eriecanal-150x150-7177363The New York Power Authority (NYPA) could be taking the money-losing state Canal Corp. off the back of the Thruway Authority under the fiscal 2017 state budget that will be proposed today by Governor Andrew Cuomo.

Assuming this Buffalo News report is true*, it would explain how Cuomo intends to finance his proposal to freeze Thruway tolls for five years even while building the $4 billion (plus $800 million in contingencies) replacement for the Tappan Zee Bridge. (*UPDATE: It is.)

The 524-mile canal (including the original Erie Canal) generates very little revenue of its own, costs at least $53 million a year to operate and has a five-year capital plan funding requirement of $210 million. As things now stand, nearly all of that money would have to continue coming from Thruway motorists. Subtract the canal, and in one fell swoop Cuomo will have almost balanced the Thruway’s financial plan through 2019.**

(**UPDATE: A budget summary says he will also eliminate an $85 million annual state budget subsidy for the Thruway Authority—so the shift to NYPA produces budget relief for the state, but not the Thruway Authority.)

Of course, such a move also would raise a lot of new questions. To start with, how does an outmoded if historically significant waterway fit into the portfolio of the nation’s largest public power authority, which runs 16 power generating plants including the large hydroelectric projects on the Niagara and St. Lawrence Rivers?

A canal certainly isn’t the first thing that comes to mind when you read NYPA’s mission statement:

Power the economic growth and competitiveness of New York State by providing customers with low-cost, clean, reliable power and the innovative energy infrastructure and services they value.

So, maybe the governor will claim there is some untapped hydropower potential in Clinton’s Ditch?***

(***UPDATE: Sure enough, the governor’s program bill enacting the shift contains this rationale: “This transfer would enable the canal system to benefit from NYPA’s experience in managing our State’s water assets while ensuring the continued efficient operation of the canal system. NYPA operates hydro-electric plants throughout the State, including three small hydro plants located within the canal system. NYPA and the Canal Corporation already share services on the canal system, and this transfer would only strengthen this partnership.”)

New York’s canal system—whose continued existence as a state asset is guaranteed by the state constitution—was funded straight out of the state budget until 1992, when it was shifted to the Thruway Authority. The move was one of several notorious one-shot fiscal gimmicks (the “sale” of Attica prison to the state Urban Development Corp. was another) initiated by then-Governor Mario Cuomo.

Now, nearly a quarter century later, Cuomo’s son may be trying wants to palm off the canal on NYPA—the nation’s largest public power authority, and Albany’s favorite cash cow. NYPA has funneled more than $1 billion into the state budget in the last 15 years, most of it since 2009.

While Governors George Pataki and David Paterson raided NYPA for one-shot budget gap-closers during recessions, Andrew Cuomo increasingly has relied on the authority to bolster his economic development programs and advertising efforts, including the “New York Open for Business” campaign. As noted in a subsequent analysis by state Comptroller Thomas DiNapoli’s office, this year’s state budget alone moved $90 million from NYPA to the budget to finance the state’s overseas trade missions as well as advertising for Start-NY and Global NY programs.

On paper, at least, the state owes money to NYPA, whose balance sheet as of 2014 carried a $279 million “receivable” from New York State in repayment of past cash raids. The state financial plan, meanwhile, projects $238 million in repayments to NYPA over the next three years, almost all of it in fiscal 2018. The repayments are described in state budget documents as “accounting reclassification(s)” that “do not carry a Financial Plan impact. ” Whatever that means.

P.S. — Before it became an eight-figure ATM for the governor’s economic development promotional campaigns, NYPA used to dole out $1 million a year in charitable contributions “for everything from underwriting St. Patrick’s Day parades and jazz festivals to supporting youth sports teams and volunteer fire departments.” That practice ended after a legal opinion was issued finding that NYPA should not make contributions unrelated to its core mission. The source of the opinion: the then-Attorney General, Andrew Cuomo.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

New York’s Medicaid costs are soaring at double-digit rates

New York's already high Medicaid spending is growing at a double-digit rate for the second year in a row, recently released state figures show. After dipping during the first year o Read More

Budget’s Historic Spending Hike Shown in Financial Plan Update

Amidst spiking inflation, a market downturn and recession fears, state spending will soar to new heights under the April budget deal, as per (Plan) that the Governor’s budget office quietly i Read More

Minimum wage for home care aides is likely to mean bigger raises for downstate than upstate

The newly enacted wage hike for home care aides is likely to increase workers' pay more than three times as much in the New York City area as in other parts of the state, according to a review of labor data. Read More

The flawed arguments behind ‘Fair Pay for Home Care’

As they contemplate a major increase in Medicaid spending on home care for the elderly and disabled, state legislators are relying on information that's outdated, incomplete or inaccurate – and neglecting to think through the predictable consequences. Read More

The debate over Medicaid home-care funding needs a reality check

The push in Albany to boost wages for home health aides is seemingly disconnected from the larger realities of the state’s long-term care system. As they , officials in the home care industry are warning that the state faces an of in-home caregivers Read More

Answers needed on Governor Hochul’s health-care budget

The health-care agenda laid out by Governor Hochul in her budget proposal this week leaves a lot of questions unanswered. Here are a few of them. Read More

The Health Department takes a big step toward COVID transparency

The state Health Department released a flurry of 20 COVID-related data sets this week, taking its biggest step yet toward full transparency about the state's pandemic response. Read More

Remembering the scandal that brought down Health Commissioner Howard Zucker

The resignation of Dr. Howard Zucker as state health commissioner marks the end of a term marred by scandal over his role in managing the coronavirus pandemic. The much-debated compelling nursing homes to admit COVID-positive patients, though it origi Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!