Transport Secretary aims to save Hudson tunnel

NEW YORK Fri Oct 8, 2010 6:06pm EDT

A rendering of the ARC Tunnel project's proposed Penn Station Expansion. REUTERS/NJ Transit/Port Authority of NY & NJ

A rendering of the ARC Tunnel project's proposed Penn Station Expansion.

Credit: Reuters/NJ Transit/Port Authority of NY & NJ

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NEW YORK (Reuters) - Transportation Secretary Ray LaHood on Friday said federal and New Jersey officials will review options for the Hudson River Tunnel project that the state's governor canceled a day earlier due to its high cost.

After meeting with New Jersey Gov. Chris Christie in the state capital, Trenton, LaHood said in a statement that he gave the governor a number of options to continue the tunnel project.

The Republican governor, in a statement, agreed that LaHood's options could "potentially salvage a trans Hudson tunnel project."

While saying he would review them, Christie added: "The fact that the Access to the Region's Core project is not financially viable and is expected to dramatically exceed its current budget remains unchanged."

LaHood said Christie would get a report from the newly formed state-federal transit working group within two weeks.

The Republican governor on Thursday said he scotched the new rail tunnel -- the first in a century -- because its cost could top its $8.7 billion budget by $2 billion to $5 billion.

Christie, who won a national reputation by closing an $11 billion budget without raising taxes, inherited the tunnel project from his predecessor, Democratic Governor Jon Corzine.

Transit advocates say the new link is crucial to relieving the bottleneck in the current tunnel as commuters traveling between New Jersey and midtown Manhattan are often delayed.

SEEKING LIGHT THROUGH A NEW TUNNEL

Financial analysts say the state's economic growth will choke without the new tunnel -- the biggest U.S. mass transit project. New Jersey's economy depends heavily on commuters who work in New York City and they need reliable train service.

In mid-September, the governor halted new work on the tunnel, saying the federal government had told him New Jersey would have to pay for every penny of cost overruns.

Transit advocates doubt Christie's projections of billions of dollars of extra costs.

"We believe a modest gap exists and urge the State, Port Authority of New York and New Jersey and the Federal Transit Administration to close the remaining gap," five nonprofit groups said in a joint statement on Friday.

Also on Friday, a top New Jersey Democrat said he officially requested the documents underpinning the governor's decision to cancel the tunnel -- and scheduled a hearing.

The tunnel, which was supposed to double capacity when it opened around 2018, was to be paid for with $3 billion from the federal government, $3 billion from the Port Authority of New York and New Jersey, and $2.7 billion from New Jersey.

Christie likely will lose that $3 billion of federal funding if he kills the project. The other 49 states could then compete for that money. But political analysts say this strategy could enable Christie to avoid raising the state's gasoline tax, one of the country's lowest.

All of that tax revenue could then be used for roads and bridges instead of being partly diverted to the tunnel.

(Reporting by Joan Gralla; Additional reporting by Jon Hurdle in Trenton; Editing by Jan Paschal)

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