For New Jersey's Chris Christie, It Was Simply a Tunnel Into Debt

New Jersey Gov. Chris Christie (R) today canceled the multibillion dollar ARC Tunnel, the nation's largest public works project, for the second time in less than a month. Christie ignored pleas from transit advocates -- and the federal government -- that the planned commuter rail tunnel under the Hudson River between Northern New Jersey and New York City was desperately needed. Christie really never indicated if he agreed with the practical need for the tunnel, but he couldn't be clearer about why he opposed it.

Clearly a rising star in the Republican Party, Christie initially declared the tunnel dead on Oct. 7, saying the state could not afford the price tag and the cost overruns that would go with it. He then agreed to hold off on a final decision for two weeks at the request of U.S. Transportation Secretary Ray LaHood, who wanted to save the project, which was already in the early stages of construction (pictured). That deadline expired on Oct. 22 but was extended. Still, in the end, Christie was unmoved by arguments about reducing congestion or LaHood's offer to kick in an additional $358 million to cover New Jersey's costs.

"It's a dollars and sense issue. I cannot place, upon the citizens of the state of New Jersey, an open-ended letter of credit," The Star-Ledger of Newark, N.J., quotes Christie as saying.

"No End to Traffic Congestion"

Transportation Secretary LaHood was clearly annoyed, saying in a statement, "I am extremely disappointed in Governor Christie's decision to abandon the ARC tunnel project, which is a devastating blow to thousands of workers, millions of commuters and the state's economic future. The governor's decision to stop work on this project means commuters -- who would have saved 45 minutes each day thanks to the ARC tunnel -- will instead see no end to traffic congestion and ever-longer wait times on train platforms."

Even more livid was New Jersey Senator Frank Lautenberg (D), whose statement included: "This is a tragic day in New Jersey's history. Two weeks ago, Governor Christie made the biggest public policy blunder in New Jersey's history. Today he repeated it. Today he killed the prospect for improving New Jersey's economy and creating thousands of new jobs. He increased the amount of toxic fumes that will be discharged from idling cars stuck in traffic, and he took away an opportunity for New Jersey housing values to go up."

Christie, whose bull-in-a-China-shop style either infuriates or delights people, will continue to be a GOP up-and-comer after making his decision -- at least in the short term -- because his profile has been raised, says Rider University political scientist Ben Dworkin. The former U.S. attorney enjoys high approval ratings among the state's voters.

Nonetheless, New Jersey will pay a financial price. The state will have to pay back the $350 million in federal funds already spent on the project. New Jersey also won't be receiving the $3 billion appropriated by Congress for the nine-mile-long tunnel. New Jersey had agreed to spend $2.7 billion on ARC, with another $3 billion coming from the Port Authority of New York and New Jersey. Many experts say the project's benefits far outweigh the risks.

Ancient and Overburdened

According to the Regional Plan Association (RPA), ARC would have boosted property values, helped improve air quality and given New Jersey residents more access to lucrative jobs in New York City. Since the existing Hudson rail tunnel was built 100 years ago, New Jersey's population has more than quadrupled, and New York City's has nearly tripled. The tunnel's capacity to handle Amtrak and New Jersey Transit rail traffic has been exceeded for years, making the need for the second tube obvious to advocates.

"Unfortunately it does not appear as though the governor gave responsible or serious consideration to any proposals to phase the project, reduce project costs, introduce private funding or accept additional funds from the federal government to help cover overruns, including options that would defer any additional cost to the state until after the project was generating substantial economic and tax benefits," the RPA says.

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Christie has consistently argued that he's acting in the state's best fiscal interest to avoid cost overruns that could have pushed the project's cost up to $14 billion, according to Christie administration estimates. Further complicating the matter is the potential insolvency of the state's Transportation Trust Fund, which funds work on infrastructure projects. The RPA argues that Christie will probably use the ARC money for these projects. Christie plans to announce a separate plan for fix the transportation fund. One thing's for sure: He opposes raising the gasoline tax, which largely finances the fund.

"None of the proposals put forth by federal officials or New Jersey's congressional delegation -- despite unsupported statements to the contrary -- eliminate, or even remotely limit, New Jersey's exposure to the potentially billions in cost overruns," according to a statement on Christie's blog. "Loans or any phase in of the project merely delays the costs to New Jersey and its taxpayers. I repeat -- none of the alternatives offered change the fact that New Jersey would be solely on the hook for all ARC tunnel overruns."

Unfortunately, the state still needs a reliable rail transport system, which won't be cheap. The 6,000 yearly construction jobs ARC would have created and the 45,000 permanent ones would have been nice, too.