Christie Rail Kill Misses Lowest Rates as N.J. Lags U.S.Tom Moroney and Elise Young
The moonscape highways around Fort Lee, New Jersey, have left cracked axles, bent rims and chunks of tire strewn across the lot at George Washington Bridge Towing. While the traffic jams Governor Chris Christie’s crew engineered here are gone, these broken vehicle parts show that the consequences of their boss’s economic choices endure.
As a thriller, the gridlock ordered up at the approaches to the world’s busiest span is tough to beat: e-mailed hints of retribution, a soured romance, prosecutors probing for links to a potential presidential candidate.
More consequential, as the 51-year-old Republican pushes a $34.4 billion budget in which debt mostly precludes new spending, is Christie’s cancellation in 2010 of a commuter rail tunnel, scuttling the creation of at least 200,000 jobs. With the money he diverted to protect the Transportation Trust Fund and avoid increasing the gas tax almost gone, New Jersey’s strangled train and road system is thwarting its recovery.
“For an economy, it’s death by a thousand cuts,” said Philip Fischer, the head of municipal bond research in New York for Bank of America Corp.
Even with the promise of $3 billion in U.S. aid for the tunnel, Christie said he didn’t want to burden taxpayers with an open checkbook. A federal report later disputed his numbers and concluded there was no evidence it would cost the $14 billion or more he said it would.
Initial estimates of the project’s cost rose to $12.4 billion at the time it was killed from $7.4 billion in 2006. Whatever the price tag, Fischer said, the most persuasive argument for the Hudson River tunnel was the historically low cost of borrowing.
Average interest rates across the U.S. on municipal bonds, designed for such public projects, hover at about 4.3 percent, close to the lowest level since the 1960s and down from a 13.3 percent peak in 1981. Issuing $12.4 billion of 20-year bonds today would cost $23 billion in principal and annual interest over the life of the debt. That’s a savings of $4.2 billion from the average 6 percent rate during the past five decades.
“The rule is, when the market gives it to you, you should take it,” Fischer said.
Freedom of movement is central to the economy and politics of New Jersey, the most densely populated U.S. state with 8.9 million people. Almost 15 percent of commuters spend 60 minutes or more getting to work, compared with a national average of 8.1 percent, U.S. Census data show. No state sends more people beyond its borders for jobs, 548,000, with about 73 percent bound for New York.
The state’s chemical, pharmaceutical and other large industries rely on the roads and trains, as do millions of others passing through. Or failing to, in the case of crumbling infrastructure.
Christie disagrees that job growth would follow better roads funded by a higher gas tax, said Michael Drewniak, a spokesman for the governor. The argument “washes both ways,” Drewniak said in a telephone interview.
“It puts an extra burden on commerce and people’s wallets,” he said. “The governor’s point is more looking at our entire economy.”
One troubling, if not definitive, sign of the connection between poor infrastructure and lost jobs can be found in the state’s employment numbers. From January 2010, when Christie took office, through December 2013, New Jersey’s number of private-sector jobs increased by 3.5 percent, according to Bureau of Labor Statistics data. At the same time, New York’s grew 7.7 percent while the nation’s increased by 7.8 percent.
Christie’s “biggest vulnerability going forward as a political entity -- leaving Bridgegate out for a second -- is New Jersey’s standing in economic growth among states,” said Ed Rendell, the co-chairman of Building America’s Future, a Washington-based bipartisan group seeking higher transportation spending, and the former Democratic governor of Pennsylvania.
Harder evidence of job loss exists in the tunnel project Christie halted in October 2010.
Called Access to the Region’s Core, the tunnel was just part of New Jersey’s need for public investment, according to a 2013 report from a bipartisan group of government executives. It recommended spending $70 billion on aging state infrastructure described as “decayed,” with $21.3 billion going for transportation.
A second report, by the American Society of Civil Engineers, painted a depressing picture of New Jersey’s major roads. Sixty-six percent are in poor or mediocre condition, resulting in an extra $3.48 billion annually in repairs for motorists, or $601 each.
“So many this year, it was crazy,” said Kazem George, 36, a tow-truck driver at George Washington Bridge Towing who sees stranded motorists pony up hundreds of dollars in tows and repairs and, in some cases, lose hours from work and school.
Mike Giacomarro, 26, blames Christie.
“I never used to mind the guy,” said the Allendale resident, until early March when he hit a pothole that set him back $275.
“I’m not expecting the roads to be perfect,” said Giacomarro, who commutes to Metropolitan College of New York in Manhattan. “But if I’m going to pay $17 to get over the bridge, I better be able to get to the bridge.”
Christie, who won re-election in November carrying 19 of 21 counties and 61 percent of the vote, has seen his approval ratings plummet 20 percentage points over the bridge scandal.
Former Deputy Chief of Staff Bridget Anne Kelly and David Wildstein, an ex-Christie ally at the Port Authority of New York and New Jersey, were responsible for the September closings in Fort Lee, where a Democratic mayor didn’t endorse the governor, according to a report last month by lawyers for the administration.
Kelly sent an Aug. 13 e-mail to Wildstein that said: “Time for some traffic problems in Fort Lee.” Wildstein, who ordered the lanes closed, replied: “Got it.”
The report revealed that Kelly and William Stepien, Christie’s former campaign manager, had a personal relationship that Stepien ended, suggesting they weren’t communicating when the plan was hatched.
State lawmakers are investigating, U.S. Attorney Paul J. Fishman convened a grand jury in Newark and in Manhattan, District Attorney Cyrus Vance Jr. is examining whether the bi-state agency that runs the bridge had improperly financed a range of major construction projects.
Christie came to Trenton promising to end an era of borrowing that engendered the nation’s highest property taxes and led its pension fund to near collapse. The retirement shortfall had reached $53.9 billion after a decade of expanded benefits and missed payments.
The new governor vowed to “tear up the state’s credit card,” raised workers’ retirement age and made them pay more toward their benefits.
When Christie canceled the tunnel, which would have more than doubled peak-hour service to 48 trains per hour, he said, “I simply cannot put the taxpayers of the state of New Jersey on what would be a never-ending hook.”
The expense was to be shared among the Port Authority, the federal government and the state, which was to pay 14.4 percent.
The tunnel would have led to $9 billion in business activity and $1.5 billion in federal, state and local tax revenue during nine years of construction, according to a March 2012 report by the U.S. Government Accountability Office. It would have generated 59,900 jobs on site and 98,300 in the region while work was under way, plus 44,000 jobs when the tunnel was done.
More jobs would have meant higher revenue from income taxes. New Jersey collected $1,257 in state individual income tax per capita in fiscal 2012, according to the Tax Foundation, a non-profit research group in Washington. At that rate, 44,000 permanent positions would have generated about $55.3 million a year in new income taxes.
In Kearny, where 41,400 people live alongside three former industrial properties classified as Superfund sites by the U.S. Environmental Protection Agency, the tunnel held promise to spark a revival, according to a 2009 redevelopment study by the Regional Plan Association, a New York-based urban-research group focusing on the metropolitan area.
New Jersey Transit, the state’s bus and rail agency, would revive a defunct rail line with direct service into Manhattan. The Hudson County town stood to gain as many as 1,400 residential units, a 10 percent increase from 2010, plus retail and office space, according to the study’s projections.
With the project dead, the Port Authority redirected money to New Jersey, relieving pressure on the state’s transportation fund. The agency spent or earmarked $1.8 billion on road projects including the Pulaski Skyway. Manhattan-bound lanes on the 82-year-old bridge are closed during reconstruction.
By 2030, mass-transit demand between New Jersey and Manhattan is expected to increase 38 percent, according to the GAO report. Access to the Region’s Core would have added two tunnels alongside two single tracks now operating at capacity. The result would have cut transfers 97 percent and taken an average 23 minutes off each trip.
New Jersey’s gas tax, the second-lowest in the nation after Alaska’s, is the largest source of money for the transportation fund, created in 1984 to issue debt for capital improvements to highways and public-transportation systems.
Now, as Christie’s fiscal 2015 budget is considered in Trenton, the transportation fund has $14.4 billion in outstanding bonds and just $160 million cash on hand. About $520 million in annual revenue from the 14.5-cent-per-gallon levy goes toward debt service, leaving nothing for new projects.
New Jersey drivers pay an average $3.40 per gallon of gasoline, according to AAA figures, compared with $3.80 in New York and $3.63 nationwide.
Christie’s decision to scuttle the rail project benefited an aspiring national political figure in two ways, said Martin Robins, the tunnel’s original project director and director emeritus of the Alan M. Voorhees Transportation Center at Rutgers University in New Brunswick.
“He could live by his pledge to both fund the Transportation Trust Fund and not raise the gasoline tax,” Robins said. “Second, it positioned him, from a national political perspective, as the spokesperson against the idea that public-works projects were a proper response to the recession.”
Other Republican governors as careful as Christie about cultivating their conservative bona fides have reversed course and increased their gas tax. Wyoming Governor Matt Mead signed into law a 10-cent boost in February. Pennsylvania Governor Tom Corbett endorsed legislation last November to bolster state highway, bridges and mass-transit spending by $2.3 billion a year. He expects to collect the money from motorist fees and an increase in the state’s wholesale gas tariff.
New Jersey’s road conditions are worsened by the sheer volume of cars and trucks. Diaz Damian, fueling his tractor trailer at the Vince Lombardi Service Area on the New Jersey Turnpike, remembered a recent afternoon when he waited so long in traffic that he lost a cargo pickup in Jersey City.
“I spent $130 worth of gas and I never got there,” said Damian, 40.
The delays apply not only to those behind the wheel. Of the half million people who travel from New Jersey each day to work in New York or Philadelphia, many get there by bus and train.
“We just never know,” Mike McKenna said of the unpredictability of his trip from the suburb of Basking Ridge. The two-hour trip on New Jersey Transit may take as long as three hours.
The anxiety that comes with these glitches has been linked to lower job productivity by Richard Wener, an environmental psychology professor. Wener teaches at the Polytechnic Institute of New York University in Brooklyn and gets there by train from Maplewood. His commute was, in fact, the genesis of his study.
Before Maplewood was connected directly by train to Penn Station in New York in the late 1990s, he had to switch trains. After Midtown Direct service began, the township’s property values went up and Wener himself felt better when he arrived at work. His study results confirmed his own experience: the less hassle in the trip, the happier the commuter.
“When people have a more stressful commute, they are more irritable and they have more days when they miss work,” he said. “That’s a drag on productivity.”