New Jersey Construction Spending to Drop by $5 Billion, Trade Group Says

Public and private construction spending in New Jersey, where Governor Chris Christie canceled a $9.8 billion rail tunnel last month, will drop by about $5.5 billion next year, an industry group said today.

Spending will decline to $13.2 billion in 2011 from $18.7 billion this year, according to the New Jersey Alliance for Action, which advocates investment in infrastructure.

At New Jersey Transit, which had projected $2.8 billion in spending on the tunnel and other projects, the 2011 construction plan now totals $140 million, Charles Ingoglia, director of public affairs, said in a presentation to the alliance.

“It’s not a good omen for the construction industry,” Philip Beachem, president of the alliance, said at the group’s meeting in Trenton. “This is a precarious situation.”

State transportation spending, which includes New Jersey Transit, the Department of Transportation, the Port Authority of New York & New Jersey and the New Jersey Turnpike Authority, will total $2.4 billion in 2011, compared with $6.9 billion this year, according to presentations at the meeting.

Spending by casinos, through the industry-funded New Jersey Casino Reinvestment Development Authority, is set to drop to $34 million in 2011 from $140 million this year, while drug companies expect to spend $1.4 billion next year, down from $1.6 billion in 2010, said Steve Issenman, senior vice president of the HealthCare Institute of New Jersey, a Bridgewater-based trade association for pharmaceutical companies.

‘Bumping Along’

“We’re really bumping along the bottom here, and will be for a number of years,” said Michael McGuinness, chief executive officer of NAIOP, an office and industrial-park trade group that projects $310 million in spending next year.

Transportation spending is contingent on federal highway funding and the Transportation Trust Fund, New Jersey’s primary bank account for road and mass-transit projects, which has no capacity to finance work after June 30, said Richard Crum, the department’s director of project management.

“We’re in very uncertain times here,” Crum said.

Christie plans to present a plan for replenishing the trust fund before year-end, a spokesman, Kevin Roberts, said.

“There’s no lack of commitment from the governor’s perspective,” he said. “We hope to move forward with infrastructure investment.”

Industry officials hope to boost business by working with Christie on a plan to replenish the trust fund, and to try to revive the tunnel project through Amtrak, Beachem said.

Construction spending accounted for $33 billion, or 7 percent, of New Jersey’s gross domestic product in 2007, according to an alliance report released at the meeting.

To contact the reporter on this story: Dunstan McNichol in Trenton, New Jersey, at dmcnichol@bloomberg.net;

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

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