The nearly $4 billion Tappan Zee bridge replacement project will almost certainly double the $5 toll currently charged on the existing bridge by 2019, a government finance expert warned Wednesday.
And the cost of the new span will create a financial ripple effect that could drive up tolls across the entire 570-mile state Thruway system.
“The Tappan Zee bridge … really threatens to overwhelm the Thruway capital plan in the next decade,” said Nicole Gelinas, a fellow with the fiscally conservative Manhattan Institute, during a Wednesday symposium on the future of New York’s highway system.
“It’s almost inevitable that this will happen,” she added.
In a written response to the warnings, Thruway Executive Director Thomas Madison said motorists using other parts of the highway won’t be tapped for Tappan Zee bridge costs.
“The Thruway Authority will ensure that any future toll increase on the bridge is dedicated to paying for the new bridge and other regional transportation projects,” Madison said. “We have consistently said there will be no system-wide toll increase to support the New NY Bridge project.”
But Gelinas and others note that the bridge, which spans the Hudson River between Rockland and Westchester counties, has historically subsidized the entire Thruway system through its toll revenue.
Located in the commuter-rich New York City suburbs, Tappan Zee toll dollars have for decades provided 20 percent of the Thruway’s revenue but handled 10 percent of the traffic, Gelinas said. Going forward, though, the debt burden following construction of a new bridge will upset that equation.
Former Lt. Gov. Richard Ravitch — in Albany on Wednesday to discuss his new work on Detroit’s recovery from bankruptcy at the Rockefeller Institute — concurred with that general analysis.
“They’re no longer paying the cost of the original Tappan Zee Bridge,” Ravitch told reporters at the Capitol, “and when they close this (old) bridge, the revenues are going to disappear. There will be new revenue from the new bridge, but you can’t use all those new revenues to service the new debt because you still have to cover all the expenses that are currently being paid out of the existing Tappan Zee Bridge tolls.”
So tolls in other parts of the highway will likely rise not to pay for the bridge, but to offset the loss of what has been a Tappan Zee-fueled subsidy to the system.
Like Madison, Gov. Andrew Cuomo has insisted there won’t be any steep or double-digit increases and continues to argue that it’s too early to talk about tolls since the final cost of the project isn’t settled.
“I haven’t the vaguest idea why he says that,” said Ravitch, who believes the administration must have current estimates can predict the cost of the bridge “within half a billion dollars.”
Cuomo is looking at multiple options to pay for the bridge beyond tolls.
The governor is proposing an infrastructure bank that could conceivably be used to help offset the cost. And he may very well tap into part of the more than $5 billion budget surplus that has appeared thanks to settlements with banks that violated financial regulations.
The state also is appealing the U.S. Environmental Protection Agency’s denial of the bulk of a proposed $511 million package of low- or no-interest loans from a federal water-quality fund that the administration wanted to allocate toward the bridge project.
Gelinas and others said the Thruway faces demographic challenges, too, notably a drop in the number of people who use the road.
She said 275 million vehicles used the Thruway in 2005, compared to 250 million in 2012.
“People are driving less,” she said, although Thruway officials have said the drop was recession-related.
Moreover, some of the first bonds sold to help pay for the bridge, a $1.6 billion offering, came in the form of “junior indebtedness,” which means that those notes would take a back seat in repayment if there were a problem.
“It’s not senior debt for a reason,” said Gelinas at an Empire Center symposium about the future of highways.
A toll rise upstate or on other sections of the Thruway system wouldn’t go over well with the motoring public, and would likely inflame upstate-downstate political tensions.
The Thruway Authority provoked an outcry in 2012 when it floated a possible 45 percent toll hike for commercial vehicles. Upstate lawmakers and business leaders said it would be a blow to the region’s fragile economy, which relies heavily on the Thruway.
Cuomo agreed, and Thruway officials eventually dropped those plans in favor of achieving limited savings by shifting the cost for State Police services away from the authority.
That approximately $85 million expense is now reflected in other parts of the state budget.
© 2014 Albany Times Union