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NJ Faces Hefty Pricetag for Rail Tunnel, Transportation Projects

That is the same situation that Christie and the Democratic-controlled Legislature faced in late 2010, when years of overborrowing by governors and legislatures reluctant to raise the gas tax left the Transportation Trust Fund unable to fund any new projects as of June 30, 2011, because all future gas taxes and other dedicated revenue streams were earmarked to pay off the principal and interest on past projects.

Christie had to come up with a new dedicated source of funding for the Transportation Trust Fund that year because the Wall Street bond rating agencies would not have accepted a Transportation Trust Fund financed solely by borrowing an additional $8 billion over the next five years.

Ironically, it was former Democratic Gov. Jon Corzine, Christie’s favorite whipping boy in both his 2009 and current gubernatorial campaign, who inadvertently provided Christie with an easy way out. Fortunately for Christie, Corzine had pushed through a $1.3 billion New Jersey Turnpike toll hike and earmarked $3 billion from New Jersey’s share of future toll revenue on Port Authority bridges and tunnels to fund the new ARC rail tunnel.

In October 2010, Christie cancelled the ARC Tunnel project, saying New Jersey taxpayers would have been on the hook for any cost overruns. U.S. Transportation Secretary Ray LaHood, a former Republican congressman serving in the Democratic Obama administration, charged that Christie refused his good-faith efforts to renegotiate the agreement to meet his concerns

Two months later, Christie diverted $1.8 billion in Port Authority funds and the $1.3 million Turnpike toll increase to provide the acceptable level of dedicated funding he needed for the Transportation Trust Fund without raising gas taxes -- ignoring Wisniewski’s demand that he cancel the Turnpike toll hike because it was supposed to be used for the ARC Tunnel.

Christie got a political boost from the cancellation both nationally and in New Jersey.

Conservative commentators lauded his decision, and newly elected Republican governors in Ohio, Wisconsin, and Florida followed suit by cancelling high-profile mass transit projects in their states. And within New Jersey, labor opposition was muted because Transportation Trust Fund projects would be built by New Jersey union labor, while three-fourths of the construction jobs on the ARC Tunnel would have been in New York. That’s one of the reasons Christie was endorsed by the Laborers and a slew of other New Jersey building trades unions.

The $2.8 billion in New Jersey Turnpike and Port Authority money took the immediate political heat off Christie, even though he later went back on his pay-as-you-go funding promise and diverted more than $600 million in Turnpike funds from pay-as-you-go funding for the Transportation Trust Fund to plug shortfalls in his past two budgets. He then filled the hole created in the Transportation Trust Fund by the Turnpike toll diversions by issuing additional debt.

Through the first four years of his administration, Christie has borrowed 97.4 percent of the state money that has gone into the Transportation Trust Fund projects, the highest percentage of any governor since Republican Gov. Thomas H. Kean created the program almost three decades ago.

Christie’s shift of the ARC Tunnel money to the Transportation Trust Fund was attacked by Wisniewski and mass-transit advocates as “robbing Peter to pay Paul.” The problem for Christie and legislators trying to decide how to fund a new rail tunnel and a five-year reauthorization of the Transportation Trust Fund is that there will be no “Peter” to rob in 2015.

The $1.8 million in ARC Tunnel funds diverted from the Port Authority have already gone into rebuilding the Pulaski Skyway, the Bayonne Bridge, the Goethals Bridge, the Wittpenn Bridge, and other projects in the Port Authority region in northeastern New Jersey. Christie has begun negotiating with the Port Authority to put $1 billion into an extension of the PATH system to Newark Airport, reportedly contingent upon United Airlines agreeing to run flights out of Atlantic City’s small airport to boost casino tourism and conference business.

Whether the Port Authority can come up with significant funding for the new Gateway Tunnel is questionable, especially in the wake of high cost overruns on the Freedom Tower and the rest of the World Trade Center site. Presumably, the $1.3 billion generated by New Jersey Turnpike toll increases from 2012 to 2016 could be dedicated in future years by a vote of the Turnpike Authority board, which Christie appointed, to support the Gateway Tunnel.

But Christie has been forced to divert the Turnpike toll money for the past two years to the state’s general treasury to fill budget gaps caused largely by the strain of having to come up with $600 million every year out of existing revenues to pay for the seven-year ramp-up to full funding of the state and local government pension system required by a 2011 law pushed through by Christie and Senate President Stephen Sweeney (D-Gloucester).

That ramp-up will not end until the fiscal Year 2018 state budget -- two years after the Legislature has to approve a new five-year $8 billion Transportation Trust Fund and most likely after a funding commitment for Amtrak’s Gateway Tunnel will need to be approved.

“It’s hard to see where the money is going to come from without some new source of revenue,” Robins concluded.

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