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Exit strategy

Rochester Business Journal
December 21, 2012

The state Thruway Authority's plan to raise truck tolls by 45 percent probably was doomed from the moment officials used "modest" to describe the increase. Yet the proposal--aimed at generating some $90 million a year--lived on for months, until the authority finally took the off-ramp this week.
 
On Monday, the authority unveiled a cost-saving plan to eliminate the need for higher tolls, at least for now. It was lauded by the trucking industry, business groups and Comptroller Thomas DiNapoli, who in August released a critical assessment of the authority. Thruway officials now say they can cut their 2013 operating budget by 21 percent with a workforce reduction, cuts in discretionary spending and operational reforms.
 
This is all good. But let's not be deluded into thinking the new plan remedies problems that have plagued the Thruway Authority for years. For one thing, the proposal arrived with few details. Until those are spelled out, it's hard to make a full assessment.
 
It's worth noting, however, that the plan does not seem to address two of the biggest cost drivers: debt service and the state canal system. The Thruway Authority has relied heavily on borrowing to finance its capital needs, and annual debt service payments have been rising steadily. By 2016, they will consume 25 percent of the authority's annual spending.
 
The state Canal Corp., meanwhile, is projected to grow to nearly 10 percent of Thruway expenses by 2016. Since taking over the canal system in 1992, the authority has spent more than $1.1 billion on canal operations.
 
And let's be clear on another point: A sizable portion of the annual savings identified in the new Thruway plan, some $60 million, comes from moving annual reimbursements for State Police expenses to the state's general fund budget. This is cost shifting, not a real saving.
 
Clearly, the Thruway Authority needs structural reforms that go well beyond the savings sketched out Monday. Assembly Minority Leader Brian Kolb's Thruway Authority Accountability Act contains several ideas worth considering, starting with merging the authority into the state Department of Transportation.

Determining the way forward might take some time, but there should be no doubt that the authority's cost-saving plan is only the first step.

12/21/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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