Did NJ First Lady Mary Pat Christie kill the ARC tunnel? Or was the problem just that her husband wouldn't raise the gas tax. Photo: State of NJ.

Having killed the badly-needed ARC tunnel not once but twice, you’d think that Governor Chris Christie would at least have the decency to let the issue go. But no. He’s got a whole new reason for opposing it. Now, apparently, the seed of the ARC’s destruction came from Christie’s wife Mary Pat, who was no fan of the deep-underground Midtown terminal.

“The lobbying to me on this one was from [the first lady],” Christie said. “She’s, like, ‘So this thing’s going 10 stories under Macy’s, [and] then I gotta go back up and I gotta walk over to Penn Station. I get on a subway. . .’”

The story is a new one for Christie, but then, he probably needs one. While deliberating on ARC’s fate earlier this fall, Christie’s argument was always that the state couldn’t afford any cost overruns. But the Tri-State Transportation Campaign caught Christie signing off on billions in borrowing for two highway widenings that had tripled in price over just five years. And Sen. Frank Lautenberg revealed that the feds had offered to add more funds and set up a public-private partnership that would bear the burden of cost overruns.

Compared to the canard of fiscal responsibility, I suppose the new argument looks pretty good.

With NJ Transit ridership soaring but only one 100-year-old tunnel into Manhattan, New Jersey needs the ARC tunnel. Graphic: Infrastructurist.

Unless something changes quickly, the Christie administration is expected to (again) kill the badly-needed ARC transit tunnel this Friday. The tunnel would double capacity for New Jersey Transit into Manhattan, providing more and faster trips for commuters, and ease the pressure on Amtrak’s Northeast Corridor trains [PDF].

Christie says he will not go forward with ARC unless the federal government agrees to cover any future cost overruns on the $8.7 billion project, reports the Star-Ledger. The Federal Transit Administration’s $3 billion contribution is already the largest federal commitment to a transit project in American history. So far, there haven’t been any signs from the feds that a further guarantee is forthcoming.

Advocates haven’t given up hope yet, however. This morning, New Jersey Senators Frank Lautenberg and Robert Menendez joined construction workers in North Bergen to rally for the project’s completion. At rush hour, local elected officials joined the Tri-State Transportation Campaign, the Regional Plan Association, New Jersey Future, Environment New Jersey and NJ PIRG at NJ Transit stations to urge commuters to express their support for the tunnel to Christie. You can add your voice at www.WeNeedARC.com.

RPA also began running an ad in New Jersey newspapers debunking some of the myths about the project. For example, while Christie claims that the project will end up costing far more than $8.7 billion, the basis for his projections has never been justified or even explained in any sort of detail.

Then again, the discussion of cost overruns is something of a red herring anyway. As the Tri-State Transportation Campaign has detailed, Chris Christie just isn’t that into transit. While claiming that the state can’t afford ARC, for example, New Jersey is simultaneously borrowing $2 billion to widen the New Jersey Turnpike and the Garden State Parkway. There is money to spend on infrastructure, just not on rail.

Similarly, Christie has refused to raise New Jersey’s gas tax, the third-lowest in the country, in order to make the state’s transportation budgets add up. He didn’t have any such compunction about raising transit fares across the state, however, and his explanation is telling. “What’s the difference between a gas tax hike and a fare hike, besides who it lands on?” asked the Star-Ledger’s editorial board at the time. “That’s the difference,” answered Christie.

There are three days left. Can New Jersey’s voters convince the governor to do something he doesn’t want to do?

The difficulty, politically, in my judgment, is very obvious. There are very few short-term dividends, for people who run for office, in long-term investments. They don’t get the benefit out of it… The benefits may not be realized until future generations. That is a political problem.

People are going to have to bite the bullet, in terms of usage charges and various taxes that will generate the revenue streams we need in order to build.

Ravitch was referring to the New York State Legislature’s failure to enact bridge tolls, but he might as well have been talking about Chris Christie’s refusal to raise New Jersey’s gas tax, which has been locked in at 10.5 cents a gallon since Reagan was president. Adjusting for inflation, it has never been lower than it is today.

Christie can say this decision was about cost-cutting, but we’re talking about an investment that would have paid off handsomely, even with cost overruns. Really, Christie just couldn’t bite the bullet. Instead of raising the gas tax to pay for transportation, he raided funds committed to one of the most important transit projects in the nation and borrowed more to keep on expanding roads.

So, New Jersey, here is a sneak preview of the future bequeathed to you by your governor:

Hat tip to Clarence for the video.

Gov. Chris Christie is expected to kill the critical ARC transit tunnel project, reports say. Photo: Star-Ledger.

The largest federal transit investment in American history is on its deathbed, reports Andrea Bernstein at Transportation Nation. Three sources have told Bernstein that New Jersey Governor Chris Christie is ready to pull the plug on the plan to double rail capacity under the Hudson River this week, though Christie denies his mind is made up.

We’ve already outlined just how important this project is to the future of New Jersey and how shortsighted this decision would be for the Christie administration, so with this devastating news, the only thing we can do is look forward.

First, the predictable stuff: If ARC dies, New Jersey will keep its $2.7 billion share of project funds, which Christie is expected to use to patch up the state’s Transportation Trust Fund for a couple of years so that he doesn’t have to raise the gas tax to pay for the state’s roads. The Port Authority will recoup its $3 billion, some of which will end up back in New Jersey and some in New York. The authority’s capital plan currently calls for no new pieces of infrastructure, so it’s possible this money will fund necessary repairs on existing bridges and tunnels.

The wildcard is where the Federal Transit Administration’s $3 billion winds up. When New York City activists defeated the Westway highway project 25 years ago, House Speaker Tip O’Neill managed to capture a large share of its funding for Boston’s Big Dig. The $350 million that US DOT offered New York to help implement congestion pricing in 2008 almost ended up paying for a Chicago BRT system, though Chicago ultimately balked as well.

Who will get the billions of dollars that Christie is on the verge of passing up? Place your bets — or vent your anger — in the comments.

Without ARC, these century-old tunnels will remain the only way for NJ Transit commuters to get to Manhattan. Photo: NJ Transit via Second Avenue Sagas

Two weekends ago, construction on New Jersey’s most important transit project was called to a temporary stop by Governor Chris Christie. He declared a thirty-day review period for the ARC tunnel project, which would build a new rail tunnel below the Hudson and double commuter rail capacity from New Jersey. Many worry the review is just a prelude to axing the $8.7 billion project altogether and using the money saved to patch up New Jersey’s Transportation Trust Fund for a couple of years.

Advocates are now mobilizing to save ARC. People who live, work, or attend school in New Jersey can send a letter to the Christie administration through the Tri-State Transportation Campaign’s “We Need ARC” petition.

Currently, only a single pair of century-old tunnels carry New Jersey Transit trains into Penn Station, and with NJ Transit ridership more than quadrupling since the 1980s, those tunnels are at capacity. “Every two minutes, a train enters Midtown Manhattan from New Jersey,” said Juliette Michaelson of the Regional Plan Association. “That capacity cannot increase.”

Without a new tunnel, commuter rail in New Jersey simply cannot expand. If ARC is built, however, it would be expected to carry 100,000 more commuters into Midtown, more than doubling capacity. Estimates suggest 22,000 cars would be taken off the road as a result. “It’s a game-changer,” said Michaelson.

Christie’s decision to halt all work on the project for thirty days has put the project in grave peril.

Ostensibly, the reason for the construction delay is to investigate cost overruns. However, at a hearing of the State Assembly’s Transportation Committee this Monday, NJ Transit Executive Director Jim Weinstein admitted that the administration had discussed using the funds committed to ARC to patch up the state’s Transportation Trust Fund, which funds both transit and roads and is on pace to go bankrupt next year. That’s a sign that the delay isn’t for an audit, but, in the words of the New Jersey Star Ledger, “a trial balloon to test the reaction to killing the project.”

Map: Star Ledger

If Christie decides to sacrifice ARC to keep the TTF afloat, it might solve one political headache for him, but not for long. “Back of the envelope, we’re talking two years, three years tops,” estimated Zoe Baldwin, the New Jersey advocate for the Tri-State Transportation Campaign. “It’s political pain-avoidance.”

Michaelson agreed that ARC funds would only finance TTF for two or three years. “Can he keep his hands off the cookie jar of money that previous governors have set aside for ARC?” she asked.

Baldwin suggested that instead, Christie look at raising the state’s gas tax, which is the third-lowest in the country and hasn’t budged for 21 years. “We’ve raised all kinds of other fees and taxes, she said, but the gas tax and other transportation fees have been untouchable.” That’s led to a years-long crisis in transportation funding for the state.

If Christie decides to kill ARC, that could be it for the project for decades. Currently, the cost of the project is split three ways. The federal government is contributing $3 billion, its largest contribution ever to a transit project. The Port Authority is paying another $3 billion. New Jersey would commit the rest, currently estimated at $2.7 billion. “The chances of the stars aligning again the get all three entities to pony up, it’s unlikely,” said Baldwin. That same agreement, she added, means that Christie’s decision is likely to be all-or-nothing for ARC. A renegotiation of the terms would be difficult.

The fiscal irresponsibility of killing ARC for a one-time infusion of cash becomes clear once you dive deeper into the numbers. To begin with, the operating revenue ARC would bring in is projected to outweigh its operating costs. It would turn a profit, once it’s built.

Moreover, the economic impact of providing more access to New York City far outweighs the project’s price tag. An RPA study from July looked at recent rail expansions in New Jersey and found that ARC would raise New Jersey property values by a total of $18 billion. A projected $50 billion in wages would come back to the state from high-paying Manhattan, said Baldwin.

This influx of wealth would, of course, be taxed. A report by NJ Transit [PDF] estimated that in 2025, ARC would add almost $100 million in taxes a year to New Jersey’s balance sheet. On top of that, RPA estimated that ARC would generate $345 million a year in local property taxes.

The amount of economic activity generated for the state would be even higher. “The economic future of the state rests on being able to keep on getting more and more people who live in New Jersey working in Manhattan,” said Michaelson.

So what’s next for ARC? Ultimately, the decision is up to Christie, but there are a few things to watch for before he makes his move. Baldwin pointed to a move by the Democrat-controlled legislature to condition certain TTF approvals on a long-term plan for the fund from Christie. Baldwin said that the governor’s reaction to the legislature could give a better sense of where his mind is.

Michaelson said that a strong statement by New Jersey’s business community could change the political dynamic. “I’m looking for the business community to come out and say we need this tunnel,” she said. “I feel like their voice has been lost in the mix.”

Meadowlands Rail event in July. Photo: EGS Blog

The New Jersey Transit Meadowlands Rail Line opened for business over the summer, and made its first NFL regular season run last weekend. A reader sends this account:

The train I was on for the Giants game Sunday was 100 percent full (wouldn't be surprised if people were left on the platform, except the train was so full I couldn't see out the window to check). Came on time, plenty of trains at the end of the game, etc. Bought my ticket at a Metro North station and they had someone manually checking tickets at Secaucus (since Secaucus usually uses electronic NY Transit tickets). Ironically, my friend who had the tickets drove and hit so much traffic that we missed kickoff.

The Giants, having topped the Redskins, travel to Dallas this week, and will host the Cowboys in December. Fresh from the impressive debut of rookie QB Mark Sanchez in Houston, the Jets face the Patriots -- now 1-0 thanks to the hopelessly luckless Bills -- in their home opener Sunday afternoon.

The trouble stems from leasing arrangements made years ago between transit agencies and lenders in which the banks bought transit equipment and facilities, such as railcars and stations, and leased them back to the agencies.

The transit agencies got much-needed cash, and the banks got tax benefits. In 2003, the tax benefits from those kinds of transactions were prohibited by the IRS.

AIG served as the insurer of many of those deals. The collapse of AIG downgraded its credit rating, allowing the lenders to demand full payment from the transit agencies if the agencies did not quickly find other insurers.

NJTransit is on the hook for up to $150 million; Chicago agencies may have to repay more than $100 million; Los Angeles County -- as much as $300 million; Washington Metro's worst-case obligation is $400 million. According to the Hill, the total exposure of more than 30 transit agencies could reach "well over $1 billion." (The MTA has not been affected as much as other agencies, according to an agency spokesman; any impact on its budget will be addressed at a November 10 meeting of the MTA Finance Committee.)

The Newark Star-Ledger reported today on the consequences for NJTransit:

"The timing couldn't be any worse," said state Transportation Commissioner Kris Kolluri. "It would add such a dramatic burden on the transit agency you would need drastic service cuts or the curtailing of the capital program."

Four Senators have written to Treasury Secretary Henry Paulson and Federal Reserve Chair Ben Bernanke, asking them to intervene:

"If the Treasury and Federal Reserve do not act quickly, public transit agencies around the nation could become financially crippled and several banks could enjoy unjustified windfalls," read the letter, which was signed by Sens. Robert Menendez and Frank Lautenberg of New Jersey, Sen. Richard Durbin of Illinois and Sen. Barbara Boxer of California.

A spokesman for Senator Lautenberg told Streetsblog yesterday that "we need intervention as soon as possible" but that the Treasury has yet to respond to the letter. Press reports indicate that the Treasury is in talks with agencies, including NJTransit, about possible solutions. One way the feds could assist is by stepping in to back up the leases instead of AIG, according to the Associated Press.

All of which raises a 122 billion dollar question, says blogger Ryan Avent:

One might ask just what the hell was the point of giving AIG government credit worth $122 billion (and counting) if it wasn’t going to prevent the deals the firm guaranteed from falling apart.

Photo: robotbrainz/Flickr