Burying A Big-Ticket Tunnel

October 18, 2010 Current Commentary Comments Off
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Big civil engineering projects, like big military weapons systems, are notoriously hard to kill, even when their costs spiral to levels that eclipse their expected benefits. But you can’t blame a guy for trying, right?

The Access to the Region’s Core (ARC) tunnel would have stretched under the Hudson River, carrying rail commuters from New Jersey to midtown Manhattan. It would have doubled the number of peak trains that could enter the city each day. It also would have cost, by the latest reckoning, between $11 billion and $14 billion — somewhere between two and three times the original $5 billion sticker price.

To his credit, New Jersey Gov. Chris Christie decided that enough was enough, and withdrew his state’s support for the project.

“The bottom line is this: New Jersey has gone for too long and for too many decades ordering things that they can’t pay for,” Christie said at a news conference. “This project has some flaws to it, but in the end, this is a financial decision.”

The governor wavered after the project’s backers applied Heaven-knows-what-kind of torque to his arms. He agreed to reconsider his position and promised a final decision sometime near the end of this week. I suspect and hope he will hold his ground, for the sake of his state’s current and future taxpayers, and for all of us who think big financial commitments should be based on realistic cost-benefit analysis rather than bait-and-switch sales tactics.

The federal government and the Port Authority of New York and New Jersey had each pledged around $3 billion toward the tunnel’s cost. New Jersey would have been left to pick up the rest of the tab. Given the uncertainty about the final cost — estimates have been rising since the project’s inception — Christie said he could not “put the taxpayers of the State of New Jersey on what would be a never-ending hook.”

About $600 million had already gone into the project when Christie announced his intention to pull the plug. Some of that was federal money that New Jersey will have to pay back if halts construction. More significantly, in the eyes of incredulous onlookers, New Jersey would lose its claim to the entire $3 billion the federal government had agreed to contribute. That allocation is project-specific. If New Jersey doesn’t use the money for the tunnel, it will most likely go to other states. (Incredulity that a governor would let federal money go to another state, where it might do more good, says a lot about how this country sets its spending priorities.)

U.S. Transportation Secretary Ray LaHood met with Christie to try to convince him to take the money and build the tunnel. The spectacle of a Cabinet officer trying to force money on an unwilling state is, to say the least, peculiar, but it is not surprising given the current political climate. Just days after LaHood’s meeting with Christie, President Obama met with mayors and governors from around the country (not including Christie) to seek support for a $50 billion transportation bill. The president stressed the bill’s ability to create jobs, something Obama needs to do, or at least appear to be doing, if he wants to help his party survive the midterm elections. New Jersey’s decision to cancel a project that would have provided 6,000 construction jobs at a relatively low cost to the federal government was not good news for the White House.

But it was good news for taxpayers. For too long, governments in this country have stuck residents with huge bills for infrastructure projects that are not worthwhile. Officials chronically underestimate costs. And then, after states have committed to projects with low-ball price tags, they insist on sticking it out as the prices gradually mount, sometimes to absurdity.

Each time, supporters of the projects argue that it would be a sin to waste the money that has already been invested. And, once workers have been hired, no one is willing to tell them their jobs won’t continue. So we end up with projects like Boston’s $22 billion Big Dig, which was originally only supposed to cost $2.6 billion.

The ARC tunnel would bring benefits to New Jersey, and to New York too, for that matter. It probably made sense at its original projected cost of $5 billion. It might have even been a good deal at the $8.7 billion price that analysts later calculated. But when the anticipated price rose to $11 billion or $14 billion, building the tunnel was no longer in New Jersey’s best interest. The surprise is that Christie had the gumption to say so.

The new governor of New Jersey is showing himself to be the kind of fiscal steward many voters say they want. But being fiscally responsible means saying no to a lot of people, which means making a lot of people unhappy. Christie has said no plenty of times, and made plenty of enemies, beginning with his state’s teachers, and now adding the construction industry and the Obama administration to the list.

New Jersey taxpayers can take comfort in knowing that this governor seems to have their back. We’ll see when the next election rolls around whether they are willing to return the favor.


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