Delay on toll hike for trucks may hinder Tappan Zee funding
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A marathon battle over a proposed 45 percent toll hike for long-haul truck drivers as the New York State Thruway Authority threatens to hamper the state's efforts to secure a critical low-interest federal loan for the construction of a new Tappan Zee Bridge.
Transportation groups insist that if the Thruway Authority doesn't come up with a toll plan soon, the loan may be at risk.
"If the authority cannot show it can fund its existing capital programs, that puts it at a disadvantage," said Veronica Vanterpool, the executive director of the Tri-State Transportation Campaign.
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Before the U.S. Department of Transportation grants the loan, it will want to know that the Thruway Authority is a good credit risk, experts say. That's where the proposed toll hike comes in. Thruway officials say it would generate $90 million in badly needed revenue annually, strengthening the authority's financial outlook and shoring up its credit rating.
Financial analysts at Standard & Poor's, a key source of ratings on credit and bonds, gave the Thruway Authority's credit rating a negative outlook in June. They now say they need to see the Thruway Authority's next move before deciding whether to adjust the outlook.
"We are waiting to get more clarity on how they are going to proceed," said Joseph Pezzimenti, a credit analyst who covers the authority for Standard & Poor's.
"From our standpoint, we feel they need some sort of rate adjustment near-term," Pezzimenti added, referring to toll rates. "And then, longer term we need to get a better idea of what their plan is in terms of the replacement of the Tappan Zee Bridge and other capital needs in the system."
The Thruway Authority is seeking at least $1.5 billion in federal loans to build a replacement for the existing Tappan Zee bridge. The rest of the money needed for construction will come from the sale of Thruway Authority-backed bonds. The Thruway Authority intends to retire the bonds and to repay the federal loans with revenue from tolls.
Initial estimates put the new bridge's price tag above $5 billion. But last week, a panel of design and engineering experts selected as its preference the lowest bidder among three construction consortiums competing to build the bridge. The low bid came in at $3.1 billion, nearly $1 billion less than the next-lowest bid.
The Thruway Authority will vote on whether to accept the panel's choice Dec. 17.
Still undecided is whether the board will take up the issue of the toll hike at the same meeting. The proposal under consideration would increase from $88 to $127 the amount that a three-axle truck would pay to travel the Thruway from Buffalo to New York City.
The Thruway Authority twice has called off a vote on the hike, in the face of stiff opposition from upstate Republicans who have come to the defense of the trucking groups.
"The rogue Thruway Authority arrogantly refuses to be accountable to the people that fund that authority, the taxpayers," Assemb. James Tedisco (R-Glenville) said in November.
State Comptroller Thomas DiNapoli has weighed in as well, saying the state should be finding other ways to increase revenue, not hitting companies that are critical to the state's economy.
"It should only be the last resort, and I think there's more creativity that can be brought to the process," Cuomo said.
Cuomo has acknowledged the delicate balance the state agency is trying to achieve.
"It's a tough situation for the Thruway Authority," Cuomo said at a news conference last week. "Their position is that they need additional revenues. They're under pressure from the bond underwriters, and their bond rating is very important to this state. It's important to the Tappan Zee project. It's important to every citizen in this state. They need to make ends meet. The obvious and easy way is always a toll increase."
Pezzimenti said the proposed toll hike is not the only factor that will go into Standard & Poor's decision on the agency's financial outlook. The agency's cost-cutting measures as well as financial planning for other capital programs also will be considered, he said.
"It's definitely a component," Pezzimenti said of the toll hike. "But it's really a combination of things that we're looking to get more clarity on."
Despite the negative financial outlook, S&P kept the authority's A-plus bond rating intact in June. The bond rating is a gauge of present creditworthiness. The outlook gauges the likelihood of future developments.
Thruway Authority Executive Director Tom Madison is pushing through cost-cutting measures as well. Madison talks about some $300 million in cuts to capital construction programs and an additional $25 million in cuts to operations in 2012. He said the agency is on course to cut an additional $100 million next year.
"We're streamlining the way work gets done and trying to get our house in order internally," Madison said at a recent news conference. "We're exploring every possible alternative to the commercial (truck) adjustment that has been widely publicized."
Trucking industry advocates accuse the agency of using them as pawns as the state tries to show the federal government that the Thruway Authority is financially sound.
Kendra Adams, the executive director of the New York State Motor Truck Association, said the state's claim that the revenue from the truck toll increase will not be used to support the Tappan Zee Bridge is untrue.
"The immediate influx of cash from the 45 percent increase is needed to back the bonds," Adams said. "If the Tappan Zee Bridge wasn't being fast-tracked, it is highly unlikely that the trucking industry would be facing a 45 percent toll increase with little to no time to prepare for that increase."