Christie’s Choice

Mark J. Magyar | October 12, 2010 | Budget
Will Gov. Christie compromise on a new federal plan to save the ARC tunnel or settle for a quick fix to the bankrupt Transportation Trust Fund?

Credit: Governor Photos/Tim Larsen
Within 10 days, Governor Chris Christie will have to make one of the most difficult political and policy choices of his political career — whether to compromise with federal officials on a new plan for the $8.7 billion rail passenger tunnel that would keep on track the largest public works project in the nation, or to give up the tunnel and the $3 billion in federal aid that comes along with it, to provide a short-term fix for the Transportation Trust Fund.

Christie made a preemptory announcement late last week that he would kill the ARC (Access to the Region’s Core) tunnel despite 20 years of planning, a $3 billion grant in federal funding for construction jobs and perhaps repaying the federal government $300 million it has already spent on the project. Christie’s been heavily criticized for the move by Democrats, planners, and transportation experts who say the decision will put a stranglehold on New Jersey’s economic growth.

Christie “should talk to [U.S. Transportation Secretary Ray] LaHood because there’s a lot of money that won’t be going to the citizens of New Jersey,” said retiring Pennsylvania Democratic Governor Ed Rendell, who derided Christie’s tunnel announcement as “pure politics.” Meanwhile, Christie was campaigning in Williamsport, Pa., for the Republican candidate who is looking to succeed him.

After meeting with U.S. Transportation Secretary Ray LaHood, a former Republican congressman, in Trenton on Friday, Christie agreed to give his New Jersey Transit team two weeks to meet with federal transportation officials to try to work out a new set of construction and financing options that would be amenable to the governor. But Christie did not indicate that he was leaning toward changing his mind.

Christie Takes a Meeting

Christie’s meeting with LaHood was the first time Christie had spoken with federal officials about his decision to kill the project, which he said was based simply on cost overrun projections. Those projections were supplied in a memo by his ARC Executive Committee, which included senior officials from New Jersey Transit, the state Department of Transportation and the Port Authority of New York and New Jersey. The memo cited estimates of possible cost overruns from $0 to $5 billion, without any details, other than the mention of a $775 million rail bridge.

It is LaHood’s task to convince Christie that his worries over projected cost overruns are misguided or overestimated, that the project can be scaled back and/or improved, or that other sources of funding could become available to make up some of the cost overrun that otherwise would be New Jersey’s responsibility.

LaHood expressed confidence that Christie would reconsider his decision.

“I believe he will listen to a number of options,” LaHood, told reporters Monday. “There are no Democratic or Republican bridges or roads – there’s just not,” the former GOP congressman from Illinois insisted.

Rebuilding the Bridge

The first $775 million “overrun” included in Christie’s estimate would be easy for LaHood’s Department of Transportation to cover. Christie’s projection included the cost of replacing the railroad Portal Bridge South, whose replacement was required for federal approval of the ARC project because it would feed into the new tunnel. That bridge was the site of an Amtrak accident about 10 years ago, Martin Robins, director emeritus of Rutgers University’s Alan M. Voorhees Transportation Policy Institute, noted.

“New Jersey applied for a competitive grant to pay for the Portal Bridge South a few months ago out of the remaining money left in the Obama stimulus fund,” Robins pointed out. “What is significant is that Amtrak cosponsored New Jersey’s application, and we should hear on that one soon.”

Passage of the $50 billion transportation stimulus package that Obama proposed on Labor Day and renewed his support for at a White House press conference yesterday could also provide additional funding, particularly if the ARC tunnel project is considered a top national priority. This new transportation package, however, will not come up for a vote until after the November congressional elections at the earliest. Christie says he will make a decision by October 21.

Based on population, New Jersey’s share of the two-year $50 billion transportation stimulus package would be about $1.4 billion. If the money is made available for highway, bridge and mass transit projects across the country in a manner left up to the states — as members of Congress, although not the Obama administration, would prefer –the president’s new stimulus could be used as a short-term bailout for the Transportation Trust Fund

Funding ARC

The $8.7 billion ARC project was slated to be funded by a combination of federal, state, Port Authority and New Jersey Turnpike Authority money. There has been $3 billion dedicated by the federal Department of Transportation and another $3 billion from the Port Authority. The state was expected to provide $1.25 billion contributed by the Turnpike Authority and $100 million a year in transportation aid funding from New Jersey.

It is the state funding that many believe the governor has his eye on. Christie’s critics say the governor’s real motivation in killing the tunnel is to use whatever state funds were dedicated to the project to prop up New Jersey’s nearly bankrupt Transportation Trust Fund. The TTF, which is used to pay for regular road and bridge maintenance, is slated to run out of money next year. Christie has ruled out raising the Garden State’s gas tax, one of the lowest in the nation, to replenish the fund.

But what remains of the $8.7 billion could be in peril to the state. Without the ARC tunnel, the $3 billion dedicated to the project by the federal Department of Transportation would be lost to other states.

The $3 billion in Port Authority funding dedicated to the ARC tunnel could be redirected to major projects in the port region, which is generally defined as within 25 miles of the Statue of Liberty. One likely project that would have a clear economic benefit to the state and the region would be to finish rebuilding the Bayonne Bridge, which has to be raised in order to permit deepwater cargo ships to use the port rather than being diverted to competitors in Halifax, Nova Scotia, and Norfolk, Va.

The Bayonne Bridge project already has received a $1 billion grant from the Port Authority for the first part of the work as New Jersey’s offset for a $1 billion grant to complete work on the World Trade Center site in New York City, Robins said.

Goethals Bridge Renovation

A second logical project for the Port Authority’s $3 billion is the long-overdue reconstruction of the Goethals Bridge between New Jersey and Staten Island, which the Port Authority’s New York commissioners would undoubtedly favor because it is used more heavily by Staten Island residents than New Jerseyans, Robins pointed out.

The governor already has said the state will have to accept a smaller transportation capital program than in past years, when the state put up $1.6 billion in largely borrowed money to match $1.6 billion from the federal government. The state does not need to worry about matching the $1.6 billion in federal funding on a dollar-for-dollar basis for the next several years, because the New Jersey Turnpike widening and other authority-funded highway projects totaling more than $1 billion per year count toward the state match under federal regulations.

Nevertheless, finding even $600 million in the state budget for transportation capital projects will be difficult, which is why James Weinstein, New Jersey Transit executive director, conceded publicly that administration officials have been discussing whether cancellation of the tunnel project would be the easiest way to replenish the Transportation Trust Fund, pushing the problem into a possible Christie second term.

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