Tollpayers Taking a Ride on the Erie Canal

1:16 PM, Oct 15, 2012   |    comments
Erie Canal
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By Jon Campbell, Albany Bureau

ALBANY -- As the state Thruway Authority ponders a steep toll hike on commercial trucks traveling by land, lawmakers and business lobbyists say it's time for motorists to stop footing the bill for those traveling by water.

New York's historic canal system -- featuring the Erie Canal, the world-renowned waterway -- has again become a punching bag for critics of a potential rate increase. The Thruway, they say, shouldn't be spending millions of dollars each year to subsidize state Canal Corp. at a time when the authority is struggling to pay its bills.

"I think the average person that uses the Thruway, they have no idea that some of that money helps the canals," state Comptroller Thomas DiNapoli said in an interview with Gannett's Albany Bureau. In an August report, his office called the canal system "a drain of resources" that has contributed to the deterioration of the Thruway Authority's finances over the past decade.

According to a consultant's report, the Thruway Authority spends an average of $80 to $90 million each year on operating and construction costs for the 524-mile canal system, a once-vital method of transportation that now largely caters to recreational trips. A proposed 45 percent toll increase on large trucks is estimated to bring in the same amount -- about $85 million annually.

That far outpaces the $2 million in yearly revenue brought in by the state's four canals, which connect Lake Champlain and the Hudson River to Lake Erie, Lake Ontario and the Finger Lakes.

Proponents of the waterways, however, say its more important to look at the economic boost provided by the canals, particularly in towns and villages in western and central New York that rely on them as the lifeblood of their community. A 2007 study by public-relations firm Eric Mower & Associates and touted by the Thruway Authority found the canals have a $380 million annual impact on upstate New York.

"The canal system brings in hundreds of millions in collatoral spending along the many, many towns and communities that it goes through," said Rob Mangold, vice president of the Canal Society of New York State. "That far outweighs the cost of it."

Traffic, however, has been down along the canals, with 99,343 crossing a lock or lift-bridge in 2010, down from 123,358 in 2007. Others use a recreational pathway along the canal, which caters to bicyclists and those traveling by foot.

About $1.1 billion has been spent on the canals since 1992, when then-Gov. Mario Cuomo and the state Legislature elected to take the system off of the state's books and shift it to the Thruway's. The canal spending is largely paid for by highway tolls, which represent more than 90 percent of the Thruway Authority's revenues.

But as the authority looks at raising tolls by 45 percent on commercial trucks, the unusual arrangement has garnered a new round of criticism.

"Do I think that the canal corporation is very valuable and important to this state? Yes," said Assemblyman George Amedore, a Montgomery County Republican and critic of the current funding system. "But I think that to continue to allow the cars and the commercial traffic to pay for recreational boats to go up and down the canal I think is absolutely ludicrous and has to stop."

Others said moving oversight of the canals to a different agency won't solve the underlying problem for the Canal Corp., Thruway Authority or the state.

"We have problems in New York," said Assemblyman David Gantt, a Rochester Democrat who chairs the Assembly Transportation Committee. "We have to get more revenues and hopefully that will happen as the economy starts to pick up so we can do what we need to do. Moving the Canal Corp. just shifts the problem to someone else."

The costs aren't limited to just the waterway itself. The system also includes 57 locks, 20 lift bridges, 22 reservoirs, 114 dams, and 1,500 other pieces of infrastructure that have to be maintained, along with thousands of acres of property, according to the Thruway Authority.

As of early this month, the Canal Corp. had 458 full-time employees, as well as 78 seasonal workers hired during the summer and for winter maintenance, according to the authority.

The authority declined to make anyone with the Canal Corp. available for comment. A Thruway Authority spokesman said the proposed highway toll increase was not being used to offset its canal obligations.

Thruway officials, however, point out the state is constitutionally obligated to keep the waterways in good repair, and the 1992 law puts the responsibility squarely on their plate. At an August hearing, Thruway Authority Chief Financial Officer John Bryan said putting the canals under the authority's umbrella wasn't a financial gimmick, but was viewed as an economic opportunity.

"It wasn't just for the fiscal convenience of the state," Bryan said. "I believe there was a desire to see the canal -- which was getting very old with infrastructure that wasn't very good -- to have some new investment, recognizing the economic impact it has on the state of New York."

While towns in western and central New York have used the canal as an economic and tourism driver, the cost to the state has been consistent. It was worsened by tropical storms Lee and Irene, which caused about $114 million in damage, though the state expects to recoup about $85 million from the federal government.

Asked in August about the criticism of the canal's financial arrangement, Gov. Andrew Cuomo pointed to the historic importance of the Erie Canal -- which was completed in 1825 and opened New York City to the Great Lakes.

Spearheaded by then-Gov. DeWitt Clinton, it took eight years to build the 363-mile Erie Canal, which stretches from Albany to Buffalo. It was considered one of the great transportation advances of its time.

"The canal is a great asset to the state, and I don't think there's anyone who says we should close down the Erie Canal," Cuomo told reporters. "It's part of our history, it's part of our legacy, it's important for tourism. It is not a money maker at this point, but it's an important part for the state."

The Canal Corp. has come into the spotlight each time the Thruway has moved to increase tolls. It has increased tolls on motorists four times since 2005, most recently in 2010.

Moving the canals back onto the state's books, however, could prove difficult in current economic conditions. While several bills introduced in the Legislature would shift the responsibility to the state's transportation or parks departments, state agencies were instructed by the Cuomo administration last month to hold spending flat as they construct budget proposals for the next fiscal year, which starts April 1.

One public study even looked at the possibility of shifting canal oversight to the federal Army Corps of Engineers, which oversees various levees and spillways, most noticeably on the Mississippi River.

"It's about finding a home for it, and I don't think it fits in any one place well," Bryan said at the Assembly hearing in August.

One bill, sponsored by Buffalo-area Sens. Mark Grisanti and Patrick Gallivan, would move the burden to the Department of Transportation. Gallivan acknowledged that the agency would have to cut its own spending to make room for the added cost.

"By moving it back to the Department of Transportation, we're helping fix the Thruway's short-term problem while calling on them to look internally and fix their long-term problems and manage this properly," said Gallivan, an Elma Republican. "The (Thruway's) fiscal management just doesn't seem quite right to me."

Thomas Madison, the executive director of the state Thruway Authority, said in August that the authority is looking at cutting costs internally, but is obligated to make sure the canal is in working order. A pair of recent reports -- one by an outside consultant, the other by the state Comptroller's Office -- have criticized the authority's management of the canals.

"We're looking at ways to become more integrated between the Canal Corporation and the Thruway Authority, whereas historically they've been operated more like independent functions," Madison said. "As long as we have that obligation and responsibility, we will continue to take it seriously and we will maintain the system as required."

For Unshackle Upstate, a group that has been highly critical of the canal system's finances and the proposed toll hike, the canal should be sent to a more appropriate financial home.

"Our position has been and will continue to be that the canal, while a significant part of our history, is a 19th Century transportation system that probably belongs more appropriately placed in the Parks Department than it does the Thruway Authority," said Brian Sampson, the Rochester-based group's executive director.

Gannett Albany Bureau Chief Joseph Spector and Democrat and Chronicle staff writer Meaghan M. McDermott contributed to this report.

JCAMPBELL1@gannett.com

Twitter.com/JonCampbellGAN

Findings

The Thruway Authority's critics have consistently brought up the cost of the state's canal system as a drain on its resources. Here's what Gannett's Albany Bureau found when it examined the situation:

- The Thruway Authority spends an average of $80 million to $90 million a year on the largely recreational canal system. The canal is largely paid for through highway tolls revenue.

-The 524-mile canal system brings in about $2 million in annual revenue, for an annual deficit of up to $88 million.

- The toll increase would bring in an estimated $85 million a year in new revenue.

- The state is constitutionally obligated to keep the canal in good repair.

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