My name is John A. Corlett, Legislative Committee Chairman for AAA. New York State, Inc., which serves more than 2.7 million members residing

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Jacob Strickland
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1 STATEMENT OF AAA NEW YORK STATE BEFORE THE NEW YORK STATE SENATE STANDING COMMITTEE ON TRANSPORTATION AND THE NEW JERSEY GENERAL ASSEMBLY COMMITTEE ON TRANSPORTATION, PUBLIC WORKS AND INDEPENDENT AUTHORITIES Staten Island, New York April 20, 2012 My name is John A. Corlett, Legislative Committee Chairman for AAA New York State, Inc., which serves more than 2.7 million members residing in New York State. I am also here to speak on behalf of the AAA Clubs of New Jersey, which collectively serve 2 million Garden State drivers. Thank you for holding this public hearing that seeks to assess the Port Authority of New York and New Jersey s ( the Authority s ) finances, including the recent and unprecedented toll increases. First let me say that, as Committee members know, AAA New York and AAA North Jersey have filed a Federal lawsuit in Manhattan seeking to stop the Authority from collecting the increased tolls on the Authority s six bridges and tunnels connecting New York to New Jersey. As a stakeholder that represents millions of area drivers, I want to emphasize that we viewed the extraordinary step of litigation as a last ditch effort to hold the Authority accountable and shine some light on the it s opaque finances. Specifically, the AAA Clubs of New York and New Jersey are questioning how the Authority has spent toll revenues - not only the increased revenues to be generated under the recent toll increase plan - but also those derived from the significant toll increases approved by the Authority in particularly

2 in view of the fact that in the last five years less than 20% of those revenues are reinvested in the Authority s bridges and tunnels. The Port Authority s actions, raising tolls to unprecedented levels to pay for projects not fully disclosed, has rightly angered hundreds of thousands of drivers. The public also resents paying ever skyrocketing toll rates when the Port Authority s bridges and tunnels already generate enormous surpluses while the Authority invests in bare minimums to keep the bridges and tunnels operational. Indeed, at Port Authority s four bridges and two tunnels drivers have and will see over the next four years: - An unprecedented total of four more toll increases every year until 2015 that will bring the E-ZPass toll rate to $12.50 in the year 2015 costing a daily commuter more than $3,000 annually; - a vast disparity between toll revenue generated and investment in the functionally obsolete bridges and tunnels that generate them - indeed, while the bridges and tunnels generate more than $1 billion annually, the authority has reduced capital expenditures on those facilities by almost 50% over the past decade. Perhaps worse than the abuses enumerated above is the institutionalized arrogance that has made them possible. For too many years the Port Authority has operated without the traditional checks and balances 2

3 to make it accountable, either to the public or elected officials. Indeed, recent audits and press reports over the past several months have uncovered obsolete and overly generous compensation packages, inflated expenses and, remarkably, the absence of proper backup documentation with respect to the growth in cost estimates for World Trade Center reconstruction - the authority s single largest fiscal burden and source of vast costs overruns. Indeed, an audit ordered by the Governors of New York and New Jersey described the Authority as "challenged and dysfunctional" - a mild description of the Authority in our view. The audit by Navigant Consulting further found that the lack of management and oversight has allowed the cost estimates for completion of the WTC to increase by $3.8 billion, making it the world s most expensive office building. Although the Authority operates some of the busiest and most important transportation facilities in the United States - facilities that serve millions of travelers from all over the country and the world - it is a remarkably opaque bureaucracy and there is little doubt that higher levels of public oversight are necessary. The latest toll hike is a perfect example of the need for public oversight. Not only was the scale of last summer s toll and fare hikes unprecedented but the process utilized by the Authority was rushed, lacking in transparency and plagued with misleading financial and public statements that we believe were carefully calculated to mislead the public. 3

4 In fact, I would characterize the process as a railroad job the likes of which I have never witnessed. In the span of a mere six weeks: - The authority announced a toll hike in a Friday press release; - held five public hearings -all on one day- and, incidentally, unattended by the authority s board of commissioners and; - approved five separate toll increases with one action by the Authority s Board of Commissioners (on August 19 th ), - ignored numerous requests by our Association for a detailed Capital Plan, and; - subsequently implemented the higher toll rates, while failing to produce for public review any Capital Investment Plan, nor details on how the bridge and tunnel toll surpluses generated from prior increases were spent. And although the Authority s new executive director has taken steps to reform the Authority s operations and management, and pledged to return the Authority to its core transportation mission, there is little question that more comprehensive and stringent long term oversight is required to ensure public accountability at the Authority on a permanent basis. Because the states of New York and New Jersey created the Port Authority by interstate compact in 1921 with the consent of Congress, the Port Authority is not subject to the same standards of accountability as those authorities operating within the states. In our view this has enabled the Port 4

5 Authority to circumvent public accountability and avoid public scrutiny of their internal operations. Accordingly, at the state levels we are also supporting various measures aimed at improving transparency and accountability at the authority including; NYS Senate Bill 6034 by Senator Lanza that would require the authority to conduct an economic impact statement prior to increasing tolls, and NYS Senate Bill 6031/Assembly Bill 8813 to ensure bridge and toll revenue remains in the Authority s interstate transportation network. We also endorse measures even more imperative that are aimed at improving the public hearing process utilized by the Authority to gather public input on its finances and capital plan. First and foremost, prior to any proposed toll hike, the Authority should be compelled by state law to produce a comprehensible capital plan prior to the public comment period. In conjunction with the full disclosure of the capital plan, the hearing process should be improved to permit more public input. This issue is addressed in The Port Authority of New York and New Jersey Accountability Act (New Jersey Assembly Bill 1011/ New York State S.5878-C/A.8677-B) which would require more financial transparency including audits to ensure greater public accountability. Finally, we strongly believe the Authority should be subject to independent audit oversight by the Comptroller s of the respective states. 5

6 In our opinion, increased state oversight should be reinforced by federal protections. Consequently, at the federal level, AAA is supporting the Commuter Protection Act (SB.2006/HR.3684). That legislation will protect the public from exorbitant interstate tolls and ensure tolling revenue is not diverted to non-transportation related purposes. I would like to highlight the fact that the Commuter Protection Act does not assert a new federal role, but instead repositions the U.S. Department of Transportation to its rightful, prior role as arbiter in evaluating the affect toll increases have on our national highway system. AAA is also advocating a measure to subject the Authority and its operations to federal oversight by the General Accounting Office, a step we believe will improve accountability and ensure efficient oversight of the authority s operations. In short, it is time to enact bipartisan, bi-state legislation to provide better oversight and accountability to the Port Authority. Legislation that will ensure honest, more meaningful public hearings; legislation to protect against future mismanagement and waste so that we have a Port Authority that works for the people of this region, not the other way around. We thank you on behalf of our millions of members for holding this hearing and stand ready to assist you in any way. JAC:dc (Statements/Statement by AAA on transportation and the NJ General Assembly ) 6

SENATE RESOLUTION No. 1 STATE OF NEW JERSEY. 216th LEGISLATURE INTRODUCED JANUARY 16, 2014

SENATE RESOLUTION No. 1 STATE OF NEW JERSEY. 216th LEGISLATURE INTRODUCED JANUARY 16, 2014 SENATE RESOLUTION No. STATE OF NEW JERSEY th LEGISLATURE INTRODUCED JANUARY, 0 Sponsored by: Senator STEPHEN M. SWEENEY District (Cumberland, Gloucester and Salem) Senator LORETTA WEINBERG District (Bergen)