Submitted to:

New York State Thruway Authority

Cover image area approx. 9 1/8 x 3 3/8

New York State Thruway Financial Requirements and Proposed Toll Adjustments 2012-2016

May 2012

Submitted by:
Jacobs Engineering Group Inc. 2 Penn Plaza, Suite 603 New York, NY 10121

Two Penn Plaza, Suite 0603 New York, New York, 10121

May2012 Mr.ThomasJ.Madison,Jr. ExecutiveDirector NewYorkStateThruwayAuthority 200SouthernBoulevard Albany,NY,12209 DearMr.Madison: ThisreportsservestorespondtotherequirementscontainedinSection2804ofthePublic AuthoritiesLawandalsotherequirementsoftheGeneralRevenueBondResolution,Section 609(1)(b)withrespecttotheNewYorkStateThruwayAuthority(Authority). Section 2804 specifies that public authorities should provide, prior to the consideration of any future increase in tolls or fees for any highway, bridge or tunnel in New York State, a detailedreportoftheneedandtheimplicationofsuchchangeintollsorfees.Thereport specifically responds to paragraphs a) the need for such an increase, b) the Authoritys revenues and expenses during the prior three fiscal years, e) future Authority operations, debt service and capital construction together with estimated future receipts and expendituresforthenextfivefiscalyears,andf)projectionsandestimatesastotheeffect theproposedincreasesonfutureusesofthefacilitiesandfuturerevenueswhichwillaccrue as a result of the proposed increase. The Authority has provided their 2011 independent auditthatrespondstoparagraphsc)itsassetsandliabilitiesattheendofthelastfiscalyear andd)ascheduleofbondsandnotesoutstandingattheendofitsfiscalyear. Section 609 (1)(b) of the General Revenue Bond Resolution requires that an Independent Consultant review the schedule of tolls, fees and charges to insure that they provide sufficient Net Revenues to comply with that sections revenue covenant. Satisfaction of those requirements of the revenue covenant will allow the Authority to meet its fiduciary obligations including those under Section 608 to operate the Thruway in a sound and economical manner and to maintain, preserve and reconstruct the Thruway in a state of goodrepair. As the Thruway prepares to enter its seventh decade of operation, the need for reconstructionandrehabilitationoftheaginginfrastructurecontinuestorequirehighlevels ofinvestment.Atthesametime,travelersontheroadwayareexperiencingdelaysresulting from congested traffic volumes. To continue to keep the infrastructure in acceptable condition and to provide the needed operational and service improvements the Authority

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developedandisimplementingaCapitalProgramfortheperiod2012to2015exclusiveof theinvestmentthatwillbemadeforthenewTappanZeeBridgeprogram. ThisreportprovidesabaselineofprojectionofrevenuesandexpensesfortheAuthority,as wellasdebtserviceandotherfundsthrough2016,assumingacontinuationofthepresent toll schedule and full implementation of the Capital Program for the period from 2012 through 2015. In this baseline case, operational deficits and very low PayAsYouGo financinglevelsareanticipatedbeginningin2013oftheMultiYearFinancialPlan.However, of particular concern, debt service coverage ratios (the ratio of Net Revenues to Debt Service)beginninginthefirstyear(2012)oftheforecastisbellowlimitsestablishedinthe Authoritys Boardadopted Fiscal Management Guidelines and the requirements of the GeneralRevenueBondResolutionarenotmetinthesecondyear(2013)oftheforecast. Accordingly,Jacobshasbeenretainedto,inconsultationwiththeAuthority,recommenda schedule of toll rates that will complement their cost containment and operational streamliningeffortstoallowtheAuthoritytosustainhealthyfinancialmetricsthroughthe endof2013andprovideafoundationforthefuturedevelopmentandimplementationofa financing plan for the Tappan Zee Bridge Project. It is important to understand that the currentdesignbuildprocurementprocessforthereplacementoftheTappanZeeBridgeis underwayandamorecompletepictureofthecostofthenewTappanZeeBridge,andany potential Federal aid for this important project or other capital purposes, will not be availableuntillaterthisyear.Atthattime,theAuthorityintendsonadvancingalongterm plantofinancetheconstructionofthenewTappanZeeBridgeandallowtheAuthorityto meetitsotherfuturecapital,operational,andmaintenanceneeds. Theproposedtollschedulewouldincrease,onaverage,commercialtollratesforallclasses, except2H,by45%.Wehaveestimatedtheeffectsoftheseproposedtolladjustmentson traffic,bothintermsofthepotentiallossofftrafficandshiftsoftraffic.Inouropinion,if implementedinfull,thetolladjustmentswillresultsinsmallchangestotrafficpatternsand provideadequaterevenuestofund,toareasonablelevel,thePayAsYouGoportionofthe capitalprogram,topayforthenecessarymaintenanceandoperatingexpenses,tomaintain thenecessarylevelsofcoverageontherevenuebonddebtservice,tomeetthecovenantsof theoftheGeneralRevenueBondResolutionandtherequirementsoftheAuthoritysFiscal Management Guidelines for the forecast period through the end of 2015. Specifically, we concur with the Authority, that the proposed toll adjustments analyzed in this report will comply with the covenant set forth in Section 609(1)(b) of the General Revenue Bond Resolution for the duration of the MultiYear Capital Program through 2015. It will also allow the Authority to comply with the operating and maintenance covenants of the ThruwaysetforthinSection608ofthegeneralRevenueBondResolution. With the recommended toll adjustments and planned operational efficiencies and streamlining,theAuthoritysCapitalProgramexclusiveofthenewTappanZeeBridgeProject can be fully implemented providing for the needed reconstruction and assuring the

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maintenanceofthecurrentconditionofthehighwaysandbridges.Asaresultwebelieve the Authority will continue to be able to provide good service to its customers and will continue to fulfill its critical role in supporting the States economy through the forecast period. It is anticipated that further actions may be taken to address the financing of the new Tappan Zee Bridge and may also be required during the final year of the 20122015 MultiYearCapitalprogramwhenthedebtservicecoverageratiosfallbelowtheAuthority BoardsadoptedFiscalManagementGuidelines. Wewouldliketothanktheauthoritystaffforalloftheirassistanceinthepreparationofthis report.

Sincerely,

RichardJ.Gobeille,P.E. NationalToll/FinanceUnitManager JacobsCivilConsultants,Inc.

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TableofContents
I. II. Introduction........................................................................................................................................I1 TheNewYorkStateThruway&CanalSystem...................................................................................II1 A. TheThruwaySystem......................................................................................................................II1 1. 2. 3. 4. 5. Roadways...................................................................................................................................II2 Bridges........................................................................................................................................II3 ServiceAreas..............................................................................................................................II4 Safety,IncidentResponseandTravelerInformationSystems..................................................II4 AnnualRoutineMaintenanceActivities ....................................................................................II5 .

B. MandatedAdditionstotheAuthority...........................................................................................II5 C. TheNewYorkStateCanalSystem.................................................................................................II6 III. HistoricalReviewoftheAuthoritysFinances..............................................................................III1

A. OperatingandMaintenanceExpenses.........................................................................................III1 B. CapitalExpenditures.....................................................................................................................III2 C. DebtServiceExpenses..................................................................................................................III5 D. Revenues.......................................................................................................................................III5 1. 2. E. IV. TrafficandTollRevenues..........................................................................................................III5 OtherRevenues........................................................................................................................III7 HistoricalFlowofFundsAnalysis..................................................................................................III8 SpecialReportsandAnalysis........................................................................................................IV1

A. TheImpactofInfrequentTollAdjustmentsonAuthorityFinances............................................IV1 B. TheEconomicImpactoftheAuthoritysCapital,OperatingandMaintenanceActivitiesonthe NewYorkStateEconomy.....................................................................................................................IV2 C. ThruwayTripsandCustomers.....................................................................................................IV3 V. 20122015MultiYearCapitalProgram............................................................................................V1 A. ProgramDetails ............................................................................................................................V1 . B. TheNewTappanZeeBridgeProject.............................................................................................V2 C. PlannedCapitalProgramExpenditures........................................................................................V3 D. TheImpactofthe20122015CapitalProgramonConditions.....................................................V4 VI. ExpensesandRevenueswiththeCurrentTollSchedule.............................................................VI1

A. ProjectedOperatingandMaintenanceExpenses .......................................................................VI1 .

B. Projected(NonTappanZee)DebtServiceExpenses...................................................................VI1 C. ProjectedTollandOtherRevenues.............................................................................................VI2 D. TotalSourcesandUses................................................................................................................VI3 E. VII. FlowofFundsAnalysiswithCurrentTollSchedule.....................................................................VI5 ProposedModificationstoCurrentTollRatesandtheImpacttotheAuthoritysFinancials....VII1

A. CurrentTollRates.......................................................................................................................VII1 B. RecommendedIncreasetoCommercialTolls............................................................................VII1 C. TollandOtherRevenues.............................................................................................................VII5 D. FundingRequirementandSources.............................................................................................VII8 VIII. SUMMARYOFFINDINGS............................................................................................................VIII1

TableofAppendices
AppendixAHypotheticalTollAnalysis AppendixBEconomicImpactoftheThruwayAuthorityInvestmentsandOperations

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I.

Introduction

Sinceitsopeningmorethan55yearsago,theNewYorkStateThruway(Thruway)hasservedasthe centralarteryoftheStatestransportationsystem,providingavitallinkbetweenitsmajorcitiesfrom theAtlanticOceantoCanadaandtheGreatLakes.Overtheyears,theThruwayAuthority(Authority) has taken actions that have allowed for safe and efficient travel for millions of passenger and commercialcustomers. The Thruway serves travelers with a variety of needs and purposes, including commuters, business travelers, recreational travelers, and commercial vehicle traffic. The Thruway has provided a dependableroadwaysystemforthesetravelers,sustainingandencouragingeconomicgrowth,fostering job creation and generating tax revenues to the State and its local governments. Underscoring its importance to the state, region and nation, in 2011 Thruway customers traveled approximately 8.1 billionvehiclemilesonthehighway,averagingalmost22.1millionvehiclemilesperday. Significant capitalimprovementsandmaintenanceworkisundertakeneachyeartokeep itshighways andbridgesinastateofgoodrepair,ensuringsafeandefficienttravelfortheheavytrafficdemandsof todays world. In addition to ongoing capital and maintenance tasks, the Thruway is also continually evolvingtobetterserveitspatrons,improvingcustomerservicewithadvancesintechnologyandadding new capacity to highways and bridges in the corridors with high travel demand. Furthermore, the ThruwayhastheresponsibilityofmaintainingthereliabilityofthehistoricCanalSystem,ensuringthatit remains a viable waterway for boating, shipping and recreation and an important component of New YorkStateseconomy. Overthelastseveralyears,theAuthorityhasfacedsubstantialchallengesthathavestraineditsabilityto maintainitsfinancialstrengthwhilefinancingthecapitalneedsoftheagingThruwayandCanalSystems. Principalamongthesechallenges,theAuthorityhadtomanagebudgetswithhistoricdeclinesintraffic and toll revenues resulting from high and volatile fuel prices, a deep and lengthy national and state recessionandaslowandprotractedrecoveryperiod.Asexperiencedbyothertollfacilitiesacrossthe nation,thenumberof tripsandthelengthoftrips taken byThruwaypatronshavemarkedlydeclined overthepastfouryearsandtrafficisnotexpectedtoreachprerecessionlevelsformanyyearstocome. In addition, the prevalence of high fuel and construction commodity prices has placed enormous pressure on the Authoritys operating budgets and capital programs, as have considerable declines in Federalaidallocatedtosupportitsgrowinginfrastructureandserviceneeds. During these times of financial stress, the Authority downsized and reconfigured its capital program, implementedoperationalcostcontrolsandissuedshorttermnotestobridgecapitalfundinggaps.Itis important to note that prior toll adjustments were originally designed to only provide sufficient revenues to finance the recently completed 20052011 Capital Program. As a result, in order for the Authoritytosuccessfullymeetitsfuturegrowingcapitalneeds,refinanceoutstandingshorttermdebt andprovidereliableservicetoitspatrons,additionalrevenuesareneededatthistimetocomplement enhancedoperationalstreamliningefforts.

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It is only with these additional revenue actions that the Authority will be able to refinance its outstanding shortterm debt,continuetomaintain itshighway,bridgeand canalsystemsinastateof good repair, fulfill its critical role in supporting the States recovering economy and meet bondholder covenantsestablishedunderitsGeneralRevenueBondResolution(BondResolution). Accordingly,inaccordancewithSection609(1)(b)oftheBondResolution,Jacobshasbeenretainedto produce this study and recommend a schedule of toll rates that will allow the Authority to sustain healthyfinancialmetricsthroughtheendof2013,providingafoundationforthefuturedevelopmentof a financing plan for the Tappan Zee Bridge Project. It is important to understand that the current designbuild procurement process for the replacement of the Tappan Zee Bridge is underway and a better understanding of the cost of the new Tappan Zee Bridge and any potential Federal aid or financingassistanceforthisimportantprojectorothercapitalpurposes,willnotbeavailableuntillater thisyear.Atthattime,theAuthorityintendstoadvancealongtermplantofinancetheconstructionof the new replacement Tappan Zee Bridge and allow the Authority to meet its other future capital, operational,andmaintenanceneeds. Based on this strategy, Jacobs recommends that the Authority complement its planned operational streamlining programwitha45 percentadjustmentto commercialtollratesin2012.However,inan efforttolessentheimpactonlocalbusinessesthatrelyontheThruwaySystem,thisrecommendedtoll adjustment would exclude commercial vehicle with twoaxles and over seven feet six inches in height (2H). The impact of the streamlining program and the recommended toll action on the Authoritys revenuesandlongtermfinancialplanisdescribedinmoredetailherein.

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II.

TheNewYorkStateThruway&CanalSystem
A. TheThruwaySystem

ThefollowingsectionsprovideanoverviewoftheThruwaySystemandtheAuthoritysresponsibilities.

At570milesinlength,theNewYorkStateThruwayisoneofthelargesttolledhighwaysystemsinthe UnitedStatesandisacriticalcomponentinthenationalinterstatenetwork.TheThruwayconnectsthe principal cities of the State from New York City to Albany, and on to Utica, Syracuse and Rochester throughtoBuffaloandthePennsylvaniaStateLine.TheThruwaycorridorserves37oftheStates62 counties and the majority of the States population. Approximately 245.2 million toll transactions occurredontheThruwayin2011,generatingabout$634.1millionintollrevenues. The Thruway is an important interstate connector, joining with the Massachusetts Turnpike (I90), Connecticut Turnpike (I95), New Jerseys Garden State Parkway, as well as several other Interstate routessuchasI287fromNewJersey;I90inPennsylvania;I290aroundthenorthsideofBuffalo;I390 andI490servingRochester;I81,I481andI690atSyracuse;I790inUtica;I87(theNorthway),I88,I 90,I787,andI890atAlbany;andI84atNewburgh.Italsomakesdirectconnectionswithnumerous majorStatehighways. The Thruway is comprised of two types of toll systems a controlled (ticket) system and a barrier system.Thecontrolledsystem(approximately481miles)makesupthelargestportionoftheThruway, runningfromWoodbury(inthesoutheastcorneroftheState)northalongI87toAlbany,thenweston I90toBuffaloandsouthofLakeErietothePennsylvaniaborder.Inadditiontothismainstretchofthe controlled system, there is a small branch south and east of Albany providing a connection to the MassachusettsborderandtheI90MassachusettsTurnpike. On the controlled system, tolls are charged based on the actual distance traveled by the customer. Meanwhile,barriertollplazashaveafixedtollrateforeachvehicleclassandpaymenttype(e.g.,Cash, EZPass, as well as Commuter and other EZPass Discounts). The barrier systems (one located in the southeastcorneroftheStateandtheotherlocatedinthenorthwestcorneroftheState)arecomprised oftheTappanZeeBridge,YonkersBarrier,NewRochelleBarrier,SpringValleyBarrier,HarrimanBarrier andtheGrandIslandBridges.Undertheexistingpolicy,tollratesacrossthesystemarebasedonthe vehicleclassification,relatedtothenumberofaxlespervehicleandtheheightofthevehicleoverthe firsttwoaxles. ItisimportanttonotethatthereareportionsoftheroadwaysundertheThruwayjurisdictionthatare currently tollfree. These include a ninemile section in the Buffalo area between the controlled sections; I190 between Buffalo and Grand Island; I90 between Albany (Interchange 24) and I88 (Interchange 25A); and the Cross Westchester Expressway (I287). In addition, there are stretches of roadwayonthesectionswithfixedtollbarrierswhereshorttripscanbemadewithoutpassingthrough atollbarrier.

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FigureII1:NewYorkStateThruwayTollSystems

1. Roadways Theoriginal2,800lanemileThruwayroadwaysystemwasconstructedbetween1949and1960andis one of the oldest components of the national Interstate Highway System. In 1991, State legislation made the Authority additionally responsible for the operation and maintenance of 11 miles of I287 CrossWestchesterExpressway.TheNewYorkStateDepartmentofTransportation(NYSDOT)remains responsibleforcapitalimprovementstothisroadway.TheThruwaySystemisnowover570totalmiles inlengthandincludes134interchanges.Thevarioussectionsofroadwaycurrently maintainedbythe AuthorityarelistedinTableII1. Thruway pavements are typically nine inches of reinforced Portland cement concrete placed on 12 inchesofgranularsubbase.Shouldersaremadeupoftreatedgranularmaterialwithasphalticwearing surface. A large portion of the roadways base dates back to its original construction, highlighting the needforheavymaintenance,reconstructionandrehabilitationactivitiestoretaintheridingsurfaceina stateofgoodrepair.

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TableII1:TheThruwaySystem

Section TheMainline(NewYorkCityBuffalo) ErieSection(BuffaloPennsylvaniaLine) NiagaraSectionI190(BuffaloNiagaraFalls) BerkshireSection(SelkirkMassachusettsLine) NewEnglandSection(I95)(BronxConnecticutLine) GardenStateParkwayConnection(SpringValley NewJersey) CrossWestchesterExpressway(I287)(MainlineI87 inTarrytownI95inRye) Total

Controlled Section x x x

Barrier Section x x x

Length(inMiles) 426 70 21 24 15 3 11 570

2. Bridges TheAuthorityhasmaintenanceresponsibilityfor811bridgesthatcarrylocalroadsandstatehighways over the Thruway System. The structural characteristics of these bridges vary: about 15 percent are concrete structures, either prestressed girder, arch, rigid frame or box culverts. The remaining 85 percentofthebridgesaresteelstructureswithasphaltoverlaid,reinforcedconcretedecks.Aswiththe roadway,anoverwhelmingmajorityofthestructuresdatebacktotheoriginalopeningoftheThruway System in the 1950s and require continual and significant repair, rehabilitation and reconstruction investmentstopreventdeterioratingconditions. By far, the largest bridge on the Thruway System is the Tappan Zee Bridge over the Hudson River, locatedapproximately20milesnorthofNewYorkCity.TheTappanZeeBridgewasopenedtotrafficin 1956andisathreemilelongmultispansteeltruss,decktrussandgirdertypestructure.Duetoitssize and importance, a permanent Authority maintenance team is assigned to the Tappan Zee Bridge. The Tappan Zee Bridge routinely experiences peak hour traffic volumes that are 40 percent higher than normal operational volumes and to increase the Bridges oneway traffic capacity, a movable barrier providesforthereversalofoneoftheseventrafficlanestohelpaccommodatedirectionalpeaktraffic volumes. As described in more detail later in this report, the Tappan Zee Bridge is scheduled to be replacedinthenearfuture. Besides the Tappan Zee Bridge, the Thruway consists of seven other major bridge structures. These include the CastletononHudson Bridge across the Hudson River on the Berkshire Section; the four Grand Island Bridges spanning branches of the Niagara River north of Buffalo; the mile long Niagara Viaduct,andtheByramRiverBridgeontheNewEnglandSection.

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3. ServiceAreas TheAuthorityowns27travelplazaslocatedatintervalsalongtheThruwaySystem,operatedbythree foodserviceconcessionaires:HMSHostFamilyRestaurants,Inc.(12plazas),McDonaldsCorporation(11 plazas)andDelawareNorthCompaniesTravelHospitalityServices,Inc.(4plazas);andtwofuelservice operators:LehighGasCorporation(12plazas)andSunoco,Inc.(R&M)(15plazas). Toprovidemaximumcustomerservice,allfoodandfuelcentersareopen24hoursdaily,7daysaweek and offer parking, fuel, public restrooms (including family assist restrooms equipped for persons with disabilities),ATMs,andfreeWirelessInternetService.Thereisalsoabrandnamefoodvendorateach travelplazaopentothepublic24hoursaday,7daysaweek.Further,manytravelplazashaveseasonal farmmarkets,giftshops,faxmachines,sellEZPassOntheGo(retailEZPasstransponders)andstaffa numberofTouristInformationCenters. The Authority and its concessionaires continue to make various improvements at the travel plazas, including updating food concepts and the overall appearance of the interiors and exteriors of the buildings,gasstationrenovations,addingtruckersloungesandincreasedtractortrailerparking. 4. Safety,IncidentResponseandTravelerInformationSystems The Thruway Statewide Operations Center (TSOC), housed at the Authority's Administrative Headquarters in Albany, is the central location for the coordination of all traffic incident response, emergency management, and dissemination of traveler information along the entire Thruway. The TSOC operates 24 hours a day, 7 days a week, 365 days a year. The Authority exchanges traffic and Intelligent Transportation Systems (ITS) data with NYSDOT through the Regional Traffic Operation Centers,providingthepublicwithaviewoftrafficoperationsacrossNewYorkStatesotheymaymake moreinformedtravelchoices. To increase the functionality of the TSOC, the Authority recently implemented an Advanced Traffic Management System to integrate and control all current and future ITS devices and systems. Such devices include 73 Permanent Variable Message Signs, 154 Closed Circuit Television cameras, 13 HighwayAdvisoryRadiostations,119realtimevehicledetectorsites,and26PortableVariableMessage Signs.TheAuthorityalsooffersanemailalertservice(TRANSalert)toitscustomerstoinformthemof major unscheduled incidents that may affect their travel plans and the Thruway website (www.thruway.ny.gov)offersacentralizedlocationtoaccessamultitudeoftravelerinformation. Finally, a troop of New York State Police (Troop T) is entirely dedicated to policing on the Thruway System.TheprincipalmissionconcernforTroopTistoincreasesafetyontheroadwayandreducefatal and personal injury auto accidents. They address the issue through enforcement and education. Through the years, Troop T has participated in traffic enforcement initiatives directed at drivers who engage in behavior known to cause fatalities or exacerbate the fatality rate: speed, failure to use seatbeltsanddrunkand/ordruggeddriving.However,thegreatestprovenmethodtoreducefatalities isthedaytodayvisibleenforcementoftrafficlawsbythepatroltroopersonthehighway.

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In2011,goodoverallhighwayconditions,traveleraccesstoonlineandradioinformationservices,good incidenceandweatherresponseandtheeffortsofTroopTcontributedtoaverylowfatalityrate.The fatality rate on the Thruway is among the lowest in the nation at 0.44 fatalities per 100 million miles traveled.Thiscomparestoanindexof1.13forthenationalaverageand0.8forallofNewYorkState. 5. AnnualRoutineMaintenanceActivities Overtheyears,theAuthorityhasdevelopedcomprehensiveplansforthemaintenanceofitsfacilities. Formalpavementandbridgemanagementsystemshavebeendevelopedtoaddressmaintenanceissues and provide input into the development of longterm infrastructure management programs. Routine maintenance activities are performed by Authority staff from 21 maintenance locations grouped into fourdivisions. Additionalspecifiedroutinemaintenanceactivitiesareprovidedbythefourdivisionhighwayandbridge maintenanceheadquartersandbythe TappanZee Bridgemaintenance team.Responsibilitiesinclude snow and ice removal, pavement and bridge repair and maintenance, guiderail and safety work, responding to incidents and accident damage, and rightofway maintenance. Additional specialized maintenanceactivitiesareprovidedbythefourcentralizeddivisionmaintenancecrewsandtheTappan ZeeBridgecrews.Maintenanceactivitiesalsoincludeinnovativepreventativemaintenanceoperations topreservethehighwaysystemandminimizeaddedcapitalimprovementcosts. In addition, environmental stewardship has become an important factor in ongoing maintenance decisions.SomeexamplesofwhatisincludedinthesetypesofenhancementsbytheAuthorityarethe useofsolarpoweredITSelements,theplantingoflivingsnowfencing,thepurchaseofflexfuelvehicles and the planned construction of five wind turbines along the Thruway section south of Lake Erie betweenBuffaloandthePennsylvaniaborder,forthegenerationofelectricpowertoprovideheatand lightforThruwayfacilities.

B.

MandatedAdditionstotheAuthority

In addition to the original mandate of the Authority to operate and maintain the controlled ticket, bridgeandbarriersystemsalongtheThruway,theAuthoritywasgivenresponsibilityoverseveralother transportationfacilitiesintheearly1990s,describedbelow: In 1991, the CrossWestchester Expressway (I287), which starts at I87 near Tarrytown and travels east for 11 miles to the Thruways New England Section (I95) in Rye became the Authoritys responsibility for maintenance and operational expenditures only. Capital improvementsremainedtheresponsibilityofNYSDOT. In 1991, the Authority began to operate and maintain I84, a 71mile section of roadway that connectsthePennsylvaniaStateLinetotheConnecticutStateLine.AfterNovember2007,the Authority was fully reimbursed by NYSDOT for all operating and maintenance costs. The PageII5

operationandmaintenanceresponsibilityofI84wastransferredbacktoNYSDOTasofOctober 11,2010. In1992,theNewYorkStateCanalCorporationwasformed,asasubsidiaryoftheAuthority,and the Authority assumed control of the maintenance and operation of the 524mile New York State Canal System. The Authority is also responsible for capital improvements to the Canal System. The Canal System is composed of the Erie, Champlain, Oswego, and CayugaSeneca canals.Since theAuthorityassumedsuchresponsibility,federalfundshaveoffsetaportionof theAuthoritysrelatedcapitalcosts. Financially, both I84 and the Canal System projects have been considered to be Other Authority Projects.Fundsforthe maintenanceandoperationsofthese typesofprojects canonlybe provided through the Other Authority Projects Operating Fund, which are junior to Thruway operations, debt service,andThruwaySystemcapitalresponsibilities.

C.

TheNewYorkStateCanalSystem

Fortwocenturies,theNewYorkStateCanalSystemhasplayedaveryimportantroleinthehistoryand developmentoftheStateandthenation.Theabilitytoefficientlymovepeopleandgoodsacrossthe Stateprovedinstrumentalinthewestwardexpansionofthenation,andthedevelopmentofmajorcities inupstateNewYorkincludingBuffalo,Rochester,SyracuseandAlbany,aswellashundredsofsmaller cities, towns and villages. The construction of the Erie Canal and the subsequent Canal System was primarily responsible for the dominance of New York City as the country's premier shipping port for manyyears. Today,NewYorkStates524mileCanalSystemisaworldclassrecreationwayandtouristdestination thatcultivateshistoricpreservationandspurseconomicdevelopmentinupstateNewYork.TheCanal Systemlinks the Hudson RiverwithLakeChamplain,Lake Ontario,theFingerLakes,the NiagaraRiver andLakeErie,passesthrough25countiesandisincloseproximitytomorethan200villages,hamlets and towns. It is estimated that this extensive waterway network supports nearly $400 million in economicactivitythroughouttheCanalcorridor.Formuchofitslength,itcloselyparallelstheThruway System. The current Canal System, which began construction in 1905, provides extensive intermodal linkages withinandbeyondtheState'sbordersandincludesfourmajorcanals,canalizednaturalwaterways,five lakes, feeder reservoirs and numerous shipping terminals. It consists of 57 locks, 20 lift bridges, 22 reservoirs, 203 buildings, 114 dams and over 1,500 other structures critical to the maintenance and operationsofthewaterwaysanditsfeedersystems(watercontroldevices,fixedbridgesovertheCanal System, terminals, terminal walls, aqueducts, culverts, roads and reservoirs). Due to the age of the infrastructure,substantialmaintenanceactivitiesarerequiredtoensuresystemreliability. PageII6

FigureII2:NewYorkStateCanalSystem

Inadditiontomaintainingtheseimportantfacilities,theAuthorityalsomaintainsmorethan260miles ofmultiuse,recreationaltrailsacrossupstateNewYorkthatareadjacenttothewaterwaysoftheCanal Systemorfollowremnantsofthehistoricoriginalcanalsthatdatebacktotheearly1800s. According to a recent study, an estimated 2.4 million people use the trail network each year for bicycling,walking,joggingandotheractivities,providinganeconomicimpactofmorethan$41million per year. More information on the Canal System and Trail Network can be found at http://www.canals.ny.gov/.

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III.

HistoricalReviewoftheAuthoritysFinances

ThefollowingsectionprovidesanoverviewoftheAuthoritysoperating,capitalanddebtservicecosts andrevenuetrendsfrom2005through2011.Thesectionconcludeswithanoverallviewofthefinancial healthoftheAuthorityduringthisperiod.

A.

OperatingandMaintenanceExpenses

TheAuthoritysoperatingexpensesincludethe noncapitalized costsforthe maintenanceofhighway, building and canal facilities; equipment purchases; snow and ice removal; Thruway toll collection; policing;administrativecostsandfringebenefits;Thruwaytrafficoperations;andprovisionsforfunding environmental and other liability reserves. Table III1 summarizes the Authoritys operating and maintenance (O&M) expenses for the period 2005 through 2011, including I287, I84 and the Canal SystemfortheperiodinwhichthesefacilitieshavebeentheresponsibilityoftheAuthority.
TableIII1:OperatingandMaintenanceExpenses,ThruwaySystem(millions)

Year 2005 2006(3) 2007(3)(4) 2008 2009 2010 2011 20052011Total

(1) (2)

Thruway Operations $303.8 310.7 332.2 334.8 339.4 358.2 365.4 $2,344.5

Reserves $3.5 13.0 6.8 2.5 7.3 6.0 4.6 $43.7

(1)

I84

(2)(4)

Canal System(2) $38.2 42.8 45.9 45.2 48.7 46.0 51.3 $318.1

$12.5 11.5 10.3 $34.3

Total Operating Expenses $358.0 378.0 395.2 382.5 395.4 410.2 421.3 $2,740.6

(4)

(5)

Theprovisionsforlegalclaimsandindemnitiesandenvironmentalremediationreserves. CanalandI84operatingexpensesarepaidoutoftheOtherAuthorityProjectsOperatingFundandfundsrequiredarenetofFederal Aidreimbursements. (3) Operatingexpensesin2006and2007wereadverselyimpactedduetotheliabilityoftwolegalclaimsandincreasesinhealth insuranceandsnowandiceremovalcosts. (4) AsofNovember2007,expendituresforI84werefullyreimbursablefromNYSDOT.Asnotedabove,since2010,theAutorityhasno operationalorfundingresponsibilityrelatedtoI84. (5) In2010,operatingexpensesinclude$13.3millionforthespecialearlyretirementsurchargeofwhich$11.4millionwasforthe Thruwayand$1.9millioninCanaloperatingexpenses.Alsoin2010,$5.6millioninFederalfundswasreceivedforCanaloperations.

Despitetheintensepressurethatrisingbenefit,fuelandothercommoditypricescausedsince2007,the Authoritywasabletoenhancetheefficiencyofitsoperationsthroughacostcontainmentstrategythat limited operational expense growth to at or below the rate of inflation, depending on what inflation measure is utilized. After excluding indemnity and reserve allocations and the impacts of Tropical Storms Irene and Lee on Thruway and Canal operations and benefit costs, core operating expenses increasedbyanaverageofonly2.6percentperyearfrom20072011.Thisrateofgrowthcomparesto PageIII1

an annual average increase of 3.7 percent in construction costs and 2.5 percent in consumer price inflationoverthesametimeframe.Inaddition,asnotedinTableIII2,2011wasthefifthconsecutive yearinwhichThruwayandCanaloperatingexpenseswerebelowbudgetestimates.
TableIII2:Thruway&CanalOperatingExpensesNetofReserves,Storm,PensionandHealthInsuranceCosts(inmillions)

Year

Original Thruway& Canal Operations Budget $344.0 372.0 391.4 404.6 412.1 420.6 443.3

Actual Thruway& Canal Operating Budget(1) $350.0 376.2 390.8 386.5 398.9 416.8 426.6

Less: Reserves Storm (Irene& Lee)Costs $0.0 0.0 0.0 0.0 0.0 0.0 6.8 Pension& Health Insurance $73.6 75.9 79.8 81.0 79.2 101.7 98.4 Net Expenses Change % Change

2005 2006 2007 2008 2009 2010 2011

(1)

$3.5 13.0 6.8 2.5 7.3 6.0 4.6

$272.9 287.3 304.2 303.0 312.4 309.1 316.8

14.4 16.9 1.2 9.4 3.3 7.7 5.3% 5.9% 0.4% 3.1% 1.1% 2.5%

Excludes I84 costs that are no longer an Authority expense, as has been reimbursed since 2007 and eliminated in their entiretysince2010.

From 2005 through 2011, the Authority was able to limit the level of growth in Thruway and Canal operatingcostsprimarilythroughstaffingreductionsandastrongerworkforcemanagementprogram. Duringthisperiod,theAuthorityeliminated314positions,representingaworkforcereductionofnearly 10percent.Inaddition,theAuthorityreducedoreliminatedexpendituresforequipmentandprojects, cancelledscheduledsalaryincreasesandotheremployeebenefits,reliedmoreheavilyuponparttime and seasonal workforces, reduced toll lane staffing hours, enhanced energy efficiency measures, reducedovertimeanddiscretionaryexpensesandotheractions. Asnotedlaterinthisreport,theAuthoritywillbesignificantlyenhancingtheefficiencyofitsoperations through a new operational streamlining program, scheduled to begin in 2012. This new program will play an important role in the maintenance of future fiscal balance, involving structural reforms and othermeasuresthatwillgeneraterealreductionsinThruwayoperatingexpenses.

B.

CapitalExpenditures

Given the age of the Thruway and Canal Systems and the high percentage of their infrastructure that datesbacktooriginalconstruction,significantcapitalinvestmentshavebeennecessarytocomplement maintenance activities for the system to remain reliable and in a state of good repair. While the Authoritys recently completed 20052011 Capital Program was primarily focused on maintaining infrastructureconditions,itdidincludesomeheavyreconstructionandcapacityimprovementactivities. The 20052011 Capital Program was intended to address several key objectives that were critical to Thruway and Canal customers. Those goals were reliability, increased customer service, improved safetyandmobilityandenvironmentalstewardship.Theprogramincludedprojectsthataddressedthe need for reconstruction and rehabilitation of roadway, bridges, facilities and support systems of the PageIII2

Thruway; congestion relief and mobility enhancements; equipment replacement needs; critical canal capitalprojects;andhigher/highwayspeedEZPasslanes. However, beginning in 2007, the fiscal distress resulting from declining traffic and high fuel and constructioncommoditypricesrequiredtheAuthoritytoreexaminethecapitalandequipmentneeds of the Thruway and Canal systems. As a result of this reevaluation, a significant number of project scopes were reduced, projects were eliminated and others were delayed. These actions reduced the levelofplannedinfrastructureandequipmentinvestmentsinthe20052011CapitalProgramby$300 million, reducing capital expenses from $2.6 billion to $2.3 billion during this period. Despite these actions, as noted in Figure V1 and Figure V2 later in this report, the Authority was able to maintain goodoverallhighwayandbridgeconditionsduringthisperiod. GiventhatanoverwhelmingmajorityoftheAuthorityspavement,bridgeandcanalfacilitiesdateback tooriginalconstruction,thepostponementorrescopingoftreatmentsthatoccurredduringthe2005 2011 Capital Program will likely increase the future cost of necessary repairs. Given the current high price of fuel and other construction commodities and anticipated future price increases, delaying required treatments will likely increase their ultimate cost. In addition, as noted in Figure III1, deteriorationofpavementconditionswillbeacceleratedwithoutappropriateaction.Aprolongeddelay in addressing infrastructure needs could lead to much larger investments in the longrun in order to returnthepavementtoagoodcondition.
FigureIII1:PavementConditionOverTime

As a result, Jacobs recommends that the Authority exercise caution as it develops and manages its future highway, bridge and canal capital needs (see Section V.D on page V4). It is critical that the PageIII3

Authorityrelyonexistingassetmanagementandcapitalprogrammanagementsystems(andscheduled improvementsthereto)tomaximizetheimpactitscapitalinvestmentshaveuponitsinfrastructure.The growingneedsoftheagingThruwayandCanalSystemsmustbedelicatelybalancedwiththeAuthoritys abilitytofinancecapitalprojects,warrantingcloserattentiontoprojectselection. Totalcapital expendituresandfundingsourcesfor the20052011CapitalProgramareshownin Table III3andTableIII4.

TableIII3:CapitalExpenditures,ThruwayAuthority(millions)

Year 2005 2006 2007 2008 2009 2010 2011 Total

(1)

Highwayand Bridge $97.1 179.3 267.3 288.7 259.6 311.0 367.6 $1,770.6

Facilities,Travel Plazaand Equipment $27.3 50.9 59.0 36.2 35.4 39.9 49.5 $298.2

CanalSystemand Economic Development Projects(1) $21.0 14.4 44.2 30.3 26.1 26.8 27.4 $190.2

TotalCapital Expenditures $145.4 244.6 370.5 355.2 321.2 377.7 444.5 $2,259.1

Asnotedabove,thesecostsarepayableonlyafterThruwayoperatingandmaintenanceanddebtservicecosts.

TableIII4:FundingSources,ThruwayAuthority(millions)

FundingSources Subtotal Exclusiveof Bond/Note Thruway Proceeds RevenuesonPay AsYouGoBasis $60.4 154.8 198.3 299.5 258.4 305.8 366.0 $1,643.2 $104.3 184.9 230.4 318.4 271.1 319.4 372.4 $1,800.9

Year

Federal Aid

Other

Revenues Requiredfrom Tolls,etc.

PayAs YouGo%

2005 2006 2007 2008 2009 2010 2011 Total

$43.1 22.7 30.9 17.6 10.0 8.7 0.0 $133.0

$0.8 7.4 1.2 1.3 2.7 4.9 6.4 $24.7

$41.1 59.7 140.1 36.8 50.1 58.3 72.1 $458.2

58.5% 36.7% 46.5% 15.7% 19.6% 19.0% 17.6% 27.3%

PageIII4

It is important to note from Table III4 that Federal aid allocated by the NYSDOT to the Authority declinedsignificantlyfrom2005through2011.Thisdeclineispredominatelytheresultoftheexpiration of an agreement with NYSDOT in 2005, which had previously authorized the allocation of Federal Interstate Maintenance Aid (IM) and Transportation Enhancement Program (TEP) assistance to the Authority that supported its capital and operational needs. As noted, declining Federal aid and low revenue growth led to a reduction in the level of Payasyougo financing for the 20052011 Capital Program.

C.

DebtServiceExpenses

AsaresultofreducedPayAsYouGofinancingfromreducedrevenuesandFederalaid,theAuthority hadtorelyongreaterlevelsofdebttofinancecommitmentsmadeinthe20052011CapitalProgram. AsnotedinTableIII5,theelevatedrelianceonbondsandtheissuanceofshorttermnotestofinance programmed capital improvements resulted in annual debt service payments increasing from $108.4 millionin2005toover$181.8millionin2011,eveninarecentlowinterestrateenvironment.
TableIII5:DebtService,ThruwaySystem(millions)

Year 2005 2006 2007 2008 2009 2010 2011 20052011Total

ServiceonOutstanding Debt $108.4 128.5 135.8 163.5 176.9 191.2 181.8 $1,086.1

D.

Revenues

1. TrafficandTollRevenues WiththeexceptionofasmallamountofFederalaidandotherfunds,tollscollectedonthecontrolled system and through toll barriers support an overwhelming majority of the Authoritys budget. As a result,theAuthoritycloselymonitorstrafficvolumesandtollrevenuesforthevariousThruwaysections. TheAuthorityhadoriginallyplannedtofinanceoperating,maintenanceandcapitalresponsibilitiesfrom 2005through2011throughaseriesoftwostagedtollrateadjustmentsapprovedin2005.Thiswasthe first toll adjustment that was implemented in 17 years and was designed to only provide sufficient

PageIII5

fundingfortheAuthority'soperating,capitalandmaintenanceneedsthroughtheendofthe20052011 CapitalProgram. The 2005 toll adjustment generally increased toll rates by 25 percent for passenger vehicles and 35 percentforcommercialcustomersin2005andincreasedcashtollsforbothpassengerandcommercial vehicles by 10 percent in 2008. In addition, the toll adjustment also implemented a new vehicle classification system (reducing the number of classifications from 43 to 9), created a new EZPass discount program, continued a graduated volume discount program for commercial customers and expandedtheavailabilityofcommuterplanstobridgesandbarriersontheThruwaySystem. Inlate2007,risingfuelpricesandtherecessionsimpactonemployment,industrialproduction,housing starts and other aspects of the economy significantly impacted passenger and commercial traffic patternsnationwide.AsnotedinFigureIII2,totaltrafficontheThruwaySystemandonotherselected tollfacilitiesbegantodeclinesignificantlyatthattimeastravelersreducedthenumberanddistanceof theirtrips.
FigureIII2:ComparisonoftheThruwaySystemtoRegionalTollFacilities
Toll Facility Traffic 12 Month Moving Average (Index Month Ending September 2007 = 1)
1.04

1.02

1.00

0.98

0.96

0.94

0.92

0.90

0.88

MD Transportation Authority Newport Pell Bridge (RI)

NH Turnpike Richmond Metropolitan Authortiy (VA)

Delaware Memorial Bridge NYSTA

Inresponsetothefinancialpressuresbroughtonbyfuelpricesandthestateofthenationaleconomy, theAuthorityimplementedanotherseriesofstaged,thoughsmalleradjustmentstotollratesin2008. This adjustment was only designed to provide additional funding to assist the Authority in financing operational, maintenance and capital commitments made in the 20052011 period. The 2008 toll adjustmentmaintaineda5percentEZPassdiscountforallpatronsandaddedtwofivepercentacross

PageIII6

theboard increases, which took effect in 2009 and 2010. Table III6 summarizes passenger and commercialtrafficandtollrevenuesfrom2005through2011,respectively.
TableIII6:TrafficTrends(millionsoftrips)

Year 2005 2006 2007 2008 2009 2010 2011

Passenger Control Barrier 125.8 115.7 127.8 127.7 125.5 128.2 129.0 126.6 112.6 100.6 96.5 94.3 93.8 93.5

Commercial Control Barrier 19.9 12.5 17.7 17.7 16.9 15.4 15.7 15.8 11.3 10.1 9.7 8.8 9.1 9.3

Total 274.0 269.4 256.0 248.5 246.7 247.6 245.0

Percent Change 1.7% 5.0% 2.9% 0.7% 0.4% 1.0%

2. OtherRevenues The Authority collects a variety of nontoll revenues derived from payments received from concessionairesattheThruwayserviceareasrestaurantandgasolinestations,salesofsurplusproperty, revenuesfromspecialhaulingpermits,EZPassfees,fiberopticagreements,interestonvariousinvested funds,andothermiscellaneoussources.Theserevenueshavevariedconsiderablyoverthelastfifteen years. The Authoritys income from all other revenue sources was $31.4 million in 2011, including interest earnings. Interest earnings have dropped substantially due to several factors including the reducedleveloffundsavailableforinvestmentandlowermarketinterestrates.Historicalcollections ofotherrevenuesareoutlinedinTableIII7.
TableIII7:SummaryofTotalThruwaySystemRevenues(Millions)

Year 2005 2006 2007 2008 2009 2010 2011 20052011Total

Passenger $311.1 333.7 324.7 347.1 400.8 413.1 403.9 $2,534.4

Commercial $200.1 220.7 215.6 215.6 210.8 228.1 230.2 $1,521.1

TotalToll Revenue $511.2 554.4 540.3 562.7 611.6 641.2 634.1 $4,055.5

OtherRevenue TotalRevenue $36.4 39.6 41.4 33.5 26.7 31.3 31.4 $240.3 $547.6 594.0 581.7 596.2 638.3 672.5 665.5 $4,295.8

PageIII7

E.

HistoricalFlowofFundsAnalysis

TableIII8presentstotalrevenueandexpensesfor2005through2011inaformatthatisconsistentwith theflowoffundsrequiredbytheAuthoritysBondResolution.Asnotedinthistable,from2005through 2011theAuthoritywasabletomaintainfiscalstabilityandadebtservicecoverageratiothatwarranted its current favorable credit investment grade credit rating. This was accomplished by the aforementioned capital program reductions, operational cost containment efforts and toll rate adjustments. However, these actions were insufficient to fully maintain net revenues at a level that would result in good coverage and fiscal balance. As a result the Authority relied on the issuance of short term notes to bridge financing gaps in lieu of taking other actions. The combination of these measuresallowedtheAuthoritytomaintainabalancedflowoffundsandachievebudgetsurplusesthat wereusedtoenhanceitsworkingcapitalreserves.
TableIII8:Revenues,OperatingExpensesandReserveFundRequirements,20052011(inmillions)
Total Actual Actual Actual Actual Actual Actual Actual 2007 2008 2009 2010 2011 2005-2011 2005 2006 $ 547.3 $ 594.0 $ 581.6 $ 596.2 $ 638.3 $ 672.5 $ 665.5 $ 4,295.4 0.3

TotalRevenues Less:CWEDebtService&Reserve AvailableRevenues Less: OperatingExpenses OperatingReserves Total NetRevenues Less:DebtService NetRevenuesAfterDebtService Less:RetainedforOperatingReserves NetRevenues Less: ReserveMaintenanceProvisions OtherAuthorityProjects (3) GeneralReserveFund GeneralReserveFundCP1,CP2&BAN's BalanceAfterReserveMaintenance Provisions,OtherAuthorityProjects andGeneralReserveFund AdjustmentsforCashBasis NetBalanceAvailableforWorkingCapital DebtServiceCoverageRatios PayAsYouGoPercentage
(1) Totals may not add due to rounding.

0.3

547.6 305.3
2.0

594.0

581.6

596.2

638.3

672.5

665.5

4,295.7

310.7
13.0

332.2 6.8 339.0 242.6 135.8 106.8 -5.0 101.8

334.8 2.5 337.3 258.9 163.5 95.4 5.1 100.5

339.3 7.3 346.7 291.7 166.3 125.4 (1.8) 123.5

358.2 6.0 364.2 308.3 167.3 141.0 2.3 143.2

307.3 240.3
103.8

323.7 270.3
127.4

370.0
365.5 4.6 295.5 167.4 128.1

2,346.1 42.1 2,388.2 1,907.5 1,031.5 876.0

136.5 5.2

142.9 5.0 137.9

(4.3) 123.8

(3.6)

141.7

872.4

(2)

60.9 50.7 24.9 4.6 0.6

69.8 54.3 12.8

20.7 53.7 26.8 -

30.7 45.2 24.4 0.0

34.5 48.7 25.1 10.6 4.7

31.0 46.0 21.2 23.8 21.1

10.0 51.3 48.2 14.4 -0.1

257.6 349.9 183.5

53.4

1.0

0.6

28.0

(0.6)

(1.0)

(0.6)

0.2

(0.1)

0.1

(1.9)

$0.0 $5.0 $21.1 $0.0 $0.0 $0.0 $0.0 2.31 2.12 1.79 1.58 1.75 1.84 1.77 46.5% 15.7% 19.6% 19.0% 17.6% 58.5% 36.7%

$26.1

(2) Shows the Reserve Maintenance Fund provision will be funded from debt proceeds when sufficient revenues are not available. (3) As of 10/31/2007, expenditures for I-84 are to be funded from NYSDOT.

PageIII8

IV.

SpecialReportsandAnalysis

TheAuthorityrecentlycommissionedJacobstostudy(i)whattollrevenuesmayhavebeengeneratedif toll rates had followed two common measures of increasing costs, (ii) the economic impact of the Thruway and Canal Systems and (iii) the typical Thruway customer. A summary of these analyses are includedbelowandprovideimportantcontexttothediscussionintheremainingsectionsofthisreport.

A.

TheImpactofInfrequentTollAdjustmentsonAuthorityFinances

Jacobsmeasuredwhattollrevenuesmayhavebeengeneratedifthetollrateshadfollowedeachoftwo common measures of increasing costs the Consumer Price index (CPI) measured by the Bureau of LaborStatisticsandtheConstructionCostIndex(CCI)developedbytheEngineeringNewsRecord.The CPIisacommonandoftenusedmeasureofpriceinflationforconsumergoodsandservicesandtheCCI isacompositemeasureofthecosttoconstructinfrastructure. Jacobs found that since the Thruway System was established, tolls rates have grown well below both indices.AsshowninFigureIV1,theactualpermilepassengercarrateontheTicketSystemisoverfour timeslessthantheywouldbetodayiftollrateshadfollowedtheconstructioncostindex.
FigureIV1:ComparisonofActualandHypotheticalTollRatesforPassengerCarsontheTicketSystem

In addition, Jacobs analyzed what toll revenue would have been collected if toll rates were indexed beginningin1988(thestartofthelongestperiodbetweentollmodificationsontheThruwaySystem). TheinfrequenttollmodificationsimplementedbytheAuthoritysince1988resultedinlargeportionsof the Authoritys capital program being funded from debt. The significant additional toll revenues that mayhavebeenavailableifaregulartolladjustmentprogramhadbeenfollowedindexedtoeitherCPIor CCIwouldhavealteredtheThruwayfinancessignificantly,generatinganadditional$1.5billionto$2.5 billioninadditionalrevenuessince1988.

PageIV1

Amongtheoutcomesthatmayhaveresultediftheadditionaltollrevenueswerecollectedinclude:

Lowerlevelofbondfinancing; Higherpayasyougopercentagepreservingavailablerevenuesforfuturebondsales; Larger capital program moving some rehabilitation and reconstruction projects forward to potentiallysaveonthelifecyclecostfortheimprovements;and Reducedpressuretoincreasetollstofundthecurrentcapitalprogram.

Whileitisimpossibletolookbackanddeterminepreciselywhatprogramshouldhavebeenfollowed, nevertheless, significant additional revenues gained by more frequent toll rate increases would have placedtheThruwayinamuchstrongerfinancialpositionasitrecapitalizedtheThruwaySystem. FurtherdiscussionandanalysesconsideringadditionalrevenuestheAuthoritymayhavecollectedhad theyimplementedregulartollincreasesoverthepast25yearsisprovidedinAppendixB,intheformof aTechnicalMemorandumentitledHypotheticalTollAnalysis,datedApril4,2012.

B. TheEconomicImpactoftheAuthoritysCapital,Operatingand MaintenanceActivitiesontheNewYorkStateEconomy
JacobsestimatedtheeconomicimpactoftheAuthoritysoperationsandinfrastructureinvestmentson the New York State and local economies. In dynamic economic conditions, we found that the transportation systems managed by the Authority (roadways, bridges and canals) are essential to supporting businesses and communities across the state. The Thruway and Canal Systems are key arteries of commerce and they transport products, facilitate tourism and recreational activities, and connectresidentswiththeirworkplaces,allofwhichgeneratesubstantialeconomicactivity. The Thruway and Canal Systems are extensive, with 570 miles of roadways and 524 miles of canals, makingitoneofthelargestStatenetworksinthenation.From20052011,theoperation,maintenance andcapitalimprovementsofthesesystemsincludingtheprivatelyoperatedtravelplazassupported: o o o o o 6,725onsitepublicandprivatesectorjobsannually; 10,150totaljobsthroughoutNewYorkStateannually; $575.2millioninpersonalincomeandbenefitsannually; $1.2billioninbusinesssalesandproductionannually;and $207.5millioninFederal,Stateandlocaltaxrevenuesannually: o o LocalandStateTaxRevenue:$130.1million. FederalTaxRevenue:$77.4million. PageIV2

Additionally,theimpactwasanalyzedonaregionalbasis.FigureIV2showsthefivemajorregionsfor whichtheeconomicimpact(supportingjobs)wasestimated.
FigureIV2:AnnualEconomicImpactAnalysisRegionsSupportingJobs

Rochester Section

Syracuse Section

Buffalo Section

Over 1,500

Nearly 500

About 1,260

Nearly 1,775

Albany Section

Metro NYC Section 10,150totaljobsinNewYorkState 4,300additionaljobselsewhereintheUS

Over 1,470

C.

ThruwayTripsandCustomers

Tobetter understandhowtollpolicy impactsthe Thruwaycustomer,itisimportant toappreciatethe makeupoftrafficontheThruwaySystemanditscustomerbase.AsshowninFigureIV3,in2011the majority of traffic on the Thruway System was comprised of passenger cars, making up roughly 90 percentoftraffic.Theremainingtenpercentoftrafficisfromavarietyofdifferentcommercialvehicle types. Though commercial traffic comprises only a small percentage of systemwide traffic, trucks accounted37percentofThruwayrevenues.Inaddition,in2011approximately66percentofvehicles paid a toll with an EZPass transponder. For passenger cars, the EZPass market share equaled approximately 65 percent, while trucks utilized EZPass more frequently, averaging a market share of about82percent.

PageIV3

FigureIV3:2011SystemWideTrafficandRevenueDistribution
2011Traffic
Commercial EZPass 8% Commercial Cash 2%

2011Revenue
Commercial Cash 5%

Commercial EZPass 32% Passenger Cash 32%

Passenger EZPass 58%

Passenger EZPass 58% Passenger Cash 23%

Jacobsfurtherfoundthatthedistributionsofvehicleclassandpaymenttypevarybyfacility,asshownin FigureIV4.ThehighestpassengercarparticipationinEZPassisseenattheTappanZeeBridge,while thehighesttruckparticipationrateinEZPasspaymentisseenatthenearbySpringValleyBarrier,which is a truckonly toll facility that offers open road tolling. It should be noted that although EZPass transactions account for about twothirds of annual transactions on the Thruway, the majority of customers(individualpeople)usingtheThruwayoverthecourseofayeartravelinfrequentlyandpay withcash.
FigureIV4:2011TrafficDistributionbyFacility
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Motorhome CashHeavyTruck CashLightTruck EZHeavyTruck EZLightTruck CashCar EZCar Commuter

PageIV4

Jacobsfurtheranalyzedthebreakdownof2011annualtollrevenuesbyThruwayfacility,aspresentedin FigureIV5.OftheThruwaysfacilities,theTicketSystemandtheTappanZeeBridgegeneratethemost significantportionoftheThruwaystrafficandrevenue.In2011,theTicketSystemgenerated$416.5 millionormorethanhalf(approximately63percent)ofallThruwaytollrevenuesandtheTappanZee Bridge generated $126.6 million (approximately 19 percent) of total toll revenues. The New York Metropolitanareabarriertolls(otherthantheTappanZeeBridge)generatedabout$95.7millionora combined 15 percent of 2011 revenues. In the Buffalo area the Grand Island Bridges plus the Erie Sectionofthemainlinegeneratedapproximately11percentof2011revenues.
FigureIV5:Distributionof2011TollRevenuesbyThruwayFacility

SpecificregionswithintheTicketSystemthatseethemostvolumeincludetheAlbanyarea,theBuffalo Mainlineplazas,andtheWoodburyMainlinetollPlaza.Thetopsixplazavolumesfortheticketsystem in2011areshowninTableIV1.

TableIV1:TicketSystemTollPlazaswiththeHighestVolumes,2011

Plaza/Interchange Exit24:Albany,Montreal,I90East,I87North Williamsville Lackawanna Woodbury Exit25:Schenectady,I890,NYRoutes7&146 Exit45:Rochester,Victor,I490

Transactions 12,700,000 8,900,000 8,300,000 7,500,000 6,900,000 5,900,000

PageIV5

Finally,in2011approximately62percentoftheThruway'sEZPasstollrevenuesweregeneratedbythe Authority'scustomers.CustomersthathadatransponderissuedbyaNewYorkStatetollagency(the AuthorityortheMetropolitanTransportationAuthority)accountedforabout78percentoftotalEZPass tollrevenues.Asaresult,22percentofEZPasstollrevenueswerecollectedfromcustomersthathada nonNewYorkissuedtransponder,underscoringtheimportanceoftheThruwaySystemintheregional andnationaleconomy.

PageIV6

V.

20122015MultiYearCapitalProgram

InordertobetterunderstandtheAuthorityscurrentandfuturefinancialcondition,considerationmust begiven tothesize,complexityandcapitalneedsifitshighway,bridgeand canalinfrastructure.The Authoritys Thruway and Canal Systems are vast and aging and require considerable investments to remainreliable.ThissectionsummarizestheAuthoritys20122015CapitalProgram,theinfrastructure investmentsandprogramchangesthatweremadethereinandtheimpactthattheseinvestmentswill likelyhaveonfacilityconditionratings.

A.

ProgramDetails

The20122015MultiYearCapitalProgramwill completemajor,jobsustainingreconstruction projects that were let during the previous 20052011 Capital Program and includes new highway, bridge and canal construction projects and equipment purchases. The program was originally planned at $1.8 billion (and excluded the new Tappan Zee Bridge Project described in the next section of this report). However,duetofiscalconstraintsbroughtonbycontinuedhighfuelandconstructioncommodityprices and a sluggish economic recovery, many projects contained in the original plan have been delayed, reduced or eliminated. These actions resulted in the program being reduced by $300 million, to its currentinvestmentlevelof$1.5billion.Inessence,fiscalconstraintsrequiredtheAuthoritytopursuea morebalancedapproachtotheprogramsprojectmix,focusingmoreonhighpriorityandhighimpact investmentstomaintaintheusefullifeofThruwayandCanalinfrastructureratherthanpursuingmajor reconstruction, rehabilitation and capacity improvements that were familiar in the 20052011 Capital Program. NewThruwayprojectsincludedinthefouryearprograminclude: GrandIslandBridgeDeckReplacementsandRepairs(2012and2013lettings); Exit59(Dunkirk)toExit60(Westfield)PavementResurfacing(2013letting); Exit17(Newburgh)toExit18(NewPaltz)PavementRehabilitation(2013letting); Exit33(Verona)toExit34(Canastota)PavementResurfacing(2014letting); I95,Exit8B(NewRochelle)toPortChesterPavementRestoration(2014letting);and Exit 54 (West Seneca) to Lackawanna Barrier Pavement Resurfacing and Bridge Replacements(2015letting).

SincethetransferoftheCanalSystemtotheAuthorityinthe1990s,theAuthorityhasmadesignificant maintenanceandcapitalinvestmentsintothewaterwaysinfrastructure.However,giventheageofthe CanalSystem,revitalizationofinfrastructureisnecessarytomeetthedemandsofrecreationalboaters, tourandrentalboatsandaresurgentcommercialshippingsector.WhiletheAuthorityundertakesan ambitiousannualmaintenanceprogram,Canalstructureconditionscontinuetodeteriorate,withnearly 50 percent of critical Canal structures rated in the fair and poor categories. Complicating efforts to PageV1

reducethisrateofdeterioration,asubstantialportionoftheCanalscurrentfloatingplantequipment consistsofavarietyofvesselsthatneedtobereplacedandTropicalStormsIreneandLeecausednearly $100millionindamagestomanycomponentsoftheCanalSystemin2011.InApril2012,theAuthority enteredintoa$60millionloanagreementwithCitibank,N.A.tofinanceaportionoftheseemergency capitalrepairsandexpectsFederalEmergencyManagementAgencytoreimburseasubstantialportion oftheloan. Duetofiscalrestraints,newCanalprojectsinthe20122015CapitalProgramarelimitedandprimarily focusedonrepairingstormdamagedfacilities.Theyincludethefollowing: Canal Dredging, Lock Repairs and Other Contracts Tropical Storms Irene and Lee RecoveryProjects(2012lettings); UticaTaintorGateandDamRehabilitation(2012letting) AmsterdamMovableDamRehabilitation(2012letting); ScotiaMoveableDamRehabilitation(2014letting);and OswegoLockRehabilitation(2015letting).

Itisalsoimportanttonotethataconsiderableportionofthe20122015CapitalProgram(some$400 million) is dedicated to financing several ongoing and largescale Thruway reconstruction and rehabilitation improvement projects that were contained in the 20052011 Capital Program. Thruway projectscurrentlyunderwaythathaveafinancialimpactin2012andbeyondinclude: Exit39(I690)toExit40(Weedsport)PavementReconstruction; Exit 23 (I787) to Exit 24 (Northway) Pavement Reconstruction and Capacity Improvements; Exit 57 (Hamburg) to Exit 58 (Silver Creek) Pavement Reconstruction and Bridge Rehabilitations;and Phase2oftheTappanZeeBridgeDeckReplacement.

Asmentionedearlierinthisreport,astheAuthorityprogressesthroughthe20122015CapitalProgram, itmustrelyonexistingandenhancedassetmanagementandcapitalprogrammanagementsystemsto ensurethatchangestotheprogrammaintaintheproperprojectmix,tomaximizeinvestmentvalueand impactastheeconomyandpricingenvironmentschange.

B.

TheNewTappanZeeBridgeProject

TheAuthorityhasmovedtowardundertakingamassivetransportationproject,thereplacementofthe Tappan Zee Bridge. This project is one of the Countrys most extensive transportation enhancement projects ever envisioned and, in 2011 the Tappan Zee Bridge Project became one of fourteen infrastructureprojectsthatPresidentObamatappedforexpeditedFederalenvironmentalreview,with PageV2

constructionestimatedtobegininlate2012.PursuanttonewstatutoryauthorityfortheAuthorityto undertake procurements on a design build contracting basis, In February 2012, four separate private joint ventures made up of large domestic and international firms, were shortlisted and have recently beeninvitedtosubmitDesignBuildbidsunderarecentlyreleasedformalRequestforProposals. The newly authorized designbuild procurement process being followed allows the private sector to compete and offer innovative, costeffective designs for this major transportation infrastructure replacement project. The designbuild process further permits an expedited construction schedule whichcantakeadvantageofsignificantcostsavingsandprovidesforlessriskifdelaysandcostoverruns shouldoccurduringtheprocess. TheAuthorityhadpreviouslyfocusedonearlierconceptsfortheTappanZeeBridgeprojectandincluded asignificantpublicinvolvementprocessoverthelastdecade.TherelaunchoftheprocessinOctober 2011hasresultedinnumerouspublicpresentationsandmeetingswhichhavebeenheightenedbythe hearingsontheDraftEnvironmentalImpactStatementfortheproject. TheAuthoritycontinuestoguidetheprocessforward.Asnotedearlier,aspecificfinancingplanforthis projectwillbedevelopedinlate2012orearly2013whenmoreinformationisavailableonthecostof the Project (i.e. when the designbuild procurement process has been completed) and when there is morecertaintyonthelevelofFederalaidorfinancingassistancethatwillbereceivedforthisProject. As a result, Tappan Zee Bridge Project costs are not reflected in the financial analysis of this report. Current, uptodate information on the Tappan Zee Bridge Project can be found at the following website:http://www.thenewtzb.ny.gov/.

C.

PlannedCapitalProgramExpenditures

TableV1showsthetotalplannedexpendituresovertheperiod2012to2016,excludingthecostsofthe Tappan Zee Bridge project. Actual expenditures from 2011 are included as a reference point and the figuresshadedingreenmakeuptheadopted20122015CapitalProgram.

PageV3

TableV1:ProjectedTotalCapitalProgramExpenditures(millions)

Year

2011(A) 2012 2013 2014 2015 2016 Total20122016

Thruway Highwayand Bridges Capital Expenditures $367.6 285.4 263.1 282.5 291.6 380.8 $1,503.4

Equipment Replacement andOther Facility CapitalNeeds $49.5 47.1 48.8 43.7 40.7 39.2 $219.5

CanalCapital Program $27.4 51.4 62.1 50.8 51.2 54.4 $269.9

TotalCapital Program Expenditures $444.5 384.0 374.0 377.0 383.5 474.3 $1,992.8

D.

TheImpactofthe20122015CapitalProgramonConditions

Aspreviouslynoted,themaingoalsoftheAuthorityscapitalandmaintenanceprogramistopreservea highlevelofpatronsafetyandservice,maintainfacilitiesinastateofgoodrepairandensuretheoverall reliabilityofthehighwaysystem.Onemeasureoftheeffectivenessofthesemaintenanceandcapital programsistheconditionratingsofhighwayandbridgefacilities. FigureV1displaysthehistoricaverageratingofThruwaypavementsurfaceconditionssince1988and theprojectedratingsasaresultofthecurrentCapitalProgram.Duringthelifeoftheproposedcapital program,itisprojectedthatthepavementratingsfortheThruwayfacilitieswillremaininthegood range,thoughatalevelslightlybelowthatofpreviousyears.Similarly,theAuthoritymaintainsratings of all of the Bridge Structures. Figure V2 shows the Bridge ratings since 1988. The current plan will maintaintheaverageratingofallBridgesatanaverageratingofgood.However,itisimportantto note that the average bridge condition rating is closely approaching the fair category. Table V2 presentsasummaryofBridgeandPavementratingsontheThruwayasofDecember31,2011.Roughly half of the bridges are in poor or fair condition and almost all pavement miles (shown as a two directionaltotalin1/10thmiles)areingoodorexcellentcondition.TheAuthoritystrictlycomplieswith allStateandFederalbridgeinspectionrequirementsandtheassessmentsinthisreportreflectresultsof suchinspections.
TableV2:CurrentBridgeandPavementConditions

Condition Excellent Good Fair Poor Total

NumberofBridges 35 364 363 49 811 PageV4

PavementMiles(in1/10th) 3,400 7,708 70 0 11,178

FigureV1ThruwayPavementConditionRatings,19882016

NYS Thruway Authority 1988 - 2016 Annual Pavement Surface Condition Rating Average
10

Excellent
9

Good

Fair

Rating

Poor

Historical
2

Projected

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Year

2016

FigureV2ThruwayBridgeConditionRatings,19882016
NYS Thruway Authority 1988 - 2016 Annual Bridge Condition Rating Average
7.0

Excellent
6.5 6.0

Good
5.5 5.0 4.5
Rating

Fair
4.0 3.5

Poor
3.0 2.5

Historical
2.0 1.5 1.0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Projected

2009

2010

2011

2012

2013

2014

2015

Year

2016

PageV5

VI.

ExpensesandRevenueswiththeCurrentTollSchedule

As noted earlier in this report, the current toll schedule implemented by the Authority was only intended to provide revenues necessary to fulfill operating, capital, maintenance and other commitmentsthroughtheendofthe20052011CapitalProgram.Thefollowingsectionsummarizesthe important components of the Authoritys current longterm financial plan based on the current toll structure,the20122015CapitalProgramandoperatingexpensesunderanewprogramofoperational streamlining.

A.

ProjectedOperatingandMaintenanceExpenses

Table VI1 shows estimated operating and maintenance expenses for the Thruway and Canal Systems assumingtheimpactoftheAuthoritysnewoperationalstreamliningprogram.Asnotedearlierinthis report, over the last five years the Authority has been able to limit core operating expense growth. However,theAuthorityiscurrentlyinitiatinganewoperationalstreamliningprogramthatisexpected tosignificantlyreducefutureoperatingexpensesin2012andbeyond.Underscoringthesignificanceof thisprogram,asseeninTableVI1,theAuthorityexpectstoholdoperatingcostsatrelativelythesame levelfrom2011through2014,involvingareductioninoperatingcostsbysome$119.5millionoverprior forecastsfrom2012through2016. TheAuthoritysstreamliningprogramwilllikelyconsistoffurtherworkforcereductions,arealignmentof employee benefits reductions to comport with the State benefit plans, additional departmental consolidations and reorganizations, reductions in vehicle and equipment fleets, further reductions in overtimeandthenumberoftolllanesthatarestaffed,bulkpurchasingofgoodsandserviceswithother entitiestoreducepricing,andmanyotherinitiatives.
TableVI1:ProjectedOperatingandMaintenanceExpenses(millions)

Year 2011(A) 2012 2013 2014 2015 2016 Total20122016

Thruway $370.0 375.3 389.9 401.5 413.5 425.7 $2,005.9

Enhanced Operating Cuts $0.0 0.0 21.0 31.0 31.0 31.8 $114.8

Canal System $51.3 55.7 53.2 54.8 56.5 58.2 $278.4

Enhanced Operating Cuts $0.0 0.0 0.5 1.0 1.6 1.6 $4.7

TotalOperatingand Maintenance Expenses $421.3 431.0 421.7 424.4 437.4 450.5 $2,165.0

B.

Projected(NonTappanZee)DebtServiceExpenses

Table VI2 shows debt service expenses on general revenue bonds and notes issued under the Bond ResolutiontosupporttheAuthorityscurrentandfuturecapitalneeds,asmanifestedinthe20122015 Capital Program. As noted, debt service expenses are expected to increase as the Authority issues PageVI1

additional bonds to refinance outstanding notes and finance the future infrastructure needs of the Thruway and Canal Systems. As noted above, in the absence of a final approved alternative and financialplan,thisanalysisexcludesthenewTappanZeeBridgeProject.
TableVI2:ProjectedAnnualDebtService(millions)

Year 2011(A) 2012 2013 2014 2015 2016 Total20122016

DebtServiceon Outstanding Bonds&Notes $181.8 167.6 167.6 167.6 167.6 167.6 $838.0

Debtserviceon NewDebtissued (nonTZ) $0.0 35.2 78.9 96.5 117.4 144.8 $472.8

TotalDebtService andRequirements $181.8 202.8 246.5 264.1 285.0 312.4 $1,310.8

C. ProjectedTollandOtherRevenues
Recently, traffic on the Thruway System and on other facilities in certain regions of the economy are exhibitingsignsofgrowth,suggestingtheeconomicrecoveryisgainingstrength.However,theslowand deliberatepaceoftheeconomicrecoveryisexpectedtoresultinrelativelyflatgrowthinpassengercar toll revenues from 2011 to 2012, with only slight growth thereafter. Commercial traffic, however, is currently showing stronger signs of growth and is expected to lead to healthy revenue growth from 2011 to 2012, with continued growth thereafter. It is important to note that while traffic growth is expectedinthefuture,totaltrafficlevelsarenotexpectedtoreturntoprerecessionlevelswithinthe forecastperiod.Inaddition,OtherRevenue,includinginterestearnings,EZPassfeesandothersources is expected to remain flat from 2012 through 2016. Traffic and revenue projections are contained in TableVI3andTableVI4.

PageVI2

TableVI3:TrafficProjectionswithExistingTollSchedule(millionsofTrips)

Year 2011(A) 2012 2013 2014 2015 2016

Passenger 220.1 222.6 223.4 225.5 228.5 231.6

Commercial 25.2 25.6 25.9 26.4 26.9 27.4

Total 245 248.2 249.3 251.9 255.4 259.0

Growth 1.2% 0.4% 1.0% 1.4% 1.4%

TableVI4:EstimatedAnnualRevenueswithExistingTollSchedule(millions)

Year 2011(A) 2012 2013 2014 2015 2016 Total20122016

Passenger $403.9 409.4 410.4 413.8 418.9 424.1 $2,076.6

Commercial $230.2 234.0 235.4 239.3 243.1 246.9 $1,198.6

TotalToll Revenue $634.1 643.4 645.8 653.0 661.9 671.0 $3,275.1

Other Revenue $31.4 32.0 32.5 33.8 34.8 35.8 $168.9

TotalRevenue $665.5 675.4 678.3 686.8 696.7 706.8 $3,444.0

D.

TotalSourcesandUses

TableVI5andTableVI6identifythetotalprojectedannualfinancialrequirementsfortheperiod2012 through2016,reflectingtheAuthorityscapital,operational,maintenanceandotherneedsexclusiveof theTappanZeeBridgeProjectandinclusiveoftheoperationalstreamliningprogram.

PageVI3

TableVI5:TotalProjectedAnnualFinancialRequirements(millions)

Year

Capital Program $384.0 374.0 377.0 383.5 474.3 $1,992.8

Operatingand Maintenance Expenses $431.0 421.7 424.4 437.4 450.5 $2,165.0

DebtService

Total Requirements $1,017.8 1,042.2 1,065.5 1,105.9 1,237.2 $5,468.6

2012 2013 2014 2015 2016 Total20122016

$202.8 246.5 246.1 285.0 312.4 $1,310.8

TableVI6:ProjectedFundingSourceswithExistingTollSchedule(millions)

Year

Total Requirement swithout TappanZee Replacement $1,017.8 1,042.2 1,065.5 1,105.9 1,237.2 $5,468.6

FundingSources Federal Aid $2.9 1.0 0.7 0.0 0.0 $4.6 Other $37.5 41.9 12.2 12.4 13.1 $117.1 DebtProceeds $277.4 235.4 278.9 308.3 424.5 $1,524.5 SubtotalExclusive ofThruway Revenues $317.8 278.3 291.8 320.7 437.6 $1,646.2 Revenues Requiredfrom Tolls,etc. $700.0 763.9 773.7 785.2 799.6 $3,822.4

2012 2013 2014 2015 2016

Total20122016

PageVI4

E.

FlowofFundsAnalysiswithCurrentTollSchedule

As noted in Table VI7, despite the implementation of operational streamlining and reductions to the 20122015CapitalProgram,theAuthorityscurrenttollscheduleprovidesinsufficientfundingtopayfor planned expenses from 2013 through 2016, resulting in a funding shortage of approximately $374.2 million.
TableVI7:ProjectedAvailableRevenuesvs.RequiredRevenueswithExistingTollSchedule(millions)

Year 2012 2013 2014 2015 2016 Total20122016

Revenues Requiredfrom Tolls,etc. $700.0 763.9 773.7 785.2 799.6 $3,822.4

Revenueswith ExistingToll Schedule $679.6 678.3 686.8 696.7 706.8 $3,448.2

AnnualShortage $20.4 85.6 86.9 88.5 92.8 $374.2

CumulativeShortage $20.4 106.0 192.9 281.4 374.2

Inaddition,asshowninTableVI8,theAuthorityscurrenttollscheduleisinsufficienttomaintaindebt service coverage and PayAsYouGo financing levels. The Authoritys Bond Resolution requires a minimumdebtservicecoverageratioof1.2xandtheAuthoritysFiscalManagementGuidelinesrequires a minimum coverage ratio of 1.5x. As noted in this table, despite capital program reductions and operational streamlining program, in 2012 the Authoritys debt service coverage ratio is expected to equal 1.49x and by 2016 the coverage ratio will be as low as 0.97x. Furthermore, PayAsYouGo financingoftheAuthoritys20122015CapitalProgramwilldeclinetoverylowlevels,endingupin2016 near10percent. Asaresultoffundingshortagesandpoorfinancialmetrics,JacobsisrecommendingthattheAuthority supplementitsoperationalstreamliningeffortswithanactiontoenhancerevenuessothatitmaymeet its goal of preserving fiscal stability until a more longterm plan can be developed that includes the TappanZeeBridgeProject.

PageVI5

TableVI8:FlowofFundswiththeExistingTollSchedule
ACTUAL 2011 Total Revenues Less: Operating Expenses Operating Reserves Total Net Revenues Less: Debt Service Net Revenues After Debt Service Less: Retained for Operating Reserves Net Revenues Less: Reserve Maintenance Provisions Other Authority Projects General Reserve Fund General Reserve Fund - CP1, CP 2 & BAN's Balance After Reserve Maintenance Provisions, Other Authority Projects and General Reserve Fund Adjustments for Cash Basis
(2)

PROJECTED

2012 $675.4

2013 $678.3

2014 $686.8

2015 $696.7

2016 $706.8

Total (2012-2016) $3,444.0

$665.5

365.5 4.6 370.0 295.5 167.4 128.1 (4.3) 123.8

372.3 3.0 375.3 300.1 200.9 99.2 4.2 103.4

365.9 3.0 368.9 309.4 250.3 59.1 59.1

367.5 3.0 370.5 316.3 272.0 44.2 44.2

379.6 3.0 382.6 314.1 295.5 18.6 18.6

390.9 3.0 393.9 312.9 323.5 (10.6) (10.6)

1,876.2 15.0 1,891.2 1,552.8 1,342.2 210.6 4.2 214.7

10.0 51.3 48.2 14.4 -0.1

40.6 55.7 5.2 1.9 0.0

52.7 28.6 0.6 -22.9

53.8 33.3 0.6 -43.6

54.9 30.4 0.6 -67.3

56.6 36.7 0.6 -104.5

40.6 273.8 134.2 4.3 -238.2

Net Balance Available for Working Capital -$0.1 $0.0 -$22.9 -$43.6 -$67.3 -$104.5 -$238.2 (1) Totals may not add due to rounding. (2) Shows the Reserve Maintenance Fund provision would be funded from Debt proceeds when sufficient revenues are not available.

Debt Service Coverage Pay go %

1.77 17.6%

1.49 27.8%

1.24 14.3%

1.16 12.3%

1.06 11.2%

0.97 10.5%

PageVI6

VII. ProposedModificationstoCurrentTollRatesandtheImpacttothe AuthoritysFinancials

Asconcludedintheprevioussectionofthisreport,fundingshortages,inadequatedebtservicecoverage ratios and low PayAsYouGo financing generated from the current toll scheduled will require the Authority to pursue new revenue sources to complement its program of enhancing operational efficiency. This section recommends a specific toll adjustment that will provide fiscal stability and healthy financial metrics until a more holistic financing plan, that includes the Tappan Zee Bridge Project,isdevelopedlaterin2012orinearly2013.

A.

CurrentTollRates

The 2010 rates are in effect today and the Authoritys current toll rate structure is outlined in Table VII1.Tollcollectionsforpassengerandcommercialvehiclesfrom2005through2011aresummarizedin TableIII7.
TableVII1:CurrentThruwayTollStructure($)
Controlled (Cents/Mile) Cash
Commuter Motor Cycle 0.0470 0.0728 0.0864 0.0933 0.1604 0.1768 0.2390 0.2963 0.3536

Yonkers Cash
1.25 1.50 1.75 2.00 2.25 2.75 4.25 4.50 5.00

Harriman Cash
1.25 1.50 1.75 2.00 2.75 3.00 4.25 5.00 5.75

Spring Valley Cash

3.00 4.50 5.25 8.25 8.25 13.50 14.75 16.50

New Rochelle Cash

1.75 2.50 3.00 3.50 4.25 5.00 8.00 8.75 9.75

Tappan Zee Cash

5.00 11.50 13.75 14.75 20.75 24.75 32.75 41.00 49.25

Grand Island
(1)

2010

E-Z Pass
* 0.0235 0.0447 0.0691 0.0821 0.0886 0.1524 0.1680 0.2271 0.2815 0.3359

E-Z Pass
0.55 0.63 1.19 1.43 1.66 1.90 2.14 2.61 4.04 4.28 4.75

E-Z Pass
0.55 0.63 1.19 1.43 1.66 1.90 2.61 2.85 4.04 4.75 5.46

E-Z Pass
3.00 / 1.50 4.50 / 2.25 5.25 / 2.63 8.25 / 4.13 8.25 / 4.13 13.50 / 6.75 14.75 / 7.38 16.50 / 8.25 (1)

E-Z Pass
1.10 0.88 1.66 2.38 2.85 3.33 4.04 4.75 7.60 8.31 9.26

E-Z Pass
3.00 2.50

Cash
1.00 1.50 1.75 2.00 2.25 2.75 4.25 4.50 5.00

E-Z Pass
0.28 0.50 0.95 1.43 1.66 1.90 2.14 2.61 4.04 4.28 4.75

2L 3L 4L 2H 3H 4H 5H 6H 7H

4.75 / 4.75 11.50 / 5.75 13.75 / 6.88 14.75 / 7.38 20.75 / 10.38 24.75 / 12.38 32.75 / 16.38 41.00 / 20.50 49.25 / 24.63

B.

RecommendedIncreasetoCommercialTolls

JacobsisrecommendingthattheAuthorityadvancea45percentincreaseoncommercialtollratesasa means to meet the goals established above. However, in an effort to lessen the impact on local businesses that rely on the Thruway System, this recommended toll adjustment would exclude 2H commercialvehicletypes. Commercial vehicles and overweight trucks represent the single greatest demand on highway and bridgeinfrastructurefrombothanengineeringandfinancialstandpoint.Itisthisimpactthatsupports ourrecommendationtoimplementanadjustmenttoonlycommercialtollratesatthistime.According toinformationreceivedfromtheAuthority,basedonaNYSDOTreport:

PageVII1

An average passenger vehicle (typically 2axle) operating at 4,000 pounds causes minimal harmtohighwaypavementorbridges; Pavementdamageincreasesexponentiallyasvehicleweightincreases; Onelegallyloaded80,000poundgrossweight(typically5axle)commercialvehicle causes wearandtearontheroadequaltoapproximately9,600passengervehicles;and Ifatruckisloadedto95,000pounds(15,000poundsoverweight/beyondthelegallimit),its pavementdamagingimpactwillnearlydoubletothesimilardegreeofthedamagecaused by19,000passengervehicles.

FigureVII1comparesfiveaxletruckstollratespermileontheThruwayticketsystemtothosecharged on other toll roads in the northeast. Figure VII2 compares Tappan Zee Bridge fiveaxle truck tolls to roundtriptollsonothermajorrivercrossingsinthenortheast.Itisimportanttonotethatmanyofthe othertollfacilitiesanalyzedarenotasoldnordotheyexperiencethesameheavyweatherconditionsas theThruway.Asseenfromthesefigures,currentcommercialtollratesonboththeticketsystemand theTappanZeeBridgearebelowtheaverageintheregion. With the proposed 45 percent increase, ticket system commercial tolls will still remain below the averagefortollroadsandthecommercialtollrateintheTappanZeeBridgetollincreasewillbringtolls withintherangeofratescurrentlychargedattheMTABridges&TunnelsandPortAuthorityofNYand NJcrossings.Itisimportanttokeepinmindthatlargetollincreasesareeitherplannedorarelikelyto occuratmanyoftheotherfacilitiesshowninthesefigures.Asaresult,therecommended45percent commercialtolladjustmentwillmaintaintheThruwayspositionasarelativelyinexpensivetollfacility.

PageVII2

FigureVII1:NYSTATicketSystemTollRatesComparedtoOtherTollRoadsintheNortheast,5AxleTrucks
ChicagoSkyway(IL) DullesGreenway(VA) DelawareTurnpike(I95)(DE) PocahontasParkway(VA) JFKMemorialHighway(MD) MassachusettsTpke.,BostonExtension(MA) NorthSouthTollway(IL)(VeteransMemorial) BlueStarTpke(NH) PennsylvaniaTurnpike(PA) NewJerseyTurnpike(NJ) NEWYORKSTATETHRUWAY(2012TOLLINCREASE) NEWYORKSTATETHRUWAY(CURRENT) ChesapeakeExpressway(VA) IndianaTollRoad(IN) WestVirginiaTurnpike(WV) MaineTurnpike(ME) SpauldingTpke(NH) CentralTpke(NH) GardenStateParkway(NJ) DullesTollRoad(VA) MassachusettsTpke.,StateLinetoBoston(MA)
0 20 40 60 80 100 120 140 160 180 200 220

PeakTollRatePerMile(centspermile),5AxleTrucks StandardRate DiscountedETCRate

FigureVII2:TappanZeeBridgeTollRatesComparedtoOtherTolledCrossingsintheNortheast,5AxleTrucks

VerrazanoNarrowsBridge(NY) RFK,Whitestone,andThrogsNeckBridges(NYC)* PortAuthorityCrossings,CURRENT(NY/NJ) PortAuthorityCrossings,DEC2012(NY/NJ) PortAuthorityCrossings,DEC2013(NY/NJ) PortAuthorityCrossings,DEC2014(NY/NJ) PortAuthorityCrossings,DEC2015(NY/NJ) TAPPANZEEBRIDGE(2012TOLLINCREASE) BenFranklin&WaltWhitmanBridges(PA/NJ) BaltimoreHarbor&Ft.McHenryTunnels(MD)* TAPPANZEEBRIDGE(CURRENT) DelawareMemorialBridge(DE/NJ) ChesapeakeBayBridge(MD) I80andI78Bridges(PA/NJ) NewburghBeaconBridge(NY) *Roundtriptolls.Tollspaid perdirectionarehalfofthe amountshown. $0.00 $20.00 $40.00 $60.00 $80.00 TollRate,5AxleTrucks OffPeakEZPassToll $100.00 $120.00

DiscountedPeakEZ

StandardPeakEZPassToll

CashToll

PageVII3

ItisimportanttonotethatprevioustollincreasesindicatethatThruwaytrafficisrelativelyinsensitiveto increasesinthetollrates.Thisisdueinparttothefactthattherearefeweffectivecompetitiveroutes, andthatthephysicalconditionoftheThruwayisgenerallybetterthanthatofalternativeroutes.The safetyandsecurityrelatedservices,suchassnowplowingandpolicepatrols,arebetterontheThruway thanonalternativeroutes.Additionally,travelplazasalongthelengthoftheThruwayprovide24hour fuel,reststop,andfoodserviceswithouttheneedtoexitthesystem.Asaresultofanytollincrease, slightdeclinesintrafficvolumesareexpected.Thedeclineinvolumesincludesoperatorsthatchoosean alternativeroute,combinetripsorchoosenottotravelatall.Theamountofdivertedtrafficfromthe recommended45percentadjustmenttocertaincommercialtollratesisnotexpectedtobesignificant as a result of the proposed toll modifications. Table VII2 presents the proposed commercial toll schedule.
TableVII2:ProposedCommercialTollRates,2012

2012
3H 4H 5H 6H 7H

Controlled Cash
0.2326 0.2564 0.3466 0.4296 0.5127
(1)

Yonkers Cash
3.50 4.00 6.25 6.75 7.25

Harriman Cash
4.00 4.50 6.25 7.25 8.50

SpringValley Cash
12.00 12.00 19.75 21.50 24.00

NewRochelle
(1)

TappanZee Cash
30.25 36.00 47.50 59.50 71.50

GrandIsland
(1)

EZ Pass
0.2210 0.2436 0.3293 0.4081 0.4871

EZ Pass
3.33 3.80 5.94 6.41 6.89

EZ Pass
3.80 4.28 5.94 6.89 8.08

EZPass
12.00/6.00 12.00/6.00 19.75/9.88 21.50/10.75 24.00/12.00

Cash
6.25 7.25 11.75 12.75 14.25

EZ Pass
5.94 6.89 11.16 12.11 13.54

EZPass
30.25/15.13 36.00/18.00 47.50/23.75 59.50/29.75 71.50/35.75

Cash
3.50 4.00 6.25 6.75 7.25

EZ Pass
3.33 3.80 5.94 6.41 6.89

Peak/OffPeakEZPassRates

TableVII3providesacomparisonofexistingandproposedtollratesforsampletripsalongtheThruway SystemforClass5Hvehicles.

PageVII4

TableVII3:CurrentandProposedTollRatesforSampleClass5HTrips

SampleTrip

Payment Type Cash EZPass Cash EZPass Cash EZPass Cash EZPass Cash EZPass Cash EZPass Cash EZPass

Class5HTripToll Current $7.10 $6.75 $28.10 $26.70 $4.90 $4.66 $16.30 $15.49 $5.75 $5.46 $10.00 $9.50 $1.65 $1.57 Proposed $10.30 $9.79 $40.75 $38.71 $7.05 $6.69 $23.60 $22.42 $8.30 $7.89 $14.50 $13.78 $2.35 $2.23 $Change $3.20 $3.04 $12.65 $12.02 $2.15 $2.04 $7.30 $6.93 $2.55 $2.43 $4.50 $4.28 $0.70 $0.67 %Change 45.1% 45.1% 45.0% 45.0% 43.9% 43.7% 44.8% 44.8% 44.3% 44.5% 45.0% 45.0% 42.4% 42.4%

Woodbury(15)toNewburgh(17)

Woodbury(15)toAlbany(24)

Albany(23)toSchenectady(26)

Syracuse(36)toRochester(45)

Geneva(42)toRochester(45)

Leroy(47)toWilliamsville(50)

Lackawanna(55)toHamburg(57)

C.

TollandOtherRevenues

Table VII5 presents the projected toll revenues based on the recommended 45 percent increase in commercialtolls.Theforecastassumesthatcommercialtrafficwillbetemperedin2012and2013as theproposedtollincreasetakeseffectlaterin2012,promptingsomecommercialcustomerstoreduce theirdrivingontheThruway,eitherbyusingadifferentroute,combiningtrips,ornotmakingtheirtrip. Asnotedearlier,diversionofftheAuthoritysysteminresponsetotollchangeshasbeenhistoricallylow and temporary. Modest passenger and commercial traffic growth is projected after 2013 as the economy recovers from the recent recession. Traffic estimates, inclusive of the recommended commercial rate adjustment, are contained in Table VII4. Figure VII3 and Figure VII4 show corresponding graphs of historical and projected traffic and revenue for passenger, commercial and totalvehicles.

PageVII5

TableVII4:EstimatedTrafficwithProposedTollSchedule(millions)

PassengerCars Year 20101 20111 2012 2013 2014 2015 2016

1 2

CommercialVehicles Control 15.7 15.8 15.9 15.4 15.7 16.0 16.3 Barrier 9.1 9.3 9.4 9.3 9.4 9.6 9.8 Total 247.6 245 247.9 248.1 250.6 254.2 257.8

Control 129.0 126.6 128.0 128.5 129.7 131.5 133.3

Barrier 93.8 93.5 94.6 94.9 95.8 97.0 98.4

Percent Change 1.0% 1.1% 0.1% 1.0% 1.4% 1.4%

Actual TollIncreaseSeptember30,2012

TableVII5:EstimatedAnnualRevenueswithProposedTollSchedule(millions)

Year 2012 2013 2014 2015 2016 Total20122016

Passenger Revenue $409.4 410.4 413.8 418.9 424.2 $2,076.6

Commercial Revenue $254.5 320.9 326.1 331.5 336.6 $1,569.6

TotalToll Revenue $663.9 731.3 739.9 750.4 760.7 $3,646.1

Other Revenue(1) $31.9 32.5 33.9 34.9 35.9 $169.1

TotalRevenue $695.8 763.8 773.7 785.2 796.7 $3,815.2

(1)Duetointerestearningsonadditionalrevenue

PageVII6

FigureVII3:HistoricalandProjectedTollTrafficwithProposedTollSchedule,ThruwaySystem,19872016

FigureVII4:HistoricalandProjectedTollRevenuewithProposedTollSchedule,ThruwaySystem,19872016

PageVII7

D.

FundingRequirementandSources

TableVII6throughTableVII8showtheestimatedprojectedexpensesandrevenuesfortheAuthority, based on the recommended 45 percent commercial toll adjustment and the operational streamlining actions outlined earlier. As noted in Table VII8, the 45 percent toll adjustment will provide the revenuesrequiredtomeetexpensesandmeettherequirementsoftheBondResolution.
TableVII6:TotalProjectedAnnualRequirementswithProposedTollSchedule(millions)

Year 2012 2013 2014 2015 2016 Total20122016

Capital Program $384.0 374.0 377.0 383.5 474.3 $1,992.8

Operatingand Maintenance $431.0 421.7 424.4 437.4 450.5 $2,165.0

DebtService $202.8 246.5 264.1 285.0 312.4 $1,310.8

TotalRequirements $1,017.8 1,042.2 1,065.5 1,105.9 1,237.2 $5,468.6

TableVII7:ProjectedFundingSourceswithProposedTollSchedule(millions)

FundingSources Year TotalSources Federal Aid $2.9 1.0 0.7 0.0 0.0 $4.6 Other $37.5 41.9 12.2 12.4 13.1 $117.1

Debt Proceeds $277.4 235.4 278.9 308.3 424.5 $1,524.5

2012 2013 2014 2015 2016 Total20122016

$1,017.8 1,042.2 1,065.5 1,105.9 1,237.2 $5,468.6

Subtotal Exclusiveof Thruway Revenues $317.8 278.3 291.8 320.7 437.6 $1,646.2

Revenues Required fromTolls, etc. $700.0 763.9 773.7 785.2 799.6 $3,822.4

PageVII8

TableVII8:AvailableRevenuesvs.RequiredRevenueswithProposedTollSchedule(millions)

Year 2012 2013 2014 2015 2016

Revenues Requiredfrom Tolls,etc. $700.0 763.9 773.7 785.2 799.6

Revenueswith ProposedToll Schedule $700.0 763.8 773.7 785.2 796.7

Amount Over/Under Minimum Required $0.0 0.1 0.0 0.0 2.9

Cumulative Amount Over/Under $0.0 0.1 0.1 0.1 3.0

PageVII9

VIII. SUMMARYOFFINDINGS
TableVIII1showstheprojectedFlowofFunds,asdefinedbytheAuthoritysBondResolution,inclusive ofa45percentcommercialtolladjustmentimplementedinDecember2012.Asnoted,thisadjustment, coupledwithoperationalstreamlining,willallowdebtservicecoveragetobe1.6xin2012,1.6xin2013 anddecreasingto1.53xin2014,1.42xin2015and1.29xin2016.Asaresult,Jacobsbelievesthatthe revised toll rate structure will allow the Authority to build a strong foundation under which it can maintain its system in a state of good repair, fulfill its critical role in supporting the States growing economy, preserve its strong financial credit rating and comply with bond holder covenants until a financing plan is developed to address the Tappan Zee Bridge Project and the Authoritys longterm capitalneedsinlate2012orearly2013.
TableVIII1:FlowofFundswiththeProposedTollSchedule
ACTUAL 2011 Available Revenues Less: Operating Expenses Operating Reserves Total Net Revenues Less: Debt Service Net Revenues After Debt Service Less: Retained for Operating Reserves Net Revenues Less: Reserve Maintenance Provisions Other Authority Projects General Reserve Fund General Reserve Fund - BAN's/Line of Credit Balance After Reserve Maintenance Provisions, Other Authority Projects and General Reserve Fund Adjustments for Cash Basis
(2)

PROJECTED

2012 $695.8

2013 $763.8

2014 $773.7

2015 $785.2

2016 $796.7

Total (2012 to 2016) $3,815.2

$665.5

365.5 4.6 370.0 295.5 167.4 128.1 (4.3) 123.8

372.3 3.0 375.3 320.5 200.8 119.7 4.2 123.8

365.9 3.0 368.9 394.8 245.9 148.9 148.9

367.5 3.0 370.5 403.2 263.5 139.7 139.7

379.6 3.0 382.6 402.7 284.4 118.3 118.3

390.9 3.0 393.9 402.7 311.8 90.9 90.9

1,876.2 15.0 1,891.2 1,924.0 1,306.5 617.5 4.2 321.7

10.0 51.3 48.2 14.4 -0.1

61.0 55.7 5.2 1.9 0.0

67.0 52.7 28.6 0.6 0.0

51.9 53.8 33.3 0.6 0.0

32.3 54.9 30.4 0.6 0.0

56.6 36.7 0.6 -3.0

212.2 273.8 134.2 4.3 -3.0

0.1

Net Balance Available for Working Capital $0.0 $0.0 $0.0 $0.0 $0.0 -$3.0 -$3.0 (1) Totals may not add due to rounding. (2) Shows the Reserve Maintenance Fund provision will be funded from Debt proceeds when sufficient revenues are not available.

Debt Service Coverage Pay go %

1.76 17.6%

1.60 27.8%

1.61 37.1%

1.53 26.0%

1.42 19.6%

1.29 10.5%

PageVIII1

 APPENDIXA
HypotheticalTollAnalysis

TechnicalMemorandum

Date To From Subject

4April2012 JohnBryan,DorraineSteele;NYSTA RichardGobeille,Jacobs HypotheticalTollAnalysis

At the request of the New York State Thruway Authority, Jacobs prepared estimates of toll revenues that may have been generated by the Authority if a regular program of toll modifications had been followed since1988. ThefinancingoftheThruwaysoriginalconstructionwasaccomplishedthroughtheissuanceofTollRevenue Bonds. Thereafter, during the first quarter century of usage on the facility, capital needs were generally limitedtoexpansionprojectsandcouldbefundeddirectlyfromtollrevenues.Asthefacilitiesbegantoage, the need for large reinvestments of capital into the infrastructure became necessary to assure the continued safe and efficient operation of the toll facilities. It is this reinvestment need that has placed significant pressure on the Authoritys ability to maintain its system in a state of good repair while preservingitsfinancialhealth. The history of toll increases is shown in the Appendix Table A1. During the period from 1959 to 1988, therewerefivechangesintollratesthatoccurredonafairlyregularbasis.Intheensuingperiodfrom1988 through2004,therewereverylimitedmodificationstothetollratestructure.Theseincluded(i)1991toll increaseattheSpringValleyBarrierthatwasphasedfromthe1988tollincrease;and(ii)the1997Tappan Zee Bridge Corridor Relief Initiative, which resulted in the removal of passenger car tolls from the Spring ValleyBarrier,theconversionoftrucktollstoonewaynorthbound,peakperiodpricingoftrucktolls,anda $0.50increaseinpassengercartollsattheTappanZeeBridge.Between2005and2011,tofundanew$2.6 billionMultiYearCapitalProgram,severalmodificationstothetollratestructurewereimplemented.Itis important to note that those most recent toll adjustments were only designed to fund capital and operational costs for the 2005 through 2011 MultiYear Capital Program. It was expected that a toll adjustmentwouldbenecessaryin2012tofundtheoperatingandcapitalneedsfor2012andthereafter. Jacobsutilizedtwocommonlyusedindicesthathistoricallyareusedtomeasurechangesincostovertime, theConsumerPriceIndex(CPIbytheBureauofLaborStatistic)andtheConstructionCostIndex(CCIfrom the Engineering News Record). For the period from the Thruways opening in 1954 through 2012, both measuresofcostescalationincreasedatasubstantiallyhigherratethantheThruwaytollrates.Ifmainline tollratesgrewataratecomparabletoCPI,tollswouldbesometwotimesgreaterthantheyaretodayand overfourtimesgreateriftollratestrackedtheCCI.AcomparisonisshowninFigures1forthemainline. AppendixFigureA1showsthecomparisonfortheTappanZeeBridge.Similarly,FigureA2intheAppendix showsthatthegrowthoftrafficalsohasnotkeptpacewitheithermeasureofcostgrowth.

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Figure1:ComparisonofActualandHypotheticalTollRatesforPassengerCarsontheTicketSystem

Table A2 in the appendix shows Revenues, Operating and Maintenance (O&M) Costs, Debt Service, and RevenuesAvailableforCapitalfortheperiod1988through2011.Overthisperiod,operatingcostsappear to have increased significantly during the period from 1988 through 2005. However, there were two onetimechangestotheO&Mrequirementsthatweretheprimarycontributorstotheincrease.In1992,the AuthorityassumedresponsibilityfortheCanalthataddedapproximately$30millionofadditionalexpenses annually, which have grown to over $80 million today. In addition, operating expenses were impacted in 2002duetoimplementationofGASB34(Statement#34oftheGovernmentalAccountingStandardsBoard), whichrequired certain capitalandequipmentexpenditurestobetreatedas operatingexpenses. To help offset these increases, the Authority implemented a significant cost containment program that, among othersavings,resultedintheeliminationof613positionssince1995. From 1988 through 2005, Debt Service also escalated significantly. During this period, the Thruway completed numerous capacity expansion and safety projects. Also, given the Thruways age, significant reinvestmentofcapitalhasbeenrequiredtomaintainthequalityofserviceandsafetythatisexpectedby theusersoftheSystem.Since1988,alargeportionofthiscapitalprogramwasfundedthroughbonding withincreasingdebtservicebeingareflectionofthecontinuedinvestmentintheAuthoritysaginghighway andbridgeinfrastructure. TheAuthorityscapitalprogramsince1988issummarizedinTableA3.Asnotedinthistable,totalrevenues collected in 2011 are more than double what was collected in 1988, while the payasyougo funding for capitalprogramshasbeenreducedbyalmost50percent.FigureA2showsthechangeovertimeinthepay asyougo share of capital expenses. As the differential between revenues and costs increased over this period,theThruwaywasrequiredtotakeonmoredebttofunditsprimarycapitalneedsandmaintaingood highway and bridge conditions. With toll rates lagging behind the rising costs of maintenance and construction, the Thruways constantly reevaluated the types of infrastructure investments that were necessarytopreservegoodoverallhighwayandbridgeconditions.Thoseimprovements,thougheffective, werenotnecessarilytheoptimuminvestmentfromafulllifecycleperspectiveduetofundingpressures.

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IftollshadincreasedperiodicallyinlinewithCPIovertheperiod1988through2011,itisestimatedthatthe Thruwaywouldhavecollectedsome $1.5billioninadditional tollrevenues.Iftollshadinsteadincreased periodicallyinlinewiththeCCIoverthesameperiod,itisestimatedthattheThruwaywouldhavecollected nearly$2.5billioninadditionalrevenues.TotalrevenuesforeachscenarioareshowninFigure2.

Figure2:EstimatedAnnualRevenues(inmillions)forHypotheticalTollIncreaseScenarios

FigureA4intheAppendixshowsadetailedestimationoftollrevenuesbyyearfortheperiod1988through 2011,comparedtoactualtollrevenuesforthisperiod.Overall,theseriesoftollincreasesimplementedby the Thruway in the late 2000s effectively caught up to the toll rates for the CPI scenario in 2010 (again, applyingratesofinflationonlysince1988,notsinceThruwayopening).However,thecurrentratesarestill wellbelowthosehypotheticalratesindexedtotheCCI. Summary Since1988,theThruwayhasimplementedarobustcapitalprogramthathasimprovedthesafety,expanded thecapacityinseveralsections,andbegantheprocessofinvestinginthepreservationoftheThruwayand Canalinfrastructure.Thelimitedtollmodificationsfrom1988through2005haveresultedinlargeportions ofthecapitalprogrambeingfundedfromdebt.Thesignificantadditionaltollrevenuesthatmayhavebeen availableifaregulartolladjustmentprogramhadbeenfollowedtiedtoeitherCPIorCCIwouldhavealtered the Thruway finances significantly. Among the outcomes that may have resulted if the additional toll revenueswerecollectedinclude:

Lowerlevelofbondfinancing, Higherpayasyougopercentagepreservingavailablerevenuesforfuturebondsales,

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Larger capital program moving some rehabilitation and reconstruction projects forward to potentiallysaveonthelifecyclecostfortheimprovements. Reducedpressuretoincreasetollstofundthecurrentcapitalprogram.

It is impossible to look back and determine precisely what program would have been followed through 2011.However,regardlessoftheprogramfollowed,thesignificantadditionalrevenuesshowninTable 1 wouldhave placed the Thruwayina verystrongfinancialpositiongoingforwardintherecapitalizationof theThruwaySystem.
Table1:EstimatedAnnualRevenues(inmillions)forHypotheticalTollIncreaseScenarios

Year 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Cumulative Notes:

ActualTotal $269.2 $289.9 $290.7 $287.9 $294.3 $300.6 $315.4 $326.9 $336.8 $351.8 $373.9 $391.8 $407.1 $411.8 $423.4 $427.2 $439.6 $511.2 $554.4 $540.3 $562.7 $611.6 $641.2 $634.1 $9,993.7

EstimatedAnnualRevenue($M) HypotheticalTotal HypotheticalAdditionalRevenue CPI CCI CPI CCI $269.2 $269.2 $0.0 $0.0 $289.9 $289.9 $0.0 $0.0 $290.7 $290.7 $0.0 $0.0 $287.9 $287.9 $0.0 $0.0 $294.3 $294.3 $0.0 $0.0 $356.7 $385.0 $56.1 $84.4 $374.3 $404.0 $58.9 $88.6 $387.9 $418.8 $61.0 $91.9 $399.7 $431.5 $62.9 $94.7 $406.9 $439.2 $55.1 $87.4 $479.5 $519.4 $105.6 $145.5 $502.6 $544.5 $110.9 $152.7 $522.6 $566.3 $115.6 $159.2 $528.6 $572.7 $116.8 $160.9 $544.0 $589.4 $120.6 $166.0 $610.7 $658.5 $183.5 $231.3 $628.6 $677.7 $189.0 $238.1 $626.1 $675.6 $114.9 $164.4 $628.8 $679.1 $74.5 $124.7 $614.7 $663.8 $74.4 $123.5 $601.8 $680.8 $39.1 $118.1 $626.9 $709.1 $15.2 $97.5 $632.8 $715.9 $8.4 $74.7 $625.0 $707.2 $9.0 $73.1 $11,530.4 $12,470.6 $1,536.7 $2,476.8

GreenShadingIndicatesActualTollIncrease OrangeShadingIndicatesHypotheticalIncreasesat RegularIntervals

JacobsNAISurfaceTransportationConsultancy

TechnicalMemorandum

APPENDIX Averagetollincreasesfrom1959through2010.
TableA1:AverageTollIncreases1959through2010

Year 1959 1970 1975 1980 1988 1991 1997 2005 2008 2008 2009 2010

AverageIncrease Cars Trucks 28% 18% 0% 19.0% 15% 8.0% 25% 30% 32% 38% 14% 0% 100%in 20% Peak Period 25% 35% 10% 10% 5% 5% 5% 5%

Notes OnlyClass14increased ClassChange VariedbyLocation

SpringValleyPassengerCarsOnly TappanZeeCorridorRelief (CongestionPricing) ClassChange JulyEZPassOnly,DiscountDecreasedto 5%fromcashrate

AverageTollRatecomparedtoCPIandCCI.
FigureA1:ComparisonofActualandHypotheticalTollRatesforPassengerCarsontheTappanZeeBridge

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AppendixPage2of5

ThruwaytrafficgrowthcomparedtoCPIandCCI.

FigureA2:ComparisonofThruwayTrafficwithInflationandCCI

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AppendixPage3of5

PayasyougorevenuesavailableforcapitalProgram.

TableA2:RevenuesAvailableforReserveFunds(inmillions)

Year 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Availablefor Debt Capital Total TotalCosts Service(3) Projectsand Revenues Thruway(1) I84(2) Canal(2) Equipment $175.2 $293.5 $40.2 $118.3 $135.0 $177.2 319.1 37.6 141.9 139.6 $190.1 321.2 42.9 131.1 147.2 $201.6 308.7 43.7 107.1 157.9 $227.5 307.4 39.1 79.9 168.8 $5.5 $14.1 $264.7 315.4 50.9 50.7 182.2 10.9 20.7 $291.4 335.1 48.7 43.7 197.6 12.2 32.9 $288.9 346.7 62.6 57.8 194.4 9.0 22.9 $290.7 359.5 60.2 68.8 195.8 9.4 25.3 $302.7 380.0 78.3 77.3 189.5 8.8 26.1 $313.3 404.3 80.4 91.0 198.9 8.3 25.7 $317.2 429.9 84.4 112.7 202.5 8.1 22.2 $326.0 434.3 89.7 108.3 221.6 9.5 5.2 $357.3 441.9 92.0 84.6 229.1 10.3 25.9 $403.5 449.9 93.2 46.4 267.9 10.5 31.9 $409.0 454.6 94.0 45.6 272.5 11.8 30.7 $409.3 470.0 92.7 60.3 299.2 11.9 5.5 $466.4 547.3 108.4 80.9 307.3 12.5 38.2 $506.5 594.0 128.5 87.5 323.7 11.5 42.8 $528.5 581.6 135.8 53.1 339.0 10.3 43.4 $546.0 596.2 163.5 50.2 337.3 45.2 $572.3 638.3 176.9 66.0 346.7 48.7 $601.4 672.5 191.2 74.3 364.2 46.0 $603.1 665.5 181.8 62.4 370.0 51.3 (1) Includesprovisionsforclaimsandindemnitiesandenvironmentalremediationreserves. (2) TransferstoOtherAuthorityProjectsOperatingFund. (3) IncludesCWEBondsandinterestexpenseonNotes. OperatingandMaintenance

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AppendixPage4of5

Payasyougopercentage,revenuesavailableforcapitalProgram.
FigureA3:ComparisonofThruwayFinanceswithPercentPayasyouGo

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Payasyougopercentage,revenuesavailableforcapitalProgram.
TableA3:CapitalSpendingandAvailableFunds,20052011(millions)

Year

TotalCapital Expenditures

Revenues Availablefor Capital Projectsand Equipment (PayGo) $118.3 141.9 131.1 107.1 79.9 50.7 43.7 57.8 68.8 77.3 91.0 112.7 108.3 84.6 46.4 45.6 60.3 81.2 87.5 53.2 50.2 66.0 74.3 62.4

Funding Required fromDebt andOther Sources $11.9 16.4 56.4 88.9 109.9 277.4 253.7 128.9 77.5 81.2 159.7 192.5 125.4 198.6 187.6 183.4 128.3 64.2 157.1 317.3 305.0 255.2 303.4 383.1

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

$130.2 158.3 187.5 196.0 189.8 328.1 297.4 186.7 146.3 158.5 250.7 305.2 233.7 283.2 234.0 229.0 188.6 145.4 244.6 370.5 355.2 321.2 377.7 445.5

Percentof Capital Funding Required fromDebt andOther Sources 9% 10% 30% 45% 58% 85% 85% 69% 53% 51% 64% 63% 54% 70% 80% 80% 68% 44% 64% 86% 86% 79% 80% 86%

JacobsNAISurfaceTransportationConsultancy

 APPENDIXB
EconomicImpactoftheThruwayAuthorityInvestmentsandOperations

The Economic Impact of New York State Thruway Authority Investments and Operations

Prepared by:

April 2012

ExecutiveSummary
Inchangingeconomicconditions,thetransportationsystemsmanagedbytheNewYork StateThruwayAuthority roadways,bridgesandcanals areessentialtosupporting businessesandcommunities. Thesystemisvast 570milesofroadwaysand524milesofcanals oneofthelargest StatetransportationnetworksintheNation. Overthe20052011period,theoperations,maintenanceandcapitalimprovementsof thesesystems,includingtheprivatelyoperatedtravelplazas,accountedforanestimated: 6,725onsitepublicandprivatesectorjobsannually 10,150totaljobsthroughoutNewYorkStateannually 4,300additionaljobselsewherethroughouttheUSannually $575 million in personal income and benefits annually $575millioninpersonalincomeandbenefitsannually $1.23billioninbusinesssalesandproductionannually $207.5millioninfederal,stateandlocaltaxrevenues
LocalandStateTaxRevenue:$130.1million FederalTaxRevenue:$77.4million Federal Tax Revenue: $77 4 million

Theseimpactsdonotincludetheeconomicvalueofthecommercethattraversesthe Thruwayroadwaysandcanals.

EstimatedAnnualOnGoingOnSiteandPartTimeJobs ( (20052011) )

Rochester Region

Syracuse Region

Buffalo Region

Over 1,500

Nearly 500

About 1,260

Nearly 1,775

Albany Region

Metro NYC Region 10,150totaljobsinNewYorkState 4,300additionaljobselsewhereintheUS

Over 1,470

TheNewYorkStateThruwayandCanalSystem

Introduction
TheThruwayandCanalSystemsarekeyarteriesofcommerceinNewYorkState transportingproductsandservices,facilitatingtourismandrecreationalactivities,and connectingresidentswiththeirworkplaces. connecting residents with their work places TheThruwaysoriginsbeginin1942whenNewYorkrecognizedthattheStateneeded amodernandrobusthighwaysystemthatcouldservepostWorldWarIIneeds. TheAuthority,createdin1950,investedinandoperatesa570milehighway system,oneofthelargesttollroadsintheNation. In1992,theAuthorityalsoassumedresponsibilityfortheoperationsand maintenanceofthe524mileNewYorkStateCanalSystem,whichincludesthe historicErieCanal. TheAuthorityalsomaintains27travelplazas,manywithawardwinningdesigns, reflectingtheheritageoftheirareas. Thisreportsummarizestheeconomicimpactsassociatedwith: Th Theongoingoperationandmaintenanceofthehighway,bridgeandcanalsystems. i ti d i t f th hi h b id d l t Thesubstantialcapitalinvestmentsthathaveandcontinuetobemadeinthis importantinfrastructurenetwork.

TheAuthoritysRegions
Economicimpactswereassessed atboththeNewYorkStateand b h h N Y kS d Nationallevels,aswellasthe followingfivelocalregionsthatthe Authoritysfacilitiesarelocatedin: TheMetropolitanNewYork CityRegion TheAlbanyRegion The Syracuse Region TheSyracuseRegion TheRochesterRegion TheBuffaloRegion

Rochester Region

Syracuse Region

Buffalo Region

Albany Region

MetroNYC Region

EconomicImpactsofPastCapitalExpenditures Economic Impacts of Past Capital Expenditures (20052011)

ThruwayConstructionandInvestmentCreate AdditionalEconomicImpact
Capitalimprovementeconomicimpactsoccuronlywhentheconstructionandinvestmentactivities aretakingplace. Th Theseimpactsareseparate f i fromtheongoingeconomicvaluegeneratedbyThruway h i i l d b Th operationsdiscussedlater. Whentheconstructionactivitiesarecompleted,theworkersmoveontootherareasand otherprojects. TheThruwayhasinvestedsubstantiallysince2005,withnearly$1.9billionspentincapital y y , y$ p p improvementprojects. InNewYorkState,theThruwayrelatedconstructionandinvestmentactivitybetween2005and 2011accountedforthefollowingjobsandeconomicbenefitovertheinvestmentperiod: 6,820onsitefull andparttimejobsinNewYorkStateorabout974jobsannually 14 850 t t l j b th 14,850totaljobsthroughoutNewYorkStateorabout2,121jobsannually h t N Y k St t b t 2 121 j b ll Anadditional10,790jobselsewhereintheUSorabout1,541jobsannually,whichincludes themanybusinessesthatsupplygoodsandservicesinsupportofThruwayconstructionand capitalinvestments. Over$1.13billioninpersonalwagesandbenefitsinNewYorkState. Nearly$3.2billioninbusinesssalesinNewYorkState Over$451millioninfederal,stateandlocaltaxrevenues
LocalandStateTaxRevenue:$185million FederalTaxRevenue:$266million

TheEconomicValueGeneratedbyThruway The Economic Value Generated by Thruway InvestmentsMadeBetween2005and2011

TotalImpactsOvertheConstructionPeriodof20052011 NotAnnualized GeographicalLevelofImpacts Regions NewYorkState Directemployment Direct employment Totalemployment Personalincome(inmillions$) Businessactivity(inmillions$) StateandLocalTaxes(inmillions$) FederalTaxRevenue(inmillions$) TotalTaxRevenue(inmillions$) 6,819 6 819 14,847 $1,135.3 $3,186.6 $185.3 $266.0 $451.3 Rochester 251 251 559 $35.8 $100.1 $6.0 $8.6 $14.5 Buffalo 1,400 1 400 2,966 $165.4 $555.0 $34.7 $44.7 $79.4 MetroNY 2,342 2 342 4,465 $390.9 $937.0 $50.6 $81.6 $132.2 Albany 618 618 1,272 $71.4 $249.4 $16.0 $20.1 $36.0 Syracuse 704 704 1,617 $104.3 $333.2 $22.0 $28.5 $50.4 USLevel 8,463 8 463 25,635 $1,521.8 $4,691.8 $207.7 $345.7 $553.4

All dollar amounts in millions of 2012 dollars. Employment includes both full- and part-time workers. The proportion of full-time workers varies by industry. For example, the construction sectors also entirely consist of full-time workers. The food service industry has one of the higher amounts of full time part-time workers. Total jobs includes the full multiplier effect direct, indirect and induced jobs in the region. Business activity is defined as the value of industry production or, in the case of service industries, sales. The economic impact assessment was conducted using customized Implan models developed by the team for each of the five regions and for New York State.

TheThruwayMadeSubstantialInvestments y
CapitalInvestmentsUndertakenFrom2005through2011 ProjectType Project Type ArchitecturalServices BridgeProjects CanalProjects Canal Projects HighwayProjects IntelligentTransportationSystems(ITS) RehabilitationWork Rehabilitation Work Trails TOTAL ExpenditureinMillions Expenditure in Millions $80.5 $650.4 $128.4 $ 128 4 $978.2 $42.3 $1.9 $ 1.9 $11.9 $1,893.6

ThruwayConstructionandCapitalInvestments Thruway Construction and Capital Investments SupportManyBusinessesthroughouttheState

Capitalandconstructionexpendituresmadebetween2005and2011rippledthrough theStateseconomy. Thebusinessessupportedbytheexpendituresbyagencies,suppliersandworkers include:
Employment Construction ArchitecturalandEngineeringServices FoodServices HealthServices SteelProductManufacturing WholesaleBusinesses RealEstateBusinesses ConcreteProducts MgmtandTechnicalConsulting AllOther 5,134 1,289 608 594 567 320 317 278 251 5,489

EconomicImpactsofPlannedCapitalExpenditures Economic Impacts of Planned Capital Expenditures (20122015)

TheInvestmentsareContinuous The Investments are Continuous

AdditionalinvestmentsareprogrammedfortheThruwaystransportationsystems. Nearly$1.2billionincapitalandconstructionprojectsareplannedtooccurbetween y p p j p 2012and2015. Theseinvestmentsandanalysisdonotincludetheproposed$5.3billionprojectto replacetheTappanZeeBridge. p p p p g Theimpactsofexpected20122015investmentsareanticipatedtoproducethefollowing jobsandeconomicbenefitovertheconstructionperiod: 4,350onsitefull andparttimejobsinNewYorkStateorabout1,088jobsannually 9,460totaljobsthroughoutNewYorkStateorabout2,364jobsannually An additional 6,790 jobs elsewhere in the US or about 1,698 jobs annually, which Anadditional6,790jobselsewhereintheUSorabout1,698jobsannually,which includesthemanybusinessesthatsupplygoodsandservicesinsupportofThruway constructionandcapitalinvestments. $723millioninpersonalwagesandbenefitsinNewYorkState. Over $2 billion in business sales in New York State Over$2billioninbusinesssalesinNewYorkState $287millioninfederal,stateandlocaltaxrevenues
LocalandStateTaxRevenue:$118million FederalTaxRevenue:$169million

EstimatedEconomicValueGeneratedbyThruway Estimated Economic Value Generated by Thruway ProgrammedInvestmentsBetween2012and2015

TotalImpactsOvertheConstructionPeriodofFutureAnticipatedInvestments NotAnnualized GeographicalLevelofImpacts Regions NewYorkState Directemployment Totalemployment Personalincome(inmillions$) Businessactivity(inmillions$) StateandLocalTaxes(inmillions$) FederalTaxRevenue(inmillions$) Federal Tax Revenue (in millions $) TotalTaxRevenue(inmillions$) 4,351 9,456 $723.3 $2,009.5 $117.9 $169.0 $ 169 0 $286.9 Rochester 55 113 $6.5 $17.4 $0.9 $1.4 $ 14 $2.3 Buffalo 1,334 2,803 $155.4 $513.2 $31.0 $41.1 $ 41 1 $72.1 MetroNY 623 1,163 $99.5 $231.8 $11.8 $20.2 $ 20 2 $31.9 Albany 597 1,279 $73.2 $259.8 $16.0 $20.5 $ 20 5 $36.5 Syracuse 282 599 $34.9 $109.3 $6.6 $9.1 $ 91 $15.7 USLevel 5,399 16,242 $964.4 $2,943.5 $131.5 $218.5 $ 218 5 $350.0

Alldollaramountsinmillionsof2012dollars. Employmentincludesbothfull andparttimeworkers.Theproportionoffulltimeworkersvariesbyindustry.Forexample,the constructionsectorsalsoentirelyconsistoffulltimeworkers.Thefoodserviceindustryhasoneofthehigheramountsofparttime y ff f y f g fp workers. Totaljobsincludesthefullmultipliereffect direct,indirectandinducedjobsintheregion. Businessactivityisdefinedasthevalueofindustryproductionor,inthecaseofserviceindustries,sales. TheeconomicimpactassessmentwasconductedusingcustomizedImplan modelsdevelopedbytheteamforeachofthefiveregionsand forNewYorkState. for New York State.

SignificantInvestmentsWillContinuetobeMade Significant Investments Will Continue to be Made

CapitalInvestmentsPlannedfor2012through2015 ProjectType Project Type ArchitecturalServices BridgeProjects j CanalProjects HighwayProjects IntelligentTransportationSystems(ITS) RehabilitationWork Trails TOTAL ExpenditureinMillions Expenditure in Millions $23.3 $433.2 $ $166.3 $531.8 $13.2 $10.3 $9.4 $1,187.5

ReplacementoftheTappanZeeBridgeisnotincluded.

PlannedConstructionandCapitalInvestmentWillContinue Planned Construction and Capital Investment Will Continue SupportManyBusinessesthroughouttheState

Similartotheinvestmentsalreadymade,theplannedcapitalandconstruction expenditureswillripplethroughtheStateseconomy. TheNewYorkbusinessessupportedbytheexpendituresbyagencies,suppliersand workersinclude:
Employment Construction ArchitecturalandEngineeringServices FoodServices HealthServices SteelProductManufacturing RealEstateBusinesses WholesaleBusinesses MgmtandTechnicalConsulting AllOther 3,179 886 390 379 362 202 201 185 3,673

EconomicImpactsofOperationsandMaintenance Economic Impacts of Operations and Maintenance Expenditures(20052011)

TheEconomicValueofThruwayOperationsAre The Economic Value of Thruway Operations Are SpreadthroughoutNewYorkState

In2011,theNewYorkStateThruwayhandled 245.2millionvehicletrips. TheoperationandmaintenanceoftheAuthoritystransportationsystems,includingtheprivately operatedtravelplazas,accountfor: 5,750onsitepublicandprivatesectorjobsannually 8,030totaljobsthroughoutNewYorkStateannually 2,760additionaljobsthroughouttheUSannually $413millioninpersonalincomeandbenefitsannually $772millioninbusinesssalesandproductionannually $143millioninfederal,stateandlocaltaxrevenuesannually , y
LocalandStateTaxRevenue:$50.9million FederalTaxRevenue:$92million

Ongoingonsitefullandparttimejobsinclude: Nearly1,690jobsintheAlbanyregionannually Over1,300jobsintheBuffaloregionannually About1,160jobsintheSyracuseregionannually Nearly1,140jobsintheMetropolitanNewYorkregionannually Over460jobsintheRochesterregionannually j g y

AnnualValueofOngoingThruwayandCanal Annual Value of Ongoing Thruway and Canal Operations

GeographicalLevelofImpacts Regions NewYorkState Directemployment Totalemployment Personalincome(inmillions$) Businessactivity(inmillions$) StateandLocalTaxes(inmillions$) FederalTaxRevenue(inmillions$) Federal Tax Revenue (in millions $) TotalTaxRevenue(inmillions$) 5,751 8,029 $413.0 $772.0 $50.9 $92.1 $ 92 1 $143.0 Rochester 462 653 $31.2 $59.8 $4.0 $7.2 $ 72 $11.2 Buffalo 1,304 1,863 $91.2 $174.3 $11.4 $21.0 $ 21 0 $32.3 MetroNY 1,137 1,515 $99.5 $168.1 $10.1 $19.6 $ 19 6 $29.7 Albany 1,687 2,408 $123.2 $230.2 $15.7 $28.3 $ 28 3 $44.0 Syracuse 1,161 1,590 $67.9 $139.6 $9.6 $16.0 $ 16 0 $25.7 USLevel 5,751 10,793 $529.7 $1,142.9 $53.3 $111.5 $ 111 5 $164.8

All dollar amounts in millions of 2012 dollars. Employment includes both full- and part-time workers. The proportion of full-time workers varies by industry. For example, the construction sectors also entirely consist of full-time workers. The food service industry has one of the higher proportion full time of part-time workers. Total jobs includes the full multiplier effect direct, indirect and induced jobs in the region. Business activity is defined as the value of industry production or, in the case of service industries, sales. The economic impact assessment was conducted using customized Implan models developed by the team for each of the five regions and for New York State.

AWideRangeofNewYorkStateBusinessesand A Wide Range of New York State Businesses and JobsareSupported

AnnualAuthorityoperationsandmaintenanceeffortssupportjobsinawiderangeof industries,reflectingthespendingofagencies,businessesandhouseholds. Thejobssupportedinclude:
Employment NewYorkStateThruwayAuthority FoodServices(ServiceAreas) HealthServices RealEstateBusinesses FoodandBeverageStores OtherGovernmentAgencies AllOther 4,000 1,856 240 123 79 54 1,677

Definitions and Terminology

EconomicImpactDefinitions WhatisaMultiplier? p p
Theeconomicimpactassessmentestimatesthe totalimpacts,whicharedefinedtoinclude:
Direct thespendingbytheNewYorkStateThruway anditsprivatepartners(e.g.,restaurantsand and its private partners (e g restaurants and gasolinestationsinthetravelcenters).Directeffects arethefocalpointofanimpactanalysis. Indirect thepurchasesofgoodsandservicesby suppliers.Bydefinition,thefirstroundofindirect suppliers. By definition, the first round of indirect impactsincludesthepurchaseofsuppliesand servicesthatarerequiredtoproducethedirect effects.Subsequentpurchasesofsuppliesand servicesgenerateotherroundsofindirectimpacts. Suchpurchasescontinuetoripplethroughthe S h h ti t i l th h th regionaleconomy. Induced thepurchases(ofsuchitemsasfood, clothing,personalservices,vehicles,etc.)thatarise, inturn,fromtheincreaseintheaggregatelabor in turn, from the increase in the aggregate labor incomeofhouseholds.

Thetotaleconomicimpactconsistsofthedirect, indirectandinducedeffects.

EconomicImpactMeasurements Economic Impact Measurements

EmploymentEffects Jobsgeneratedorsupported,including: Directemployment:onsitefull andparttimeequivalentjobsorjobs. Total employment: The total number of full time equivalent jobs (direct indirect and induced) Totalemployment:Thetotalnumberoffulltimeequivalentjobs(direct,indirectandinduced) generatedineachofthegeographicallydefinedregions. TotalBusinessOutputs Outputrepresentsthevalueofindustryproduction.InIMPLAN,theseare annualproductionestimatesfortheyearofthedatasetandareinproducerprices.For manufacturersthiswouldbesalesplus/minuschangeininventory.Forservicesectorsproduction= p / g y p sales.ForRetailandwholesaletrade,output=grossmarginandnotgrosssales. TotalPersonalIncomeEffects Includesallformsofemploymentincome,includingEmployee Compensation(wagesandbenefits)andProprietorIncome. TotalStateandLocalTaxEffects definedasrevenuescollectedbystateandsubstate governments.Thetaxesincludeemployee,personalproprietor,business,householdandcorporate taxes. TotalFederalTaxEffects definedasrevenuescollectedbythefederalgovernmentfromcorporate income,personalincome,socialsecurity,andexcisetaxes.

AbouttheApproach About the Approach

JacobsandA.StraussWieder,Inc.workedcloselywithNewYorkStateThruway Authoritystaffto: R i Receiveandcompileinformationoncapitalinvestmentsandoperations,including d il i f ti it l i t t d ti i l di informationonrestaurantandgasolinestationsatthetravelplazas. Definethefivesubstateregionsincludedintheeconomicimpactassessment. Separatethecapitalandoperationalinformationintothefiveregions. CreatecustomizedversionsoftheIMPLANmodelforNewYorkStateandthefive regions. Translatethecapitalandoperationalexpendituresintotheinformationneededto undertaketheeconomicimpactassessmentandconductedtheanalysis. undertake the economic impact assessment and conducted the analysis Undertakepostassessmentchecks,includingcomparingmodelgenerated estimatesofpublicfull andparttimeoperationsemploymentwithactualjobs.

AbouttheEconomicImpactModel
TheIMPLANversion3.0modelwasusedforthisassessment.Implanisacompleteeconomic assessmentpackageincludingdataandsoftware.TheNewYorkStateandcountylevelinformation wereacquiredforthisassessment.MoreinformationonImplancanbefoundat http://implan.com/V4/ Thebasicframeworkforinputoutput(IO)analysisoriginatednearly250yearsagowhenFranois QuesenaypublishedTableauEconomique in1758.Quesenaystableaugraphicallyand numericallyportrayedtherelationshipsbetweensalesandpurchasesofthevariousindustriesofan u e ca y po t ayed t e e at o s ps bet ee sa es a d pu c ases o t e a ous dust es o a economy.Morethanacenturylater,hisdescriptionwasadaptedbyLeonWalras,whoadvanced inputoutput(IO)modelingbyprovidingaconcisetheoreticalformulationofaneconomicsystem (includingconsumerpurchasesandtheeconomicrepresentationoftechnology). WassilyLeontiefgreatlyadvancedWalrasstheoreticalformulationandwasawardedtheNobel Prizein1973.Leontieffirstusedhisapproachin1936whenhedevelopedamodelofthe1919and Prize in 1973 Leontief first used his approach in 1936 when he developed a model of the 1919 and 1929U.S.economiestoestimatetheeffectsoftheendofWorldWarIonnationalemployment. Recognitionofhisworkawaitedwideracceptanceanduseoftheapproach.Thismeant developmentofastandardizedprocedureforcompilingtherequisitedata(todaysnational economiccensusofindustries)andenhancedcapabilityforcalculations(i.e.,thecomputer).The federalgovernmentimmediatelyrecognizedtheimportanceofLeontief sdevelopmentandhas federal government immediately recognized the importance of Leontiefs development and has beenpublishinginputoutputtablesoftheU.S.economysince1939.

BackgroundonInputOutputAnalysis
IOmodelingfocusesontheinterrelationshipsamongsectorsinaneconomy.WithintheIOmodel, theeconomyofanareaismappedoutintableform,witheachindustrylistedacrossthetopasa consumingsector(ormarket)anddownthesideasaproducingsector. Inputoutputmodelingisamongthemostacceptedmeansforassessingeconomicimpacts,as previouslyindicated.Theapproachprovidesaconciseandaccuratemeansforarticulatingthe previously indicated The approach provides a concise and accurate means for articulating the interrelationshipsamongindustrysectors.Themodelscanbequitedetailed.Asnotedpreviously, thecurrentU.S.andIMPLANmodelshavemorethan400sectors.Thislevelofdetailprovidesa consistentandsystematicapproach,aswellasamoreaccuratemeansforassessingthemultiplier effectsofchangesineconomicactivity. IOAnalysismakesseveralkeyassumptions.First,theinformationusedtocreateaninputoutput I O Analysis makes several key assumptions First the information used to create an input output modelisforagivenpointintime.Theinformationinthemodelreflectsasnapshotofthe technicalrequirementsandindustryrelationshipsatagivenpointintime.Becauseofthis,input outputmodelsareregularlyupdated. Regionalinputoutputmodels,suchastheoneusedinthiseconomicimpactassessment,needto accountforthepercentageofthedemandforanindustrysoutputortherequirementsfora account for the percentage of the demand for an industrys output or the requirements for a transportationprojectthatcanbereadilysuppliedbyfirmswithinthespecifiedregion.Firms withinthespecifiedregionmaynotbeabletosupplyalltheproductsneeded.Therefore,goods andservicesmayneedtobepurchasedfromoutsideofthespecifiedregion. RegionalpurchaseinformationcontainedwithinIMPLANwasgenerallyassumedexceptwhere discussionswiththeNewYorkStateThruwayindicateduniquesourcing,suchasthepurchaseof di i i h h N Y kS Th i di d i i h h h f steel,whichcomesentirelyfromNewYorkmills.