Officials say NJ-NYC rail tunnel appears doomed

[October 27, 2010]  TRENTON, N.J. (AP) -- The fate of the biggest public works project in the country -- a $9 billion-plus rail tunnel under the Hudson River -- appears to be sealed after officials said New Jersey Gov. Chris Christie was standing firm on his decision to kill it.

Christie, a rising star in the Republican Party for his fearless budget-slashing, has argued that his cash-strapped state can't afford to pay for any overruns on the project, about a third of which is being paid for by the federal government. New Jersey's share is $2.7 billion, plus overruns.

He first pulled the plug on the project two weeks ago but gave himself time to reconsider at the behest of federal Transportation Secretary Ray LaHood. But he put his foot down Tuesday, according to two officials familiar with the decision who spoke to The Associated Press on the condition of anonymity.

A formal announcement on Christie's move, which drew strong reaction from proponents who say the tunnel is sorely needed infrastructure, is expected Wednesday.

"The federal government demonstrated its strong commitment to building this tunnel, but it was clear from the beginning that Gov. Christie planned to kill this project no matter what," the office of Sen. Frank Lautenberg said Tuesday in a statement that stopped short of confirming the governor's decision.

Lautenberg said that he urged the U.S. Transportation Department to give Christie options to minimize New Jersey's financial risk and that federal officials complied.

The governor was given four financial options for salvaging the project, including one that eliminated his state's risk for overruns, said one of the officials who spoke to the AP.

The Star-Ledger of Newark reported that federal officials offered to improve financing terms but offered no new money. The newspaper first reported the decision, citing three officials close to the project.

Christie said Tuesday after a town hall meeting in Monmouth Junction that he would "make the decision when I'm ready."

Later in the day, spokeswoman Maria Comella declined to confirm reports the project was dead, saying only: "We're not commenting on this until we make a formal and public announcement."

Transportation Department spokeswoman Olivia Alair said Tuesday that she had no new information to share about the project.

Construction began last year on the tunnel, which has been in the works for 20 years. It is designed to supplement a century-old two-track tunnel and would double the capacity for NJ Transit commuter and Amtrak trains between New York and its populous New Jersey suburbs.

Officials estimated it would provide 6,000 construction jobs immediately and as many as 40,000 jobs after its completion in 2018.

The first-term governor canceled the project Oct. 7. His reprieve officially expired Friday, and Christie said he would delay a decision until after the weekend.

Christie had already ordered a cost review in September, suspending new work on the tunnel while the estimate was completed.

The federal government and the Port Authority of New York and New Jersey are each contributing $3 billion. Christie has objected to the state being on the hook for overruns and wanted someone else to help pick up the tab.

Some proponents believe Christie is motivated, in part, by wanting to divert the money to state projects. The governor has said the tunnel and state transportation needs are separate issues.

He has refused to raise the gas tax, among the lowest in the nation at 10.5 cents per gallon, to beef up the nearly broke state fund.

At least $1.25 billion becomes available for state projects with the tunnel's demise.

New Jersey Assemblyman John Wisniewski told the AP that discussions to save the project included forming a public-private partnership to build and lease a new terminal the project called for, a move that would have removed the costs of building it from the budget.

"This is a monumentally boneheaded decision," said Wisniewski, a Democrat who leads the Assembly Transportation Committee. "There are lots of ways to solve this problem, and the governor is not looking at any of them because he already made up his mind to cancel the project."

[Associated Press; By BETH DeFALCO and ANGELA DELLI SANTI]

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