The New York State Thruway Authority approved a $1.1 billion budget Wednesday with no plans to issue general revenue bonds in 2011 for capital projects. Instead, the agency plans to roll over its $680 million of outstanding bond anticipation notes that are due in mid-2011.
“If we roll the Bans for another six months, we can take those Bans out in January 2012 at the point when we need new money,” Thruway Authority chief financial officer John Bryan said.
The current-year budget, which also did not include new-money long-term debt, assumed that the Bans would be taken out in 2011. Bids on Thruway capital projects have been coming in 20% to 25% below engineers estimates, Bryan said.
The New York State Department of Transportation “isn’t doing an awful lot of large capital projects, and because of that, we’re finding very significant increases in the number of bidders we’re getting on projects,” Bryan said. “That’s leading to some very spirited competition.”
Low interest rates have also made short-term debt attractive, he said.
The authority still expects to issue long-term debt on behalf of the state, including personal income tax bonds and highway and bridge trust fund bonds, he said.
The Thruway Authority operates and maintains 641 miles of roadway, including a 496-mile toll road. The budget assumes that toll revenues will rise to $656.7 million from a projected $641.9 million in 2010 as traffic increases with improvement in the economy. Debt service is projected to essentially stay flat next year at $167.2 million, compared to the current $167.3 million. The budget reduces the percentage of pay as you go capital spending to 19.2% from 37.8%.
In other business Wednesday, the authority board expanded the number of underwriter firms eligible to senior manage deals to 15 from 11. Ramirez & Co., Siebert Brandford Shank & Co., Loop Capital Markets, and Stifel, Nicolaus & Co. were elevated from the co-manager pool to the senior manager pool.
“The board felt it’s good to have as much competition as possible,” Bryan said.
Also Wednesday, the authority approved Hawkins Delafield & Wood LLP and Harris Beach PLLC as bond counsel.
Staff recommended in July that Hawkins serve in that capacity for debt offerings, but board members questioned whether the only firm that has filled that role in the authority’s 60 years of existence should continue to do so.
The selections are for debt issued on the authority’s credit, not bonds issued on behalf of the state.
