When New Jersey Governor Chris Christie killed the ARC Tunnel project last week, the uproar was instantaneous. From the Washington, DC, to the halls of labor in the Garden State to the pages of newspapers across the region, Christie was condemned for this short-sighted decision that will cost New Jersey thousands of jobs, billions of dollars and better commuting options. The region will suffer; his state will suffer; workers will suffer. But what if he’s not wrong? What if he has sound reasons for questioning the viability of the project — and, in particular, its price tag — as it is now conceived?
From the basic need for better rail connections between New York and New Jersey to a profound feeling of American failure, the reactions to Christie’s decision ran the gamut this weekend. Charles Wowkanech, head of New Jersey’s AFL-CIO, summed up those thoughts as he urged his governor to reach a compromise with the feds. It’s not, he noted, a partisan issue, and the state can ill afford to lose the $600 million it has sunk into the tunnel already, let alone the promise of 45,000 construction jobs and $3 billion in federal aid. “Everyone agrees that we need a new rail tunnel under the Hudson,” Wowkanech said. “Doubling rail passenger capacity is necessary to make New Jersey and New York economically competitive, to reduce congestion on our highways and to improve the quality of the air we breathe.”
In The Times, two columnists tackled the tunnel. With more than his fair share of hyperbole, Paul Krugman spoke of great American failures: “So here’s how you should think about the decision to kill the tunnel: It’s a terrible thing in itself, but, beyond that, it’s a perfect symbol of how America has lost its way. By refusing to pay for essential investment, politicians are both perpetuating unemployment and sacrificing long-run growth. And why not? After all, this seems to be a winning electoral strategy. All vision of a better future seems to have been lost, replaced with a refusal to look beyond the narrowest, most shortsighted notion of self-interest.”
Bob Herbert offered up a more tempered assessment of Christie’s decision: “The railroad tunnel project, all set and ready to go, would have provided jobs for 6,000 construction workers, not to mention all the residual employment that accompanies such projects. What we’ll get instead, if it is not built, is the increased pollution and worsening traffic jams that result when tens of thousands of commuters who would have preferred to take the train are redirected to their automobiles…This is government policy at its pathetic worst.”
But on a purely economic level, Christie has inadvertently hit upon a problem with rail construction projects in New York City: The initial estimates appear to be woefully conservative, and the final tallies — billions higher than first projected — are leaving local governments with fewer and fewer choices. We don’t even have to look beyond the city limits of New York or the overarching topic of this blog to find a great example. When the MTA first firmed up plans for Phase 1 of the Second Ave. Subway, it’s price tag came in at $3.8 billion. Today, the federal government estimates a final cost of $4.98 billion. Someone will have to cover that extra $1.18 billion, and in a time when state and city funds are tight, if not non-existent, seeing projects through to completion has become a challenge.
These budgetary concerns aren’t limited to Second Ave. either. A look at recent MTA documents reveals that nearly every big-ticket station renovation — from South Ferry to Columbus Circle to Fulton St. — is over budget by a significant amount. In New Jersey, Christie had to pull the plug because his state simply can’t afford to cover cost overruns that could range from $2-$5 billion. He shouldn’t have canceled the project before consulting with the federal government and conducting a forensic analysis of the budget, but his decision seems reasonable from a fiscal perspective. After all, the logica goes, I can’t buy something for which I can’t afford to pay and neither can the state of New Jersey.
Later this year, MTA Inspector General Barry Kluger will be releasing a report that examines just why the MTA can’t control construction costs. Ahead of that report, Manhattan Borough President Scott Stringer has urged the MTA to, in his words, “streamline its construction management and revamp its protocols for developing budget and time estimates.” On a national level, he would like to see an infrastructure bank and peer reviews of cost estimates incorporated into the planning process for big-ticket items.
Writing for Crain’s New York today, Stringer hits upon Christie’s rationale but also why canceling ARC is akin to hiding from monsters. “Putting a halt to this project is the easy way out,” he says. “The much harder but correct path is to directly confront the problem of how to accurately estimate the costs of infrastructure megaprojects and offer solutions.” Today, no one has a good solution.