Jersey Tea Port-y

Port Authority owns 40 properties in Jersey City, but it contributes only $2.2 million to the city treasury in the form of payments in lieu of taxes.

The Port Authority has been taking it on the chin in recent months, and rightfully so. After years—decades—of mission creep and favor-banking, the bistate agency finally has come under scrutiny, thanks in large part to accusations that New Jersey Governor Chris Christie’s allies treated the Port as if it were an arm of their re-election campaign.

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The latest to challenge the Port’s hegemony is Jersey City Mayor Steven Fulop, widely regarded as a regional political star in the making. Mr. Fulop recently decided to sue the PANYNJ over unpaid taxes. According to Mr. Fulop’s office, the Port owes Jersey City more than $300 million.

Lawsuits are not always the best way to resolve political or policy disputes, but in this case, Mr. Fulop appears to have had little choice. Jersey City sought to engage Port officials in reasonable discussions over the unpaid taxes, but talks went on and on with no result. The lawsuit was a tactic of last resort.

It’s a fair bet that many of his colleagues on both sides of the Hudson River are quietly cheering for him. The mayor noted that the Port Authority owns 40 properties in Jersey City, but it contributes only $2.2 million to the city treasury in the form of payments in lieu of taxes.

This page has argued that high taxes are the greatest obstacle to regional economic growth, but the Port, which, of course, is not a private entity, should be contributing more to the Jersey City treasury, since it crowds out other taxpayers. If the properties it owns were held in private hands, Mr. Fulop said, they would have generated some $315 million in property taxes since they were developed.

The Port, as a governmental agency, often does not pay property taxes outright but agrees to make payments in lieu of taxes. In 1998, for example, the City of Newark sued the Port for underpaid rent at Newark airport and negotiated a settlement worth over $100 million, plus $12.5 million annually for capital improvement projects.

Given the Port’s enormous footprint in regional real estate, those payments are critical to many local governments’ budgets.

The Port’s refusal to work with Mr. Fulop to achieve an equitable solution to the Jersey City issue speaks to the agency’s arrogance. “The Port Authority is not only a dysfunctional organization but one that thinks they are above the law,” Mr. Fulop said.

He’s right. And with any luck, other local officials will be inspired by Mr. Fulop’s example.

Jersey Tea Port-y