ARC Funding: What's at Stake

(New York -- Matthew Schuerman, WNYC) New Jersey never put up much of its own money towards the ARC Tunnel. And yet Governor Chris Christie seems poised to cancel the project because of money concerns.

Out of the tunnel’s $8.7 billion budget, New Jersey was contributing just $2.7 billion. Even that figure overstates the case, however. According to transportation officials, only $1.25 billion would come from New Jersey sources: the tolls collected by the NJ Turnpike Authority. Another billion and change comes from the federal government’s Congestion Mitigation and Air Quality Improvement Program (CMAQ), according to transportation officials.

If, or when, the tunnel’s canceled, New Jersey could divert the $1.25 billion in turnpike tolls easily—even to help out the state’s ailing Transportation Trust Fund. Christie will also be able to spend the CMAQ money on other road and bridge projects—although transportation sources say the money will have to be used in accordance with federal regulations, which would rule out its use for the trust fund.

The other $6 billion, contributed equally by the Port Authority and the Federal Transit Administration, is money slated specifically for the ARC Tunnel. Transportation sources say that Christie will have to sacrifice all of that money should he cancel the tunnel. However, presumably some Port Authority projects would take place in New Jersey.

Christie’s stated concern all along, however, was what New Jersey would do if the tunnel ended up costing more than $8.7 billion. According to one legislative source, the current agreement with the Federal Transit Administration calls for the Port Authority and the state of New Jersey to be jointly responsible.

The bottom line: Christie gets loses $6 billion in free money. But he gets to spend a different $2.25 billion on roads and bridges, all the while limiting his liability for cost overruns.

He also wouldn’t need to increase the gas tax to bail out the Transportation Trust Fund,thereby protecting his reputation as a fiscal conservative.