By TU Editorial Board

 Our opinion: Oversight of the state Canal Corp. has moved to the New York Power Authority. Although it runs a deficit, the canal system remains a valuable asset.

It’s a simple lesson in government economics – if you have an agency running a deficit and another racking up surpluses, put them together. And if you can, do it all off-budget.

Former Gov. Mario Cuomo pulled off that budget-balancing trick in 1992 when he moved the money-losing barge canal system out of the Department of Transportation and into a cash-rich Thruway Authority. Thruway tolls were supposed to end a few years later, once the highway’s construction bonds were retired. Instead, tolls were kept and used to maintain the highway and cover its new canal component.

Fast-forward to March 2016, when, in the waning hours of the Legislative session, Gov. Andrew Cuomo pushed through the transfer of the Canal Corp. – still losing money – from the Thruway Authority to the New York Power Authority, another cash-flush entity. The millions in annual Thruway tolls will no doubt now help the state repay the billions it borrowed to replace the aged Tappan Zee Bridge.

This week, the Power Authority reported that an anticipated $43 million surplus is now a $46 million paper loss, thanks to the cost of Canal Corp. debt. NYPA’s CFO is optimistic it can still turn that deficit around in 2017, but it won’t hit the $80 million originally projected. That ultimately could affect taxpayers, taking a big bite out of NYPA’s contribution to the state’s general fund.

The Canal Corp., which operates the Erie and Champlain canals and other historic waterways across upstate, certainly presents a challenge for state bean counters. The nearly 200-year-old waterway, once a major shipping route that transformed upstate’s economy, is today a mainly recreational asset. Though it has little income of its own, it does help the economies of communities that line its shores. Watercraft, from canoes and kayaks to major touring boats, fill the river from spring through fall, launching from hundreds of locations, many in scenic parks and flourishing commercial marinas.

And it still gets some limited use from shipping. Last week, GE moved a giant turbine built in Schenectady through the Eric Canal. But long-overdue dredging has stymied commercial use of the Champlain Canal, in the Hudson River between Waterford and Fort Edward. The state needs to pressure GE, which had disposed of tons of toxic PCBs into the river there, to pay its fair share for a cleanup needed as part of the dredging project.

All this seems to be a foundation on which the state can build.

To thrive, the canal must be permanently anchored. NYPA may be a good fit, as both share the mission of economic development. NYPA also operates some hydropower plants in the canals, offering potential savings by combining some operations and maintenance.

The canal system may never be a money-maker again, but that doesn’t make it a liability. It’s as great a resource as any major park or historical site. With stability, leadership and vision, it can still be an enormous asset for the state and its economy.