For Immediate Release: January 27, 2008, 1:20 p.m.

Statement from the New York State Thruway Authority's Executive Director Michael R. Fleischer Regarding Comptroller Audit

The Comptroller’s Audit Report specifically stated that the Authority's cost containment efforts “may be the most the Authority can reasonably be expected to achieve,” confirmed the Authority’s revenue estimates, and indicated a toll increase is, in fact, necessary to preserve the Thruway’s roads and bridges, and maintain high levels of safety and service for Thruway motorists. 

While the Comptroller has conceded that “the funding demands of the capital plan are the main reason for the projected cash shortfalls,” contrary to the stated objectives of the Comptroller’s Audit Report, the Audit Report does not refute the overall need for a toll increase. In fact, the total impact of all of the recommendations contained in the Audit Report does not even come close to providing the necessary revenue required to preserve the Thruway’s roads and bridges, and maintain high levels of safety and service for Thruway motorists. 

Operating under Board-imposed cost containment measures, the Authority has already eliminated more than 450 positions since 1995 and plans to eliminate at least another 50 positions by the end of 2012.  Further, the Authority's overall operating expense budget is expected to grow 3.2 percent annually between 2008 and 2012, significantly less than the 5.0 percent growth rate included in the proposed 2008-09 New York State Operating Funds Budget.  In addition, the Authority has already cut more than $300 million of projects from its $2.1 billion Multi-Year Highway and Bridge Capital Program (Capital Program) due to inflationary costs.

The Authority will continue to evaluate its own operating costs; however, as the Audit Report stated, the Authority has been given “additional areas of responsibility that went beyond its original mission of constructing, operating and maintaining the Thruway,” spending more than $1 billion since the early 1990s.  The Audit Report further points out that “it is not within the Authority’s power to change the law giving it responsibility for the Canal System.”   Until the Authority’s financial obligations for the Canal System are removed, the Authority must continue to rely upon Thruway tolls to invest in and maintain the Canal System.

As the public process continues, the Authority will continue to seek public input and will consider the recommendations in the Audit Report before any final decisions are made. 

The Audit Report confirmed that:

• obligations for non-Thruway related projects since 1991 climbed to over $1 billion in 2007 and that these obligations are statutorily mandated and  outside of the control of the Authority. These mandatory projects include the New York State Canal System, I-84, I-287 and various economic development projects (such as the Buffalo and Syracuse Inner Harbors and the Stewart Airport access project). The Audit Report further stated that if the Authority did not carry these obligations, that its "financial condition would be stronger";
• the Authority's $2.1 billion Capital Program contains projects that are "useful and beneficial" and that the "projects' cost estimates are supported by the appropriate documentation and appear to be reasonable";
• funding demands of the Capital Program "are the main reason for the projected cash shortfalls";
• revenues projected by the Authority's traffic engineer "for the five-year period appear to be reasonable";
• reserve balances "are appropriate and the Authority has appropriately factored available reserve balances into its capital project financing plans";
• the Authority "receives relatively small amounts of Federal and State and local funding";
• cost containment efforts already in place “may be the most the Authority can reasonably be expected to achieve"; and
• the Authority’s financial projections “enabled the Authority to meet the two financing goals established by the Board of Directors”.

As noted in the Authority's response to the OSC, statements contained within the Audit Report which question the overall need for a toll adjustment were simply not substantiated by the facts or the Audit Report's findings.

The principal recommendations made in the Audit Report to which the Authority takes issue include the following:

• The Authority include higher estimates of future Federal aid in its Multi-Year Financial Plan.
  
  New York State receives a defined amount of Federal aid for its Transportation Infrastructure Capital Program.  Any further Federal aid allocated to the Authority would be at the expense of the State and local Capital Programs.
  
  Similar to its responsibility to operate and maintain the Canal System and I-287, the Authority has no unilateral control over whether or how much Federal aid it receives. Further, there are no agreements or commitments in place that would allow the Authority to receive additional Federal aid, and any such aid delivered to the Authority would be at the expense of the State or local highway and bridge projects.
  
  
• "Non-essential" projects, as identified by the Comptroller, should be deferred, including highway-speed E-ZPass, truck parking improvements, Intelligent Transportation Systems (ITS) and public outreach funds for the Tappan Zee Bridge.
  
  Most of the projects recommended for deferral by the Comptroller include projects that have clear safety benefits, reduce congestion and address environmental concerns, and the Audit Report recognizes that the projects themselves are useful and beneficial.
  
  In fact, more than $85 million of the $159 million in projects recommended for deferral in the Comptroller’s list are directly related to conversion of mixed mode mainline toll barriers to highway-speed E-ZPass, with physical separation of electronic (non-stop) and cash (stop) customers. These projects are consistent with the findings in a 2006 report by the National Transportation Safety Board, that such projects increase safety in toll plazas by limiting vehicle merging, weaving, queuing and differential speeds at these locations.
  
  The Comptroller also recommended eliminating the remaining funding that is critical to complete the direct connection between I-84 and I-87 at Interchange 17, and funding for a project to keep the public informed about decisions relating to the replacement of the Tappan Zee Bridge.
  
  
• A "top-to-bottom" review of Authority operations be undertaken to find additional savings, despite low budget growth of 3.2 percent annually over the next four years.
  
  The Audit Report stated that cost containment efforts already implemented at the Authority “may be the most the Authority can reasonably be expected to achieve.” In fact, the Authority's overall operating expense budget is expected to grow significantly less than the 5.0 percent growth rate included in the proposed 2008-09 New York State Operating Funds Budget. While the Audit Report recognized that the Authority's operational growth is held to this low level, it did not recognize how this was achieved; namely, through the continuous and thorough reviews that are being performed by the Authority as part of its intensive budget and financial monitoring processes.
  
  The Audit Report also did not characterize the magnitude of operating reductions that would have to be made and the impact those cuts would have on service levels in order to materially alter the proposed toll adjustment.  However, the Authority’s response to the OSC made clear that a $1.0 billion reduction in the Capital Program would be required (canceling all remaining capital projects from now until the end of 2011) or more than 1,000 employees would have to be laid off in order to avoid a toll adjustment.

If the Authority agreed with (which it does not) and accepted all the recommendations, including the Comptroller’s proposed cuts to the Capital Program, the Authority estimates the cumulative impact through 2012 to be an additional $70 million in revenue, far short of the $520 million needed to deliver the Authority's $2.1 billion commitment to public safety, further demonstrating the Authority's need to increase tolls.

The Authority's proposal will be subject to a series of public hearings, with no final action taken until later this spring. Through the public process and consideration of the Audit Report's recommendations, the toll adjustment, as currently proposed, may be modified. The Authority appreciates the professionalism and expediency with which the Comptroller's staff performed the audit.

Authority's comments to the Comptroller's Audit (PDF, 20 pages/1.32 Mb)

-30-

Return to Thruway Press Releases