October 7, 2010 / 6:07 PM / 9 years ago

NJ governor kills Hudson River tunnel due costs

TRENTON, NJ (Reuters) - One of the biggest U.S. transport projects ended on Thursday after New Jersey’s governor said the state could not afford the risk that a new rail tunnel under the Hudson River could cost billions more than planned.

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

Republican Governor Chris Christie, who took office in January, said the $8.7 billion budget for the tunnel between New Jersey and New York City’s midtown Manhattan could rise to more than $11 billion and even surpass $14 billion.

“We simply can’t spend what we don’t have,” Christie told a news conference. “I had to figure out how I was going to pay for it. We simply can’t.”

Christie inherited the tunnel project from former Democratic Governor Jon Corzine. He halted work in mid-September for 30 days and asked his staff and federal transportation officials to review the cost estimates.

Under the original deal, the federal government and the Port Authority of New York and New Jersey were each to pay $3 billion, with $2.7 billion coming from a combination of other federal funds, including stimulus and clean air funding, as well a contribution from the New Jersey Turnpike Authority.

But crucial to the funding plan was that New Jersey was to pay anything above the $8.7 billion estimate.

U.S. Transportation Secretary Ray LaHood requested to meet with Christie after the governor told him of his decision. The meeting is scheduled for Friday in Trenton, the governor’s spokesmen said.

Christie’s decision means no contract has been signed for completion of the project and the federal funding was not secured.

The Port Authority of New York and New Jersey and New Jersey Transit both declined to comment on the termination of the project. New York Governor David Paterson said he was disappointed but respected Christie’s decision and understood “the difficulty of governing in our current economic climate.”

Christie has garnered national attention for progress made tackling the state’s record $11 billion budget deficit during his first year in office. He has been invited by other Republicans across the country to campaign for them ahead of the November 2 congressional elections in a multi-state tour that has added fuel to speculation that he might consider a presidential run.

Christie is pushing a lean-government, low-tax agenda that includes limiting annual increases in the state’s property taxes, the highest in the nation. He has refused to raise money by increasing taxes on gasoline, among the lowest-priced in the country.

New Jersey Democratic Party Chairman John Wisniewski said there was no evidence that the Hudson River tunnel would exceed its estimated budget and accused Christie of canceling the project in a bid to fuel his growing national profile.

“It fits with his national agenda,” Wisniewski said. “There is no better time to get public works projects than now and the governor is throwing away this opportunity.”

One century-old Hudson River commuter train tunnel runs between New Jersey and Manhattan’s Pennsylvania Station. Transit advocates say the tunnel is so overcrowded that commuters frequently endure long delays.

Christie had repeatedly stressed that New Jersey is too cash-poor to pay for any cost overruns by itself. New York Mayor Michael Bloomberg, who supported the project, has said the city did not have money to contribute to the project.

Digging for the tunnel, which was estimated to create 6,000 jobs, began in June 2009. It was to open in 2018.

Critics have called Christie overbearing and confrontational toward the New Jersey state legislature, which is Democrat-controlled. But his fans praise his straight talk, his forceful style and his record of getting things done.

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