While New Jersey governor Chris Christie was collecting accolades for his talk about ending teacher tenure, limiting the power of teachers’ unions, and more to faculty and students at Harvard University’d School of Education, US transportation secretary Ray LaHood was letting New Jersey know that the state owes the federal government $271 million for the cancelled Hudson Tunnel project. Declaring that costs to build the railroad tunnel were running far higher than estimated, Christie cancelled the project last October and hired Patton Boggs, a Washington, D.C., law firm to clear the state of its debt obligations, to the tune of $800,000 so far.
In other words, not only do New Jerseyans have to continue to trudge to work on severely overcrowded and overtaxed trains, but we have to pay back a bundle to the government including interest on the debt. As the federal government currently charges interest at a rate of 1 percent a year, thanks to a decision made by a governor who’s been styling himself as Mr. “We Gotta Exercise Fiscal Conservatism,” the debt will be more than $50,000 a week.
In a letter to New Jersey’s senators and representatives in Congress, LaHood wrote that “‘the law was clear” that New Jersey had only received federal funding that would total $3 billion on the condition that it finish the project. Says the Star-Ledger:
“After the initial contract was entered into and later expanded at Governor Christie’s request, the state of New Jersey broke the terms,” LaHood said. “The governor’s unfortunate decision will affect the commuters in New Jersey and the entire Northeast region for generations.”
Christie’s office said it disagreed with LaHood’s conclusion but had not decided how to respond or whether it would appeal.
But LaHood has said New Jersey has no options left, and that the Department of Transportation has “many ways to extract the money, including withholding a wide range of federal funds.”
According to the New York Times, the tunnel was projected to cost $8.7 billion, with the Port Authority of New York and New Jersey committing $3 billion more on top of federal funding. The Star-Ledger describes the dispute which began last fall when Christie said he just didn’t know the tunnel would cost so much:
Launched under Gov. Jon S. Corzine with the support of Democrats and Republicans as well as labor unions, Christie abandoned the tunnel — known as ARC for Access to the Region’s Core — in October after initially expressing his support for the project.
He said it was only then that he had learned the state would be liable for $2.5 billion in cost overruns on top of the $8.7 billion price tag.
“New Jersey was unable to move forward with the ARC project for reasons beyond the state’s control,” [governor spokesman Kevin] Roberts said today. “Billions of dollars in unaccounted-for cost overruns and re-estimates of project costs late in the process only continued to increase New Jersey’s already heavy financial burden.”
But LaHood wrote in the letter, which was sent to U.S. Sen. Frank Lautenberg, that state officials were well aware in August 2008 — before Christie became governor in January 2010 — that costs could grow to as much as $12 billion.
“Any notion that the potential for cost growth constituted new and emergent information when the governor made his decision is simply not accurate,” he wrote.
Roberts declined to comment about whether the governor knew about the higher cost projections in 2008.
I guess Christie should have done his homework better.
Photo by Hoboken Condos.