Wednesday, April 11, 2012

More Fallout From the GAO Report On ARC Tunnel and More Misleading Editorializations

Charles Stiles seems to think that Gov. Chris Christie was concerned more about the politics of looking like a fiscal conservative than doing the right thing in canceling the ARC tunnel project. He claims that the GAO report bolsters claims that Gov. Christie misled the public about who would be responsible for cost overruns.

The GAO report claims that New Jersey would be on the hook for 17% of the overruns, not 70% as Christie had claims, but let's dig a little deeper, shall we?
The possibility that taxpayers would get “stuck” with the bill seems like a long shot. New Jersey’s share of the project didn’t come from the $32 billion state budget, but from Jersey’s allotment of Port Authority project money, a smaller piece from New Jersey Turnpike toll collections, and from federal transportation dollars that flow through NJ Transit. Those sources would have been the likely targets to pay for overruns, not direct state funds financed by taxpayers through income, sales and corporate taxes.

“They definitely left the impression that it wasn’t the Port Authority, it was the state that was paying the cost of the overruns,’’ said Patrick Murray, a Monmouth University pollster and political analyst.

Overall, the GAO report reminds us of Christie’s aggressive salesmanship skills, his ability to stretch and piece together facts to make a compelling argument, and then using his bully pulpit to sell it or browbeat critics who have the temerity to challenge him.
Who exactly is paying for the cost overruns? NJ Transit, which is a state agency and receives state and federal funding, will have to divert its limited budget to cost overruns, forcing both additional fare hikes and state appropriations that will have to come from New Jersey taxpayers.

Port Authority cost overages will have to likewise be split between fare hikes, toll hikes, and that too falls on New Jersey and other taxpayers who utilize Port Authority facilities such as bridges, tunnels, and PATH system. It means that projects that the Port Authority would have otherwise considered for improvements would have been shelved shelved in order to complete the ARC project even as the Port Authority's budget is already stretched as a result of cost overruns on the PATH transit hub at the World Trade Center.

All the cost overruns would have eventually flowed back to taxpayers, despite which agency was allotted the overrun. Directly or indirectly, the cost overruns would have inured to New Jersey taxpayers and the bottom line from the GAO report and the FTA was that NJ Transit could not hold the line on cost overruns.

NJ Transit has repeatedly shown itself incapable of doing so, and it could not be expected to do so with the most ambitious and complicated project the agency has undertaken since it was established. The last time NJ Transit attempted an ambitious project of this sort, the $80 million budget on the Secaucus Transfer turned into a boondoggle of a $450 million underutilized project that would itself be obsolete and largely sidestepped if the ARC tunnel was completed because there would be no need to transfer between the Main/Bergen/Pascack lines and the NEC because everyone could take a one-seat ride to New York Penn Station.

Meanwhile, others are claiming that the ARC tunnel would have created thousands of jobs and improved the local economy. That is true, to a point. Construction jobs would have been created, but let's not forget that it was the federal government that refused to pick up the cost overruns that led Gov. Christie to kill the project. It was the feds that refused to push New York to pick up its share of the costs. The overruns would have hit New Jersey hardest, even though this was an interstate project. Ray LaHood could have picked up the cost overruns and forced NJ Transit into cost containment methodologies that would have protect New Jersey taxpayers. He didn't. Instead, he left the bulk of the overruns to be picked up through debt financing. That's not a solution. That's a punt into the future when he and other federal, state, and local politicians will be in office to deal with the financial mess left by the project.

And that doesn't even touch on just how ill-conceived the project was because of its terminus in New York and the additional costs that would inure to NJ Transit to operate that facility years and decades into the future.

That's where the Gateway Tunnel comes into play. This proposed project is superior to the ARC in every conceivable manner. It increases thru-traffic by doubling the number of trains that would run into New York Penn Station. It provides high speed rail access. It spreads the costs of construction among all the interested parties, including New York and New Jersey and puts Amtrak as the lead agency. It accomplishes everything that ARC did, without the problems associated with the lack of tail tracks and storage facilities.

The only thing that Gateway lacks is the funding mechanisms in place. That's the only thing that ARC had going for it. New Jersey's Gov. Jon Corzine, Senators Frank Lautenberg and Bob Menendez all managed to get the funding in place for the ill-conceived project, and it's Lautenberg who is whining loudest that the project was killed. He's taking it personally, even though it was he and Menendez who should have been burning up the phone lines to see to it that the federal government and New York pick up the overruns instead of saddling New Jersey taxpayers will the bill.

When Gov. Christie killed the ARC, the funding that was in place reverted to their sources, and that includes monies from the New Jersey transportation trust fund and Port Authority. That enables the Port Authority to go ahead with other vital projects, including raising the Bayonne Bridge for super Panamax shipping traffic to keep the New Jersey ports competitive and bridge and tunnel projects like replacing the stringers on the George Washington Bridge and replacing the helix at the Lincoln tunnel. The Transportation Trust Fund monies will be made available to rebuild deficient roads across the state.

It's not like that the money is going to waste - they're being used to fix and replace existing infrastructure, but it means that new sources have to be devoted to building the new Gateway project.

That's where Lautenberg and the other politicians have to get together and put together a fiscally prudent financial package that gets the project done in a timely and efficient manner.

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