STATE – The Port Authority is spending more than $2 million per month on interest rate swaps that are tied to bonds that were never issued or have already been refunded, according to a report on PolitickerNJ.com.
Interest rate swaps were in vogue when rates were high and rising prior to the economic collapse. The financial arrangement allows the Port Authority to make a fixed payment in exchange for a variable one tied to the current interest rate. They would have protected the Port Authority if interest rates continued to rise, but with current rates near zero they are a losing proposition. The rate swaps cannot be cancelled without paying a substantial penalty.
The Port Authority recently voted to raise tolls on its crossings between New Jersey and New York, as well as fares on the PATH trains because it needed money to finance various capital projects.
The agency is under fire for paying $86 million in overtime last year, other wasteful practices and running significantly over budget and late on construction of the World Trade Center project.
New York Comptroller Thomas DiNapoli said an audit of the bi-state agency revealed $85.7 million in overtime costs, average annual pensions of $143,253, and a string of broken budget promises showed out-of-control spending.
Twenty-four PATH and Public Safety Department employees’ 2009 overtime pay was more than 100 percent of their salaries, according to the audit.
DiNapoli said 281 employees earned more than $50,000 in overtime, and 77 agency workers had taken home more than $175,000 combined overtime and base salary in 2009.
The Port Authority pays more than $1 billion to outside contractors for services each year without assessing whether it really saved money by outsourcing security jobs, janitorial duties, landscaping work and a host of other tasks to contractors.
Auditors who sampled 75 service contracts worth $13 billion, said they found 57 of them worth $1.18 billion had no written justification on file.
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