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New Jersey Transit Halts NYC Tunnel Funding on Overrun Concern

Sept. 13 (Bloomberg) -- New Jersey Transit, the largest statewide mass-transit network in the U.S., froze new spending on an $8.7 billion rail tunnel into Manhattan after the federal government estimated the project may run $1 billion over budget.

James Weinstein, the agency’s executive director, suspended new work and contract awards to determine whether it can keep to initial cost projections, said spokesman Paul Wyckoff. Work now under way will continue during the one-month halt, he said.

New Jersey broke ground in June on the tunnel to carry trains under the Hudson River in and out of Manhattan, a passageway that officials said would help ease delays for hundreds of thousands of commuters. The decision to suspend new spending follows a five-month review to finalize the federal government’s $3 billion contribution to the project.

Governor Chris Christie “has made it clear to me that this project must stay on time and on budget,” Weinstein said in a statement announcing the spending freeze. “Anything short of that is unacceptable.”

New Jersey’s share of the project is $2.7 billion, and the U.S. government and Port Authority of New York & New Jersey each pledged $3 billion. Federal officials estimated during the review that overruns could reach $1 billion, state Transportation Commissioner James Simpson said in an interview today in Trenton.

$583 Million Contract

The project is scheduled to be finished by late 2018. Since 2005, New Jersey has paid out $600 million in contracts for the tunnel, including $272.6 million for construction work. The awarding of a $583 million construction contract will be on hold during the temporary shutdown, Wyckoff said.

Michael Drewniak, Christie’s spokesman, declined to comment. Christie, a Republican who took office in January, cut the state subsidy for the transit agency by 11 percent, or $33 million, this year. New Jersey Transit raised train fares 25 percent in May to help close its $300 million budget gap.

The project calls for 9 miles (14 kilometers) of tunnel and new tracks from Kearny, New Jersey, to a new station under 34th Street in Manhattan. New Jersey Transit estimated building the rail connection would create 6,000 annual construction jobs, allow it to double the number of trains it can run in and out of Manhattan every hour, and increase the number of riders it can handle to 255,000 a day from 170,000.

The work suspension was reported yesterday by the Star-Ledger of Newark.

Federal Dollars

Assemblyman John Wisniewski, a Democrat from Sayreville who chairs the transportation committee, said he was told Sept. 11 of the delay in a voicemail from Weinstein. He said he is afraid the suspension might be the first stage of a plan by Christie’s administration to redirect tunnel funding, which he said may put future federal dollars for the project at risk.

“If it goes beyond a couple of weeks you’re starting to put the tunnel in jeopardy,” Wisniewski said in an interview today in Trenton. “With a 30-day delay, you’re starting to come really close.”

Jeff Tittel, state director of the Sierra Club, an environmental organization, said he supports the delay. His group has called the project poorly designed because Amtrak trains can’t use the tunnel.

“We agree that a third rail tunnel is needed to improve access to the region’s core, but it must be done right,” Tittel said in a statement. “It took us 50 years to get to this point; we can’t wait another 50 years for an effective solution.”

To contact the reporter on this story: Terrence Dopp in Trenton, New Jersey, at

To contact the editor responsible for this story: Mark Tannenbaum at

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