Friday, October 08, 2010

Fallout From Christie's Decision To Kill ARC Tunnel Project

Many of the reports that are critical of Gov. Chris Christie's decision to kill the ARC Tunnel project focus on the fact that this was a project decades in the making.

That's not quite accurate. It's been on the wish list for transportation planners for decades and studies had been carried out from time to time. Funding for the project began in earnest last year when the Corzine Administration was hoping for a reelection bump. Construction began last year with great fanfare even though there were serious questions about funding and the alignment of the project.

Christie killed the project because the state of New Jersey cannot afford the project. The state is putting up about 1/3 of the cost of the project, with the federal government and Port Authority putting in the rest.

The costs have gone from $5 billion when proposed to more than $8.7 billion today. Cost overruns are expected to push the cost to $10 billion. It's the cost overruns that drove Christie to kill the project since New Jersey has no way to pay for the project.

With that in mind it's not surprising that Christie is meeting with Transportation Secretary Ray LaHood today, and one can expect that the federal government may end up taking up the issue and covering the cost overruns, rather than the state of New Jersey.

The politics of the situation are quite interesting. Christie wants to show fiscal responsibility, but needs to show job creation - and killing the project would kill jobs for construction workers. The Obama Administration needs to have job growth, and could use Christie's decision to embarrass him and to get the infrastructure project done to fulfill the government's goal of improving infrastructure. In other words, both sides need to get this done - so the terms of the deal will likely be revisited and reworked so that New Jersey doesn't have to shoulder the burden.

It's a bargaining tactic, and one that may end up benefiting New Jersey taxpayers because they wont need to cover the cost overruns that may end up being quite substantial. New York can't be expected to contribute either because they're in even worse fiscal shape and haven't contributed a dime to the project. The Port Authority and NJ Transit have already maxed out their contribution, so the only party that has the ability to fund the project is the federal government.

Still, I hope that the project ends up being reorganized to realign the terminus with Penn Station rather than Herald Square because the separate terminal is an additional cost that is unnecessary and ignores the fact that Amtrak is interested in doubling its own tracks into Penn Station (something that NJ Transit says wasn't feasible). This may actually cost more to do than the alignment to Herald Square, but eliminating the duplication would end up saving taxpayers and commuters even more.

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