Last Thursday, the NYS Thruway Authority announced that it will be borrowing $500 million to pay for the initial construction phases of the Tappan Zee Bridge replacement project. Unfortunately, the state still has not outlined a plan to pay back this half a billion dollars in borrowing, or any of the $4 billion it needs to borrow for the project, an issue flagged by the Newsday editorial board today.
The Thruway Authority recently gave itself a little financial wiggle room by offloading state police and other operating costs onto the state, but the authority’s ability to pay for the project remains limited. And without a financial plan, there is no way to know what assumptions about funding have been made and what will happen if those assumptions are wrong. Even New York State Comptroller Thomas DiNapoli, when signing off on the bridge project contract between the state and Tappan Zee Constructors, issued a warning that the project must have a financial plan.
The Thruway Authority has said all along that it anticipates receiving a TIFIA loan to help keep project costs down. But what if the loan amount is less than expected? Or what if it doesn’t come through at all – there are 27 other projects totaling over $35 billion competing with the bridge replacement project for a limited amount of funds. (Note also that TIFIA requirements very explicitly state a financing plan is necessary.) A decrease or absence of TIFIA financing means more money must be borrowed from the private sector, possibly leading to an increase in borrowing costs.
In the face of this uncertainty, the Thruway Authority continues to assert that the money borrowed will be paid back through related toll increases but has not been forthcoming with a proposed toll price. Toll revenue plays a big part in financing the new bridge. Calls against tolls that are too high or for toll discounts, and even for scrapping the toll all together, will ultimately impact the state’s ability to meet the financial obligations of borrowing or put the funding of other transportation projects in jeopardy. The Thruway Authority should not rush to borrow money without a financial plan. At this point, any haste should be focused on meeting the financial obligations of the TIFIA process rather than putting the state into more debt without a plan for how to pay that debt off.