Changes Come to Port Authority — But Slowly and Not Without a Struggle

John Reitmeyer | October 29, 2015 | Transportation
New rules could put a CEO in place, but they also mean current board chairman, widely liked and regarded as effective, would have to step down

Port Authority Chairman John Degnan with the agency's CFO, Elizabeth McCarthy.
The Port Authority of New York and New Jersey expects to have a new chief executive officer hired by the end of this year, a key change recommended by a special panel that reviewed the bistate agency last year in the wake of Bridgegate. It’s also a change that’s intended to create a less-politicized atmosphere at the agency going forward to put more focus on the core mission of regional transportation.

But as New Jersey lawmakers learned about that progress during a lengthy hearing in Trenton yesterday, they also raised new concerns about the impact that another major change will have on the Port Authority, the rotating out of the agency’s current board chairman, an appointee of Gov. Chris Christie’s who’s won praise from both parties for his leadership in the wake of Bridgegate.

They’re also raising new questions about cost estimates as high as $10 billion for a new Port Authority Bus Terminal that have been floated by the agency, as well the need to keep making progress on a proposed commuter rail tunnel linking New Jersey with Manhattan.

And there remains lingering tension after a series of hearings on the Port Authority among New Jersey lawmakers about what version of proposed reform legislation should be adopted to ensure proper oversight of the agency in the years to come. Pressure is building to pass a bill that has already been cleared by New York’s Legislature and also has the endorsement of both Christie and New York Gov. Andrew Cuomo.

Because the Port Authority is a bistate agency, major changes must be passed by lawmakers in both states and signed into law by both governors to take effect.

Yet Democrats who control New Jersey’s Legislature said yesterday they are as convinced as ever that a tougher bill they’re sponsoring — one that would require Port Authority officials to come before them on a regular basis to explain their decisions on issues like capital-planning — is what’s needed to rein in an agency with an operating budget larger than most states’.

“There is no way that we will be able to come back again through four legislatures and two governors,” said Senate Majority Leader Loretta Weinberg (D-Bergen).

“We have to get this right the first time,” said Weinberg, a prime sponsor of the New Jersey reform bill.

Weinberg also raised concerns during a hearing that featured nearly two hours of testimony from Port Authority Chairman John Degnan that when the agency hires its new CEO – something Degnan said will likely happen in December — that they change will trigger an agreement reached by Christie and Cuomo that will result in Degnan being replaced by a new chairman from New York.

The recommendation to switch to a CEO management structure came from the special panel that reviewed the agency in the wake of the scandal last year. It said the current management team made up of a politically appointed executive director from New York and deputy executive director from New Jersey is fostering a dysfunctional and highly politicized atmosphere that distracts the agency from its core transportation mission.

But New York will lose the powerful executive director position during the shift, and an agreement hashed out between the two governors calls for it to instead pick up the chairman’s position under a new, two-year rotation.

Weinberg stressed that the New Jersey reform bill is better because it would keep the highly respected Degnan in his current role for another year to help the new CEO get acclimated.

“We will be making sure that with your willingness you will be the one who is still sitting in that chair while the new CEO gets trained into what his or her day job should be,” said Weinberg, who has been one of the loudest critics of the agency in the wake of the lane closures.

“That is a very important aspect of our bill which is not contained right now in the New York bill,” Weinberg said.

But Degnan downplayed the effect of New Jersey losing the chairman’s position, saying agency decisions would still have to be made on a cooperative basis given the 12-member board is split evenly with appointees from the two states.

[related]And he said he favors the New York legislation, telling reporters after the meeting that additions to the New York bill like those being sought by the New Jersey lawmakers could still be passed as part of a follow up legislative effort.

“Don’t throw the baby out with the bathwater,” he said.
Senate Minority Leader Tom Kean Jr., who is sponsoring a New Jersey reform bill that is similar to the one that has already passed in New York, agreed.

“It’s very important that this body move,” said Kean Jr (R-Union).

Degnan, meanwhile, was also challenged by lawmakers to explain the $10 billion price tag and up to 10-year timeline that his agency has floated for a new Port Authority Bus Terminal.

“We really need to get that to be a better number,” said Sen. Paul Sarlo (D-Bergen), who is an engineer.
Degnan said in response that he also questions that figure and thinks the agency could recoup a lot of money when it replaces the terminal because of its prime midtown Manhattan location.

He said the Port Authority would soon vote on an amended capital plan that includes funding to move ahead with plans to replace the existing, outdated terminal. That vote would follow the Port Authority’s commissioners’ authorization last week of an international design competition to develop a plan for the new bus terminal, with a winner to be selected in September 2016.

And Degnan pointed to looming indecision on exact funding sources when pressed to explain what, if any, progress has been made on the planned Gateway tunnel, a $20 billion federal project that’s aimed at easing the region’s reliance on the existing 105-year-old tubes under the Hudson River that right now are used by trains travelling between New Jersey and Manhattan.

Last month, Christie and Cuomo announced in a joint statement that the two states would agree to provide half of the funding for the project if the federal government could come up with the other half. But the full funding for the project has yet to be identified in the ensuing weeks.

“Frankly, until we get that (funding) commitment and an identification of the sources, we have not spent a lot of money preparing for our role — that is our being the Port Authority’s role — in this project,” Degnan said. “We’re ready to move and to be a leader among the relevant agencies that need to come to the table.”

After the meeting, Weinberg and Sen. Robert Gordon (D-Bergen) again made the case for the New Jersey legislation, citing the estimated costs of the $20 billion tunnel project and up to $10 billion bus terminal replacement.

“Before we spend this money, wouldn’t it be a good idea to make sure that we have the right accountability and transparency (requirements) in place,” said Gordon, the chair of the legislative panel.