New Jersey May Be Unable to Afford Rail Tunnel to New York, Christie Says

New Jersey Governor Chris Christie said his state may be forced to cancel an $8.7 billion commuter- rail tunnel to New York after the federal government estimated the project may cost as much as $5 billion more than projected.

“I don’t have the money to pay for going $2 billion to $5 billion over budget,” Christie said today during an interview on Bloomberg Television’s “InBusiness With Margaret Brennan” in New York. “We need to examine what the real cost of that tunnel is going to be. I like the project and think it’s good for the region, but I can’t spend money I don’t have.”

Christie, a 48-year-old Republican who took office in January, called a 30-day halt to new work on the project this month to assess the cost. The conduit under the Hudson River would serve a new station beneath Manhattan and is meant to double the number of commuter trains that can travel to New York during peak times.

The governor said his administration has spoken to the U.S. Transportation Department about the possible overrun and he’s willing to move ahead if the federal government assumes more of the cost. Christie said he’ll release a plan in October to deal with the state’s infrastructure and replenish its Transportation Trust Fund, the roadwork account set to run out of money for new projects next year.

Federal Assistance

Christie’s comments come as a Monmouth University survey released today showed 44 percent of registered voters approve of his job performance, compared with 45 percent in July. His disapproval among those respondents declined to 40 percent from 43 percent. The poll has an error margin of plus or minus 3.5 percentage points.

New Jersey broke ground in June on the tunnel to carry trains under the Hudson River in and out of Manhattan. Officials said the passageway would create 6,000 construction jobs and help ease delays for hundreds of thousands of commuters.

The project is “significant and has a ripple effect on the economy,” said U.S. Senator Robert Menendez, a Democrat from New Jersey and tunnel backer.

“Unfortunately, our governor is in the midst of trying to cannibalize the state contribution to that” tunnel, he said today in Washington during a hearing of the Senate Banking Committee on President Barack Obama’s proposal to create a U.S.- backed bank to increase infrastructure spending.

Discussed Halt

U.S. Transportation Secretary Ray LaHood and Christie discussed the project and a 30-day halt during a telephone call Sept. 16, said Brian Farber, a spokesman for the Federal Transit Administration, part of the Transportation Department.

“Given that this project represents the single largest transit investment ever made by the Federal Transit Administration, the secretary and governor agreed to have staff work together to further refine the estimated cost of the entire project,” Farber said today in an e-mail.

James Weinstein, executive director of New Jersey Transit, told state lawmakers yesterday there have been talks in Christie’s administration of using $2.5 billion in state money earmarked for the project to replenish the transportation fund. Christie, at a press conference in Bayonne today, said decisions about the tunnel and the trust fund must be separate.

‘Worst Scenario’

“This is the worst-case scenario for a lot of New Jerseyans,” said Zoe Baldwin, New Jersey director for the Tri- State Transportation Campaign, which advocates for greater transit investment in New York, New Jersey and Connecticut. “If Governor Christie takes that money and uses it as a short-term fix for the Transportation Trust Fund, he’s just kicking the can down the road.”

Christie also said during the television interview that he expects his proposals to reduce pension benefits for current workers to pass the Democratic-controlled Legislature “within the next 90 days,” and doesn’t expect those cuts to reduce consumer spending.

The governor this month called on lawmakers to roll back a 9 percent benefits increase approved in 2001 and indefinitely freeze cost-of-living adjustments to help reduce the state’s $46 billion pension deficit. He proposed making workers cover 30 percent of their health-care costs, up from about 8 percent now.

Senate President Stephen Sweeney, a West Deptford Democrat, said he’ll block Christie’s pension proposals unless he pays into the fund. Christie skipped a $3.1 billion pension payment this year, saying he wouldn’t put money into a “broken” system.

Campaign Events

The governor said in the television interview that he won’t run for vice president in 2012, and that he’ll begin campaign events this week for Republican gubernatorial and congressional candidates around the country. Christie said he welcomes the “energy” of backers of the Tea Party movement, a loose coalition seeking to limit government spending, taxes and debt.

Christie said Republican victories in November and future elections depend on “sticking to principles” that include reduced spending, less government regulation and lower taxes.

The governor, in a radio interview yesterday on “Bloomberg Surveillance” with Tom Keene, said he intends to reduce New Jersey’s income taxes within two years to stimulate the economy.

Christie said today in Bayonne that New Jersey “is the failed experiment of the last decade” because its income-tax increases didn’t result in higher revenue.

New Jersey faces a $10.5 billion deficit next year because of higher costs, nearly matching the one Christie closed in his current $29.4 billion budget, the Office of Legislative Services said in July. Christie has said that estimate, which assumes the state funds all programs and obligations, isn’t realistic.

To contact the reporter on this story: Terrence Dopp in Trenton, New Jersey, at tdopp@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

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