Christie Derails Tunnel

New Jersey Gov. Chris Christie called a halt to the nation’s largest public works project last week over projected cost overruns. The Access to the Region’s Core rail tunnel (ARC) is an estimated $8.7 billion link between New Jersey and Manhattan. Proponents of the project say the new tunnel is desperately needed to help alleviate crowding in the existing 100-year old tunnel as well as to expand access for commuters traveling between the two states. But Christie, citing budgetary constraints, said that the tunnel was a luxury that the state just cannot afford right now.

“The bottom line is this,” Christie said, “New Jersey has gone for too long … ordering things that it can’t pay for. Now this project has some flaws to it, but in the end this is a financial decision. When weighing all the interests I simply cannot put the taxpayers of the state of New Jersey on what would be a never-ending hook [for cost increases].”

New Jersey’s share of the project was slated to be $2.7 billion, with an additional $3 billion each coming from the federal government and the Port Authority of New York and New Jersey. Critically, however, the state was tasked with picking up the full tab for costs above the $8.7 billion estimate. In announcing his decision to scuttle the project, Christie said that current estimates of the total cost of the tunnel were $11 billion-14 billion, meaning ARC would cost the state an additional $2-5 billion.

Christie said that the original estimate of the tunnel’s cost was never realistic, and hinted that cost overruns could go still higher than already projected. “Simply put, the $8.7 billion estimate was a fiction, and I’m not going to ask the taxpayers to take it on faith that a project tunneling under Manhattan Island and the Hudson River will run even close to these cost estimates. Our previous experiences with these type of projects and current ones tell us that it will get even worse before it gets better,” he said.

Christie asked New Jersey’s Democratic Senators Frank Lautenberg and Robert Menendez to use their “considerable influence” to keep the federal money slated for the tunnel in the state. But the senators would not commit to seeking ways to keep the federal dollars, and criticized the decision to end the project.

Lautenberg characterized the decision as shortsighted. “Without increased transportation options into Manhattan, New Jersey’s economy will eventually be crippled,” Lautenberg said. “The governor has sentenced New Jersey to a future of insufficient access to New York City, fewer job opportunities, and lower home values.”

Menendez questioned whether Christie ever wanted the project to go forward, and said that his actions were ultimately not in the best interests of the taxpayers. “It would seem that a more sensible and level-headed approach on behalf of New Jersey workers, commuters and taxpayers would be to take a deep breath, work with all of the parties involved to identify ways to reign in the costs and get the tunnel built,” Menendez said.

Christie rejected those arguments, saying that there was no practical way to scale back the project to make it more affordable. “I don’t know how you scale back going under the river to a terminal that doesn’t exist at the moment,” Christie said. “I don’t know how you scale it back—go two thirds over and have a boat meet everybody there and have them take a boat the rest of the way over?”

On Friday, the day after Christie canceled the tunnel, U.S. Transportation Secretary Ray LaHood traveled to Trenton for a scheduled meeting with Christie on the ARC project. LaHood said that he wanted to discuss ways to salvage the project. 

The Newark Star-Ledger reported late last week that Secretary LaHood overruled his aides who instinctually wanted to follow Lautenberg and Menendez in slamming Christie in the press for canceling the tunnel. Among the options LaHood presented Christie were rerouting the tunnel, restaging construction to put less essential parts of the project off until later, and creating a public private partnership to help with financing. Christie told LaHood that he was willing to look at options, but reiterated his chief concern. “We have to work on the money,” he reportedly told the secretary. 

Christie and LaHood emerged with an agreement to revisit the project for a two-week review period, essentially staying the governor’s execution order while federal and state transportation officials jointly study the project. The working group will report back to Christie, who agreed to reconsider his decision based on the report’s conclusions.

Still, Christie said that the project would continue to wind down while the working group meets, and said it was not likely that the study could alter the fundamentally unaffordable nature of the project. “The fact that the ARC project is not financially viable and is expected to dramatically exceed its current budget remains unchanged,” he said.

In his first year in office, Christie has shown little fear of cutting big spending items and taking on entrenched interests in the process. His first budget reduced state spending on education by over $800 million, and his battles with New Jersey’s teachers’ union over the cuts have gained the governor a nationwide profile among conservatives. 

Ending the ARC project will prove to be enormously popular with that following, many of whom want to find a spot for the governor on the Republican presidential ticket in 2012, in which Christie says he has no interest. If, however, the cancellation turns out to be a hard-nosed negotiating tactic designed to win more federal or private sector money for the tunnel, Christie would be on track for a relatively easy reelection campaign in 2013.