Trenton, NJ – New Jersey Gov. Agrees To Reconsider Tunnel Cancellation

Trenton, NJ – U.S. Transportation Secretary Ray LaHood says New Jersey’s governor has agreed to take the next two weeks to rethink his decision to cancel a massive NJ-NY rail tunnel project.

LaHood met with Christie for nearly an hour at the New Jersey Statehouse on Friday. LaHood issued a statement shortly afterward saying that the Republican governor has agreed to review options for the tunnel into Manhattan.

LaHood says a small group of U.S. and New Jersey transportation officials will review the options and report back to Christie within two weeks.

Christie canceled the project Thursday over escalating costs, which he said New Jerseyans could not afford.

He had earlier halted work on the already under-construction project to review it.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

TRENTON, N.J. (AP) — As a candidate last year, New Jersey Gov. Chris Christie was willing to support the planned New Jersey-to-Manhattan rail tunnel. As governor, he now says the nation’s largest public transportation project is a luxury the state can no longer afford.

Christie justified his decision to scrap the project on Thursday as a move to protect the long-range financial interests of New Jersey taxpayers. But supporters of the nearly $9 billion project said the decision will have the exact opposite result.

U.S. Sen. Frank Lautenberg, D-N.J., who helped secure federal funding for the project, called the cancellation “one of the biggest policy blunders in New Jersey’s history.”

“Without increased transportation options into Manhattan, New Jersey’s economy will eventually be crippled,” he said.

Christie was set to meet with U.S. Transportation Secretary Ray LaHood on Friday, whom he spoke with Thursday before announcing that he was killing the tunnel. It’s unclear what was said during that conversation and whether Christie told LaHood of his decision.

LaHood spokeswoman Olivia Alair said in an e-mailed statement Thursday that LaHood and Christie plan to meet Friday afternoon to “discuss a path forward on the ARC tunnel project.”

More than a half-billion dollars has been spent on the tunnel — dubbed Access to the Region’s Core, or ARC — and construction began last year. The largest federal transportation project in the country, it was expected to double train traffic in and out of New York City during peak commute times once completed in 2018.

But over the years, cost projections for the tunnel also have nearly doubled.

It started at $5 billion in 2005 and grew to $8.7 billion by 2008. In recent months, Federal Transit Administrator Peter Rogoff has made public statements that put the price tag between $9 billion and $10 billion. On Thursday, Christie said his advisers put the costs at $11 billion to $14 billion.

“The bottom line is this, New Jersey has gone for too long and for too many decades ordering things that they can’t pay for,” he said at a news conference. “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.”

A month ago, the Republican governor ordered a 30-day halt to all work on the tunnel over concerns that it would go over budget. On Thursday, he directed state transportation officials to explore other approaches to modernize and expand rail capacity into New York.

Lautenberg acknowledged that cost overruns on a project of the tunnel’s size were inevitable but said Christie’s numbers are inflated.

The federal government and Port Authority of New York and New Jersey had each pledged $3 billion to the tunnel. New Jersey had committed $2.7 billion. The project is being run by NJ Transit.

New Jersey Assemblyman John Wisniewski, who leads the Assembly transportation panel, filed a public records request Friday for documents pertaining to the tunnel. He has accused Christie’s advisers of inflating the cost of building the tunnel to justify what some believe will be the governor’s decision to divert the money to smaller road and rail projects. Christie has not said how he plans to use the money.

The independent Regional Plan Association said Christie was using fuzzy math.

“Gov. Christie’s claim that he supports ARC but could not move forward because of budget overruns is most likely not true,” the group said in a statement. “The Federal Transit Administration (FTA) officially never released its estimates for potential budget overruns — only Gov. Christie estimates them to be in the $3 billion to $5 billion range. What’s more, Trenton has repeatedly rebuffed federal officials’ efforts to work out a cost overrun deal.”

The project had been in the works for about 20 years. Currently, NJ Transit and Amtrak share a century-old two-track tunnel beneath the Hudson River. The new tunnel would add two more tracks, more than doubling the number of NJ Transit trains that could pass under the river.

Mark Nardolillo, CEO of tunnel contractor BEM Systems in Chatum, said 10 to 15 employees he has working on it will lose their jobs.

“We don’t have alternate work to put these people on,” said Nardolillo, whose company handled environmental permits and data management for property acquisition. “This is the one job you counted on. It’ll have a devastating impact on the region.”

Commuters at New York’s Penn Station weren’t pleased to hear the project had been canceled.

“This is not good. I hope they reconsider,” said Michael Murphy, an IT and infrastructure expert waiting for a train home to Morristown. But, he added, “if they have a problem with the budget, there’s not much choice.”

Roy Gainsburg, a retired book publisher from South Orange, who still rides into the city occasionally, said commuter trains frequently get stuck in the tunnel.

“It certainly would be nice if there was another tunnel, because this one has only two tracks, so trains get stuck at peak hours,” he said.

Christie’s predecessor, Democratic Gov. Jon Corzine, broke ground on the tunnel in June 2009, a few months before the gubernatorial election that he lost to Christie.

During his campaign last year, Christie supported the project.

But as soon as he announced the work stoppage, lawmakers and transportation officials suggested Christie had planned to scrap the project and to use the state’s share of the money to pay for the nearly broke Transportation Trust Fund, which pays for local road projects and rail repairs.

Christie has refused to raise the state’s gas tax, which is among the lowest in the country, to replenish the fund.

So far, about $600 million has been spent on the tunnel project — $130 million of that in federal stimulus money. New Jersey could be on the hook to repay half of what’s been spent to the federal government for breaking its commitment.

Lautenberg has said canceling the tunnel would violate an agreement with the federal government in which New Jersey committed itself to the project in exchange for $3 billion in federal funding.

Officials have said the tunnel would create 6,000 construction jobs and add at least 40,000 new jobs after it is completed. If Christie were to divert money to the state transportation fund, that could also create jobs, depending on the projects.

Christie said staff will immediately begin a shutdown of the tunnel project.