COVID-19’s impact on public transportation is evidenced by the Port Authority of New York and New Jersey’s 2021 operating budget. The budget, which includes a 15% cut to the operating budget and major reductions on capital spending, is open for public comment through Dec. 17.
The proposed 2021 Budget is comprised of $3.3 billion for operating expenses, $2.4 billion for capital expenditures, and $1.6 billion for debt service and other expenses. This proposed budget is $1.3 billion, or 15% lower, versus the 2020 budget.
“The proposed 2021 budget shows the Port Authority, as it has for almost a century, is adapting to face new challenges while continuing to provide safe, secure and efficient movement of people and goods throughout the region,” said Kevin O’Toole, Port Authority Chairman.
Pandemic-related Lost Revenue
The agency projects to face $3 billion in lost revenues over a 24-month period, dating back to March 2020. Historically low volumes are cited as a key reason for budget cuts, to both the operating and capital spending budgets.
The Port Authority estimates a $980 million revenue loss in 2021, due to lower activity levels. The lost revenue, along with the lack of federal funding, provided no other option but to reduce the 2021 capital spending allocations by 33%, according to authority officials.
Capital Spending Slashed
“Overall, the proposed 2021 Budget is an austerity budget,” said Port Authority Executive Director Rick Cotton. “That is simply not enough to deliver the rebuilding projects contemplated in our Capital Plan. On the operating side, we have aggressively but prudently cut costs, while we maintain our commitment to high standards of cleanliness and customer service to ensure the safety and security of our employees and customers, all while maintaining high levels of service at all of our facilities.”
When combined with the projected capital under-spending in 2020 of $1 billion that is a result of coronavirus pandemic, the two-year reduction in capital spending is $2.2 billion. Officials warned additional capital spending reductions in 2022 will follow if federal aid is not forthcoming.
Balancing Operational Needs with Lower Ridership
The proposed 2021 budget rolled back operating expenses to 2018 levels, in order to balance operational needs with maintenance requirements due to COVID-19.
The budget breakdown is as follows:
- $911 million to support overall agency operations;
- $772 million to safety and security obligations;
- $743 million for maintenance of property, facilities and equipment; and
- $382 million for management services.
Spending and Staffing Reductions
Among the cost-saving initiatives implement to lower the operating budget are:
- Reduction of spending on contract, consultant, and materials and supplies spending; and
- Reducing operating overtime hours by 15% (253,000 hours) below the 2020 budget.
A 2020 hiring freeze led to a seven percent reduction in staffing. Contributing to the headcount reductions are the expected retirements through first quarter 2021, completion of time-limited assignments, and efficiencies that result in the elimination of certain positions.
Public Comment Period
Budget materials can be viewed here. The proposed budgets will be on the agenda for action at the Board of Commissioners’ Dec. 17 meeting.
Written comments can be submitted here through Dec. 10. Comments can be made at the Board’s Dec. 17 meeting as well. The agency requests that comments be submitted as early in the comment period as possible.