. The Port Authority’s bridges and tunnels generated excess cash flow of $453 million in 2011, but a 2012 audit (PDF) found it was falling to carry out routine maintenance work. Its airports generated $892 million in excess cash in 2011, and yet it can’t afford to fund the major capital upgrades needed at La Guardia, Newark, and JFK airports. Instead, the money goes towards sopping up loses elsewhere in the organization, such as the agency’s estimated $7.4 billion tab for construction cost overruns at the World Trade Center.

A major reason New York’s three major airports provide such a lousy experience for travelers is that they’re all operated by the Port Authority, so they don’t have any reason to compete for customers. The agency imposes a rule that prevents most flights traveling more than 1,500 miles from departing out of LaGuardia—a form of turf protection for Newark and JFK. And what’s the rush to replace outdated infrastructure? LaGuardia’s new state-of-the-art terminal isn’t expected to be finished until 2021.

“The Port Authority has been a money tree, an ATM machine…a place [the governors of New York and New Jersey] can go to do projects that they can’t get through their budgets,” Stephen Berger, a former Port Authority executive director, said at a recent breakfast forum held by the Citizens Budget Commission. During Berger’s tenure, New Jersey Governor Thomas Kean pushed the Port Authority to underwrite an office building in downtown Newark that had nothing to do with transportation. In 1992, Governor Mario Cuomo got the Port Authority to buy a portion of the Aqueduct Racetrack for $40 million to help plug a budget shortfall.

Currently, 94% of New York State’s outstanding debt was issued by a public authority, according to the State Comptroller’s Office.

So what should be done about the Port Authority? An obvious step would be to break the agency up so that money collected on the George Washington Bridge, for example, would have to be spent on maintaining and improving the George Washington Bridge. Bob Poole, the director of transportation policy at the Reason Foundation and an expert in airport finance, suggests that New York and New Jersey could turn to private operators to run the airports competitively—something Mayor Rudy Giuliani was pushing back in 1994—though the Port Authority holds long-term leases on LaGuardia and JFK Airports that run through 2050.

Poole also suggests a better model for funding new infrastructure called “project finance,” which taps future user fees to pay for new bridges and tunnels without involving an unaccountable pubic authority. Under this approach, popular in Europe, a city or state selects a private firm to borrow the necessary capital to build a project, tasks it with overseeing construction, and then allows it to collect tolls to pay off its debt and fund operations. This model has all of the benefits of the authority model with built-in incentives to keep costs in line and plundering politicians at bay.

Unfortunately, the Fort Lee scandal won’t be enough to force any meaningful reforms at the Port Authority, because the governors of New York and New Jersey, who jointly control the agency, have no interest in cutting off the supply of easy money or the flow of jobs for their friends. An agency designed to be insulated from obstructionist politics in order to better serve the public has become a private bank and enforcement arm for the powerful, increasingly corrupt, and cut off from the public interest.

So the Port Authority will keep “violating” commuters and putting off the inevitable day of reckoning when Julius Henry Cohen’s vision of an organization insulated from politics comes apart in even more spectacular fashion.