NEW YORK (AP)  -- Even as many government agencies cut back, the Port Authority of New York and New Jersey is pressing ahead with plans to replace the central terminal at LaGuardia Airport.

The authority on Thursday authorized a $40 million study that should result in a new design for the 45-year-old terminal, which handles about 12 million passengers a year.

``The board concluded that the right direction for planning is a complete replacement,'' said the authority's aviation director, William DeCota.

Asked whether it was prudent to ramp up for a major project when the region's economic picture is cloudy, DeCota noted that construction wouldn't begin for years.

The design study is likely to take until 2010. Building wouldn't start until at least 2011 and could take as long as eight years, due in part to the challenge of building in an airport that is essentially out of space.

``We would have to build around the existing terminal,'' DeCota said.

The authority also agreed to spend nearly $19.8 million on new navigation equipment for Newark Liberty International Airport in New Jersey. The equipment will help planes operate in bad weather.