tzbnew1-7908391Moody’s Investor Service has just lowered the New York State Thruway Authority’s senior lien revenue bond rating by a notch, from A2 to A1, citing the authority’s failure to identify a plan for raising tolls sufficiently to finance the building of the new Tappan Zee Bridge. Standard & Poor’s last month did much the same thing, for essentially the same reason.

The federal government recently approved a record $1.6 billion low-interest Transportation Infrastructure Finance and Innovation Act loan for the Tappan Zee project, repayable over a 35-year period starting five years after the bridge is completed. In the meantime, Moody’s notes, the Authority will significantly expand its borrowing to finance the new Tappan Zee link, also known as the “New New York Bridge,” or NNYB. Quoth the rating agency:

The downgrade considers that future financial performance will rely to a much greater extent on as yet undetermined toll increases to support the bridge construction costs and that failure to adopt sufficient rate increases within the expected time horizon would pressure financial metrics. Additional risks factored into the senior lien rating include the ability of [the Authority] to manage the construction of a complex project while maintaining the condition of its very large asset base; the contractor’s ability to deliver the NNYB project on schedule and within budget, particularly given the use of a unique floating crane that is being shipped from the West Coast.

Worry-warts. Cost overruns don’t occur too often on massive infrastructure projects, right?  Oh,wait a minute.

Meanwhile, the Thruway Authority’s executive director announced today that tolls won’t rise for the next year, at least.

The continued toll suppression is not necessarily good news for New Yorkers who don’t drive much on the Thruway, however. In fact, the only reason Thruway tolls haven’t gone up already is that, apparently for the first time since Tom Dewey cut the final ribbon the thing 59 years ago, the authority’s operating costs are being subsidized out of the state budget’s general fund revenues — i.e., the taxes we all pay. This year, tax-funded state budget support for the Thruway comes to $85 million, including state police patrols permanently absorbed into the state budget.

The point of a toll road, remember, is to pay for itself. The only reason the Thruway Authority has been assigned a “stable” outlook by S&P and Moody’s is because it can raise tolls in the long run. Indeed, sooner or later, it must. But by how much?  The Cuomo administration has remained very cagey on this front.

This much is certain: after leaching hundreds of millions of highway toll dollars into the state canal system over the past two decades while going more deeply into debt in a largely unsuccessful effort to keep pace with its rising capital costs (quite apart from the Tappan Zee Bridge), the once-solid Thruway Authority looks worse financially than its many rusty bridge overpasses.

About the Author

E.J. McMahon

Edmund J. McMahon is a senior fellow at the Empire Center.

Read more by E.J. McMahon

You may also like

Cuomo’s magical mystery cash

So, how is Governor Andrew Cuomo paying for that $100 billion infrastructure "development initiative" that, as he put in his State of the State message yesterday, "would make Governor Rockefeller jealous"? The answer: for the most part, he actually isn't. Read More

Power for tolls?

The New York Power Authority (NYPA) could be taking the money-losing state Barge Canal 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 $4.8 billion Tappan Zee Bridge replacement. Read More

Robert Moses, call your office!

Apparently looking to make a big splash with a pre-budget rollout of downstate infrastructure initiatives, Governor Andrew Cuomo aimed for the biggest body of water he could find: the Long Island Sound. The "2016 agenda" Cuomo unveiled before the Long Island Association today included revived plans for a third track on the main line of the Long Island Railroad, improvements to regional airports and other development projects. But the governor couldn't resist capping off the agenda with a real attention-getter: a $5 million feasibility study of "a tunnel connecting Long Island to either the Bronx, Westchester County or Connecticut." Read More

Highway project highlights waste

Governor Cuomo last week announced the completion of a construction project in Orange County, four years after the state Department of Transportation (DOT) deliberately added at least $4 million to the cost by improperly steering jobs to Hudson Valley unions—and cost taxpayers up to $22 million for the way it did it. Read More

NY fuel tax drops — a little

The impact of declining crude oil prices, already visible at the gas pump, has now rippled through to New York State’s petroleum business tax (PBT). Effective Jan. 1, the PBT on motor fuel has dropped by a whopping six-tenths of a penny, to 17.8 cents per gallon from 18.4 cents per gallon, according to the state Department of Taxation and Finance. Read More

The big Tappan Zee stall continues

A full year after the official start of construction on a replacement for the Tappan Zee Bridge, Governor Cuomo still isn’t leveling with New Yorkers on how he will pay for the $4 billion project, Nicole Gelinas and I write in a New York Post op-ed today. Read More

The Empire State’s bumpy highway ride

New York spent 2.6 times the national per-mile average on state highways — but had some of the worst road conditions in the country in the most recent year for which comparable federal data have been analyzed in the Reason Foundation’s 20th Annual Report on the Performance of State Highway Systems. Read More

The MTA tax ruling: calling the GOP’s bluff?

Republican pols in New York’s downstate suburbs loudly celebrated last week’scourt ruling tossing out a payroll tax enacted by the Legislature in 2009 to subsidize mass transit in the 12-county Metropolitan Transportation Authority (MTA) region. 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
Fax: 518-434-3130
E-Mail: info@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.