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August 15, 2012

 

DiNapoli: Thruway Toll Hike Should Be Last Resort

Authority Should Look to Cut Costs, Examine Other Options

The New York State Thruway Authority should explore all other options to increase revenue and cut costs before going ahead with a 45 percent average toll increase on some commercial vehicles that could impact the state’s economic recovery, State Comptroller Thomas P. DiNapoli said today.

DiNapoli released an analysis showing the Thruway Authority has increased operating costs by 36 percent over the past ten years, but revenues have not kept pace. Debt service payments have nearly doubled to $181.9 million over the same time frame, necessitating increased revenue, while the authority has failed to publicly prioritize its capital projects. DiNapoli also called for an independent review of the Canal System to identify savings and alternative revenue sources, and create a plan to make it a more viable part of the upstate New York economy.

“Imposing a large toll increase could have damaging effects on consumers and businesses at a time when many New Yorkers are struggling to recover from the recession,” DiNapoli said. “Too often in the past the Thruway has pushed costs and difficult decisions to the future by raising tolls or borrowing. The Thruway’s fiscal condition has deteriorated, but a new leadership team has begun to make changes. For years the authority has failed to make the improvements recommended by my office and independent consultants. The Thruway should do more before relying on yet another toll hike to make ends meet.”

In late May, the Thruway Authority announced a planned 45 percent average toll increase for larger commercial vehicles. The increase, slated to take effect Sept. 30, comes after toll hikes for all vehicles in 2005, 2008, 2009 and 2010. A recent consultant report, commissioned by the authority, suggested that “further actions” may be needed by 2015 – raising the prospect of another toll increase, unrelated to the Tappan Zee Bridge, in a few years.

DiNapoli’s report found that from 2002 through 2011, Thruway-generated revenues grew by 4 percent on average annually, while expenses grew by 5 percent on average. In 2011, Thruway-generated revenue fell by 1 percent while expenses rose 7 percent. Over the past ten years, annual Thruway Authority operations spending has grown 35.8 percent, increasing from $310.3 million in 2002 to $421.3 million in 2011. The authority has consistently overestimated traffic levels, including in 2011 when actual usage was 12 percent below projections.

The authority expects its debt service costs to climb to $312.4 million by 2016, a 72 percent increase from current figures. That estimate does not include the costs associated with the planned replacement of the existing Tappan Zee Bridge.

Additionally, the Thruway has spent more than $1.1 billion since 1992 to support the Canal System. Thruway Authority estimates indicate that it will cost another $436.5 million to operate and repair the canals between 2013 and 2016. This drain of resources has contributed to the deterioration of the Authority's financial condition over the past decade. And despite major investments and new amenities, boating activity on the Canal System is down by nearly one-third since the Thruway Authority assumed control.

The report suggests the Thruway Authority:

  • Identify options for operational cost savings, including recommendations by the Office of the State Comptroller, such as improving collection of E-Z Pass tolls, seeking other revenue gains from existing sources, and enhancing financial controls to minimize cost overruns on construction and maintenance projects;
  • Examine the SAGE Commission’s findings regarding potential savings from consolidation of certain functions with other transportation agencies;
  • Establish a prioritized plan for capital improvements, aligned with the authority’s financial resources and the infrastructure goals of the state as a whole, to provide the public and elected officials an opportunity to address the comparative importance of competing projects;
  • Commission an independent analysis of the Canal System to examine ways to streamline operations, seek new funding streams, and develop a realistically attainable vision for its future role in the upstate economy.
  • Analyze past and present traffic estimates to identify sources of erroneous projections that have led to revenue shortfalls and, if necessary, to fine-tune projections for the next few years.
  • Report traffic and revenue levels quarterly, and issue financial and management updates periodically throughout the year, to enhance public confidence in the operational streamlining and other improvements that Thruway leaders indicate are now underway.

In recent weeks, a number of New York residents and elected officials have reached out to the Comptroller regarding their concerns on the toll hike.

Auditors from the Office of the State Comptroller recently examined what actions, if any, Thruway Authority officials have taken to implement the recommendations in a 2008 report regarding maximization of E-Z Pass toll collections. They found that the Thruway Authority has made progress in addressing previously identified issues, but that additional improvements are needed. A copy of that audit can be found at: http://www.osc.state.ny.us/audits/allaudits/093012/12f2.pdf

For a copy of the Thruway report released today, visit: http://www.osc.state.ny.us/reports/thruway_policy_08142012.pdf

Deputy Comptroller Robert Ward's Sept. 7 testimony to the Assembly on the Thruway Authority toll hike proposal can be seen here: http://www.osc.state.ny.us/osdc/press/RobertBWard_Thruway_testimony09072012.pdf

Since 2007, DiNapoli’s office has completed 14 audits and follow up reports on the Thruway Authority’s operations. For a list of those audits, visit: http://www.osc.state.ny.us/reports/thruway_fact_sheet.pdf.


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