newjerseynewsroom.com

BY NAOMI M. BRESSLER

COMMENTARY

A little more than 24 hours after canceling New Jersey's commitment to help pay for a second rail tunnel connecting New York and New Jersey, Gov. Chris Christie met with U.S. Transportation Secretary Ray LaHood and agreed to rethink his decision. Although the hour-long meeting did not resolve the governor's concerns about how the tunnel should be funded, it did emphasize one important point: New Jersey has options beyond simply walking away.

Christie announced that he was shutting down the tunnel project at a hastily arranged news conference last week, saying the state did not have its share of the $8.7 billion project, let alone funds to cover potential cost overruns, which he said could be as high as $5 billion.

The governor is correct in saying that New Jersey, which has cut funding to a number of important services, including schools and women's health, does not have billions of dollars tucked into a secret savings account set aside to pay for the tunnel. However, if cash in hand were needed to accomplish great public works projects, the Holland and Lincoln tunnels and the George Washington Bridge would never have been built and New Jersey would not have the economic vitality it enjoys today.

Like buying a home, where purchasers take out a mortgage knowing their future income will help cover the costs, large public works projects (the tunnel is the largest ongoing public works project in the nation) are funded with the promise of future prosperity and revenue. So, while it may be correct to say that New Jersey does not have the money to pay for the tunnel now, it is short-sighted to imagine that it cannot generate the money in the future.

Known as Access to the Region's Core, or ARC, the tunnel is expected to create 6,000 construction jobs and 40,000 permanent jobs, the benefit of which will be felt both in New Jersey and across the river in New York. Yet that tells only part of the story. Within eight years of opening, ARC also is expected to add $18 billion to home values within two miles of New Jersey Transit's Metro-North, Port Jervis and Pascack Valley train stations and to increase the value of commercial properties near those stations. The tunnel is expected to reduce automobile use and improve air quality throughout the region.

Original estimates put the tunnel's cost at $8.7 billion, with New Jersey responsible for $2.7 billion and the federal government and Port Authority of New York and New Jersey each agreeing to contribute $3 billion. New York is providing no direct financing. In making his announcement, Gov. Christie cited figures that show the tunnel will cost between $11 billion and $14 billion. The state, he said, had no way to pay for a $5 billion cost overrun.

But the state has options — tax and fee increases aimed at those who would benefit from the tunnel — that will help keep New Jersey the desirable place to live and work it has been since the first bridges and tunnels were constructed. It will also make it easier for New Jersey residents to work in Manhattan, which helps make the argument that New York state also should contribute to the cost of its construction.

New Jersey has neglected to fully fund its transportation needs, in spite of the dire condition of its overburdened transit system and the need for serious repairs to the state's aging roads and bridges. Despite transit fare increases of up to 47 percent and massive service cutbacks in May, the state hasn't increased its 14.5-cent-per-gallon gas tax since 1988. Raising the gasoline tax by 15 cents per gallon would generate approximately $750 million annually. At 29.5 cents per gallon, New Jersey would be close to the nationwide average of 29.3 cents per gallon. Revenue generated from increasing the gas tax to a fair level could provide a permanent funding source for the state's soon-to-be-depleted Transportation Trust Fund, some of which could be used to pay for the tunnel. The state should also begin charging sales tax on gasoline. At $2.50 per gallon, applying sales tax would raise about $750 million a year for the state.

Among the other revenue-generating ideas broached during the meeting with federal transportation officials, according to an account in The Star-Ledger, was a 50-cent surcharge on transit tickets. That would unfairly put the entire responsibility on New Jersey Transit users, who already pay some of the highest fares in the country.

Gov. Christie maintains that no tax increase is acceptable to his administration and refuses to acknowledge that fare increases are in fact a burden to transit riders. If New Jersey is to remain attractive to residents and businesses, it must have reasonably priced, reliable transportation. The real cost of not funding the tunnel is the decline of the whole region as additional cars clog roads and further pollute the air.

Naomi M. Bressler is a policy analyst with New Jersey Policy Perspective.

This column first appeared in the Times of Trenton