The Port Authority of New York & New Jersey is facing a difficult choice: forge ahead on unpopular toll increases or risk a lower credit rating. The Port Authority’s costs have been skyrocketing of late, as overruns at several development projects, most notably the World Trade Center Transportation Hub, have ate away at its budget. When it turned to bridge toll hikes to fund these projects last year, the American Automobile Association sued to overturn the increases, which it said could only be used for transportation projects.
“If all of a sudden the Port Authority were to decide to delay these planned toll hikes, then you put at risk the credit ratings for the bonds,” Phil Villaluz, head of muni strategy at regional bond brokerage Sterne Agee, told Reuters.
The Port had planned on raising tolls for motorists by 75 cents each of the next four Decembers and raising the PATH fare by 25 cents each of the next four years. There’s also a planned 45 percent increase in tolls for commercial vehicles on the New York State Thruway.
Without these increases, the agency’s credit rating would suffer, according to Moody’s. The Port has become increasingly dependent on revenue from bridges and tunnels, as revenue from airports is expected to decline over the next five years.
“Maintaining strong credit ratings is critical to financing the over $25 billion in capital projects we are executing over the next 10 years and the tens of thousands of jobs they represent,” a Port spokesperson said. [Reuters]