Photo – Wikimedia Commons.

The Port Authority of New York and New Jersey (PANYNJ)—a 90-year-old public authority which reports to the Governors of both states and runs an empire of tunnels, bridges, real estate (including the World Trade Center), seaports, airports, and more—is under the public spotlight. While the scrutiny was originally provoked by the Christie Administration’s traffic-causing scandal, all of the Port Authority’s business lines have now been thrust into public awareness and review. That includes the Port Authority Trans-Hudson (PATH) passenger rail operation that links Newark, Harrison, Jersey City and Hoboken in New Jersey with the island of Manhattan in New York.

PANYNJ took over the privately owned, bankrupt PATH in the 1960s, but only because of a classic political trade: the leaders of New York agreed to bail out PATH for New Jersey commuters, and the leaders of New Jersey agreed that the Port Authority could build the World Trade Center to bail out the lower Manhattan commercial real estate market. Some might consider this accommodation the PANYNJ’s original sin, because ever since many of the agency’s spending decisions have been characterized by bi-state deal-making that values reciprocal benefit instead of joint benefit. Rather than working for the mutual interests of a unified region as intended, the agency sometimes has been working for the separate interests of the two halves of the region.

Because of that strange parentage, PATH has always had the whiff of a waifish orphan about it. A significant transit agency run by an organization dominated by maritime docks and airports, it is an oddball in its own family. Meanwhile, it is not affiliated with its dominant peers, NJ Transit and New York City Transit, whose connections are essential for many trips. Its distinct status provides an opportunity to compare the relative efficiency of multiple transit agencies working in the same region.

Last week, the respected civic group Citizens Budget Commission issued their report about the PATH. Some of their findings were quite illuminating, while other issues, particularly about underlying costs and relative efficiencies, were left unexamined. Some of the key points:

• PATH ridership has been growing, in part because both the population of northern New Jersey and the portion of the population that commutes into Manhattan is growing.
• PATH recovers a smaller percentage of its costs from fares (31%) than most large transit agencies do, and significantly less than the New York City bus and subway system does.
• Despite that growing ridership and low farebox recovery ratio – which suggest some consumer elasticity – PATH fares have been held relatively low, often lagging behind fare increases in New York City or some trans-Hudson bus routes, and way below the trans-Hudson ferries.
• Alone among major transit agencies, PATH receives no direct taxpayer support, because its non-fare revenue (69%) consists of a cross-subsidy from other PANYNJ business lines, chiefly the surplus from tolls on the Port Authority’s bridges and tunnels.
• PATH’s per-unit operating costs are higher than those of comparable agencies, though the report does not investigate the causes of that difference.

Some of these findings reflect sound policy: keeping fares low for transit riders, and using tolls from autos in part to do so, is generally a good thing. But the allocation of burdens and benefits in this situation is the random result of institutional ownership rather than demand management or a calculated capture of the automobile’s externalities.

Some of the CBC’s recommendations to rationalize the governance and financing of PATH make sense, but will be politically very difficult to achieve. They suggest transferring ownership of PATH to NJ Transit, which runs most other public transit in the Garden State, a move that certainly makes sense in terms of seamless service and coherent planning. Aside from the reality that Governor Christie is already under-funding NJ Transit, the prospects of adding another $400 million in annual deficit to that agency would not be attractive to New Jersey even in the best of times. CBC also suggests some general taxes in northern New Jersey and perhaps New York City be directed to PATH. Again, a logical step and one that is standard practice for other transit systems, but one that political leaders are likely to resist, especially as long as they can have the PANYNJ pay the bills instead.

In the meantime, the CBC report raises other issues that are worthy of a deeper dig. If PATH’s operating costs are above the industry norm, why? If PATH’s capital plan is dominated by projects that are less about mobility for local residents and more about enhancing the real estate value of the World Trade Center or access to PANYNJ’s Newark Airport (which is already served by NJ Transit), could more transparent decision-making (not a PANYNJ hallmark) lead to better decisions? And, perhaps most importantly, if we can all agree that more rail capacity across the Hudson is important to both states – which have not added a new rail crossing since 1911 – then what is the best way to fund and deliver that new crossing?