3/31/2014

Jim Cpolein Inside the Port Authority, the Corrupt Powerhouse Behind Christie's Bridgegate Scandal- The Daily Beast

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# Insidethe PortAuthority, the Corrupt PowerhouseBehindChristie's BridgegateScandal

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 ofFort Lee, New Jersey told 

### USA Today, describing his reaction tothe dirty details behindthe Bridgegate trafficjamthat choked his town for four days last September. New Jersey Governor Chris Christie's office has taken most ofthe heatfor screwing citizens 

### by playing dirty 

### politics, but there's another party responsible that has so far evaded most of the blame. The Port Authority ofNew York andNev: Jersey,the government agency that directly caused the gridlock, is 

### an enormously powerful bastion of patronage that violates all 

### commuters every day ofthe year.
Itwould 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 ofthe Port Authority-andthe 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 ofthe transportation infrastructure around New York City and http://Vvi/'.W,thedailybeast.com/articles/2014/01/21/inside-the-port-authority-the-corrupt-po\r\lerhouse-behind-chrisite-s-bridgegate-scandal.html 11293/31/2014 Inside the Port Authority, the Corrupt Powerhouse Behind Christie's Bridg egate Scandal -The Daily Beast 

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political retribution. 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 ofdirty politics. How ironic that
an organization designed tobethe antithesis ofold school Tammany Hall machine politics, wouldbeturned 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 stafferincluding a deputy executive director willing to create a phony trafficjam at the behest of a gubernatorial aide seeking

Foundedin 1921, the PortAuthority was tasked withbreaking through the logjams that madebuilding big projects so difficult, and in its early years the agency was successful in this regard. Before the founding ofthe 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 eventhe most worthwhile projects past the planning stages. The Port Authority, modeled after a similar organization inLondon, raised moneyby issuing bonds that would eventually be paidback through user fees lilce bridge tolls. That meant projects didn't require direct voter approval, and mayors and governors didn't have to account for infrastructure projects 

### in theirbudgets.
The agency was also designed with the idea that cities werehampered by too much democracy, as Jameson Doig details 

### inhis excellent history ofthe Port Authority, 

### Empire on the Hudson. Julius Henry Cohen, the visionary behind the Port Authority's founding, wanted to create an organization shieldedfrom "thehurry and strife ofpolitics," toborrowWoodrow Wilson's phrase, runby wise technocrats empoweredto carry out thebest plans for society without politicians and party bosses getting intheir way. The Port Authority was supposed to have all the efficiency ofa private firm, but with the higher aim offurthering the public good.
But the key to efficiency is competition, and commutershave few a1ternatives to the PortAuthority's bridges and airports. So, like any monopolist, the agency ba11ooned into a bureaucratic monstrosity that spends mucl1 ofits wealth on itself. Today the organization's ranks are flooded with middle managers (PDF) paid handsome salariesbased on the time they've served, not how well they do theirjobs. The compensation package for http://vvvvw.thedailybeast.com/artic!es/2014/01/21/inside--the--port-authority-the-corrupt-po1.M8rhouse--behind-chrisite-s-bridgegate-scanda!.html 21293/31/2014 Inside the Port Authority, the Corrupt Powerhouse Behind Christie's Bridg egate Scandal -The Daily Beast the average PortAuthority employee exceeds $143,000, stemming in part from out-of-control overtime payments and rich perks. DavidWildstein, Christie's high-school classmate who worked for the Port Authority and orderedthebridge closure on behalfof 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 puttingunder the aegis ofone agency, including airports, a bus terminal, seaports, bridges, tunnels, and the World Trade Center. This allows it to drain money from some holdings tofloat 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 inexcess cash in 2011, and yet it can't afford tofund 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 WorldTrade Center.
A n1ajor reason New York's three major airports provide such a lousy experience for travelers is that they're all operatedby 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 ofLaGuardia-a form ofturfprotection for Newark andJFK. And what's the rush toreplace outdatedinfrastructure? LaGuardia's new state-ofthe-art terminal isn't expected tobe finished until2021.
"The PortAuthority has been a money tree, an ATM maehine

...a place [the governors ofNew York and New Jersey] can go to do projects that they can't get through their budgets," Stephen Berger, a former PortAuthority executive director, said at a recent breakfast forum heldby the Citizens Budget Commission. During Berger's tenure, New Jersey Governor Thomas Kean pushedthe 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 tobuy a portion ofthe Aqueduct Racetrack for $40 million to help plug a budget shortfall. Currently, 94% ofNew York State's outstanding debt was issuedby a public authority, aceording tothe State Con1ptroller's Office.
So what should be done about the Port Authority? An obvious step would be to breakthe agency up so that money collected on the George Washington Bridge, for exmnple, would have tobe spent on maintaining and hnproving the George Washington Bridge. Bob Poole, the director oftransportationpolicy at the Reason Foundation and an expert in airport finance, suggests that New York http:/!vvvvw.thedailybeast.com/articles/2014/01/21/inside-the-port-authority-the-corrupt-pmverhouse-behind-chrisite-s-bridgegate-scandal.html 3/293/31/2014 Inside the Port Authority, the Corrupt Pot.Nerhouse Behind Christie's Bridgegate Scandal -The Daily Beast 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 fmance," which taps future user fees topay 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 toborrowthe necessary capital tobuild a project, tasks it with overseeing construction, and then allows it to collect tolls to pay offits debt and fund operations. This model has all ofthebenefits ofthe authority model with built-in incentives tokeep costs in line and plundering politicians atbay. Unfortunately, the Fort Lee scandal won't be enough to force any meaningful reforms at the Port Authority, because the governors ofNew York and New Jersey, whojointly control the agency, have no interest in cutting offthe supply of easy money or the flow ofjobs for their friends. An agency designedtohe insulated from obstructionist politics in order tobetter serve thepublic has become a private bank and enforcement arm for the powerful, increasingly corrupt, and cut offfrom the public interest.
So the Port Authority will keep "violating" commuters and putting offthe inevitable day ofreckoning when Julius Henry Cohen's vision ofan organization insulated from politics comes apart 

### in even more spectacular fashion.

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