New Jersey Governor Cancels Nation’s Largest Job Creation, Economic Recovery Project

New Jersey Governor Chris Christie made national headlines last week by announcing that he is canceling the nation’s largest public works project – and sacrificing nearly 50,000 jobs in the process.  The Access to the Region’s Core (ARC) tunnel project would double the existing rail-commuting capacity from New Jersey to New York City with a nine-mile tunnel under the Hudson River to midtown Manhattan.    

The move not only undermines the nation’s efforts at jobs creation and to promote economic recovery, it will hinder the state’s efforts to resolve its ongoing revenue crisis by eliminating a unique economic development opportunity estimated to generate nearly $500 million per year in new tax revenues.  U.S. Department of Transportation (USDOT) officials have entered into discussions with the Christie administration in hopes of saving the ARC Tunnel, which has been in the works for two decades; the project received the capital infusion needed to move forward with $3 billion from the federal American Recovery and Reinvestment Act (ARRA).  Another $3 billion is being contributed by the New York/New Jersey Port Authority, half of which comes from New York State. 

Estimates by New Jersey Transit, the state’s public transportation agency, and the Regional Plan Association, which advocates for mass-transit improvements in the tri-state area, predicted the ARC Tunnel would create nearly 3,000 construction jobs and 16,000 permanent jobs for New Jersey residents, and increase property values in the state by $18 billion.  New Jersey municipalities would benefit from $375 million in new property taxes, and the state would see $96.7 million per year in new personal and business taxes by 2025.  New York City and New York State would benefit to a similar extent, with almost 2,800 construction and 28,000 permanent jobs, and $384 million in additional tax revenue.  In addition, New Jersey may have to pay back $300 million or more in ARRA funds it has already spent on the project.  The high ratio of permanent jobs stems from the massive expansion in transit capacity and decreased commute times to Manhattan, which are predicted to spur more companies to locate their offices in New York City.  The property value estimates are based on housing market analyses for New Jersey communities after other significant transit system expansions and improvements.

Despite the fact that New Jersey is currently slated to pay for less than half of the $8.7 billion project, Christie stated that an assessment he ordered last month predicts cost overruns of $2 billion to $5 billion.  The sincerity of the governor’s explanation seems dubious, though, in light of other recent actions and the overwhelming benefits to the state from the ARC Tunnel.  For instance, the administration reportedly turned down requests by USDOT officials over the last year to work out an agreement to cover potential overruns.  In late September, the New Jersey Turnpike Authority approved an additional $2 billion bond measure for a far less beneficial, $4 billion highway project to widen sections of the state’s two toll roads, the New Jersey Turnpike and the Garden State Parkway.  That project is  does much less for  for New Jersey residents; it will not expand transit system capacity to the same extent, particularly due to unmitigated congestion at existing bridges and tunnels from New Jersey into Manhattan. In addition, the governor refused to make $3.1 billion in payments to the state pension fund this year, likely saddling New Jersey residents with a major liability in the years to come.