Funds Limit Port Authority Operation

Many a commuter leader, watching rail service deteriorate from year to year, has sometimes bitterly asked:

“Why can’t the Port of New York Authority take over and give us a workable rapid-transit system? The Port Authority has built bridges, tunnels, truck terminals, and airports. Isn’t transit important too?”

As you saw yesterday, the Authority was busy in some of the early studies of North Jersey-Manhattan rapid transit. Even though many persons have said this agency is the logical one to operate commuter transit services the 1957 Page plan proposes that a special new district be established for just that purpose.

The reasoning behind this proposal is set forth in a study of rapid-transit financing prepared by William Miller, a consultant engaged by the Metropolitan Rapid Transit Commission this year.

His summary of the situation, in part, said:

“...There is no doubt that under the compact (which created the Port Authority) the two States could legally, by appropriate legislation, authorize the Authority to undertake rail rapid transit.

Key: Self-Supporting

“A careful analysis of its outstanding bond resolutions… leads to the conclusion that the Port Authority has not divested itself of legal power in relation to rail rapid transit. It is equally clear, however, that financial and governmental considerations deprive the Port Authority of competence to undertake such a project.

“The Authority is specifically prohibited by the compact from pledging the credit of either State, and is denied direct or indirect access to the taxing power in either State.”

Referring to the agreement under which the Port Authority provided the $800,000 for M.R.T.C. interstate studies, Miller continues:

“This agreement reflects the long established and well known policy of the Authority to limit its investments to projects which, while temporarily unable to sustain themselves, may reasonably be expected to become self-supporting eventually.

Drain On Confidence, Cash

“Two basic factors justify the Authority in its policy: first, it has no taxing power, and its ability to acquire private funds for its important public undertakings depends upon the confidence of the investing public that its net operations will not only cover interest and principal on its bonds but will also provide sufficient reserves…: and, secondly were it to follow the practice of undertaking projects which do not eventually become self-supporting, its earnings from other projects would be permanently drained off and further expansion of its services to the public would be prevented.”

For these reasons and many more given in his 135-page report, Miller recommends that a Metropolitan Rapid Transit District be formed to operate rapid transit. As you can read in an accompanying story today this is the proposal also recommended by M.R.T.C. Project Director Arthur Page.