New Jersey governor to re-examine tunnel funding

PHILADELPHIA Fri Oct 22, 2010 6:44pm EDT

New Jersey Governor-elect Chris Christie greets supporters before delivering his victory speech at election night headquarters in Parsippany, New Jersey, in this November 3, 2009 file photo. REUTERS/Jeff Zelevansky/Files

New Jersey Governor-elect Chris Christie greets supporters before delivering his victory speech at election night headquarters in Parsippany, New Jersey, in this November 3, 2009 file photo.

Credit: Reuters/Jeff Zelevansky/Files

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PHILADELPHIA (Reuters) - New Jersey Governor Chris Christie will examine a report this weekend on an $8.7 billion rail tunnel after the federal government urged him to reconsider his cancellation of the project, his spokesman said on Friday.

The tunnel between New Jersey and Manhattan would be the largest U.S. public-works project and has been backed by Democratic politicians who argue that major infrastructure projects can boost sluggish economic growth.

Christie, a Republican, pulled funding for the tunnel on October 7 but is reconsidering his decision at the request of U.S. Transportation Secretary Ray LaHood, a Republican former congressman.

"The governor expects to get a report from (New Jersey Transit Executive Director) Jim Weinstein on recommendations, conclusions from the fed/state working group," Christie's spokesman Michael Drewniak wrote in an e-mail on Friday. "The governor will consider that through at least the weekend."

LaHood said on Friday that he wants to find a way to keep the tunnel project alive.

He released Transportation Department estimates that the tunnel exceeded the initial cost estimate by at least $1 billion, costing between $9.775 billion and $12.708 billion. The project also includes a new bridge that would cost an additional $775 million, LaHood said.

Drewniak said the figures showed the entire tunnel project could cost up to $13.475 billion, supporting Christie's concerns that it would be too expensive.

"The hurdle remains unchanged," Drewniak said in a statement. "He is not willing to saddle New Jersey taxpayers with a public-works project with such a large, indeterminate cost overrun projection with no way to fund it."

By withdrawing state funding from the project, which would have created 6,000 jobs, the governor took one side of a clear divide in U.S. politics ahead of November 2 elections -- one that sees big government and higher taxes as a threat to prosperity.

The tunnel would run alongside the century-old Hudson River commuter train tunnel that links New Jersey and Manhattan's Pennsylvania Station. Transit advocates say it is crucial to relieving a transportation bottleneck.

New Jersey's economy depends heavily on commuters who work in New York City and financial analysts say the state's economic growth will choke without the new tunnel.

COST OVERRUNS

Christie said his state would be responsible for paying the excess from the original estimate.

"We were willing to put our $5.7 billion on the table. But ... I cannot afford to put close to $10 or $11 billion on the table. The people of New Jersey don't have the money," Christie told "NBC Nightly News" on Thursday.

Under the original financing deal, which was agreed to before Christie took office earlier this year, New Jersey would pay $2.7 billion, the Port Authority of New York and New Jersey $3 billion, and the federal government $3 billion. Any overruns would be paid by New Jersey.

Christie challenged his critics from The New York Times op-ed page -- and billionaire New York Mayor Michael Bloomberg, a tunnel supporter -- to pay the difference.

(Reporting by Jon Hurdle; Editing by Daniel Trotta and Eric Beech)

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