The fallout from New Jersey Gov. Chris Christie’s decision to cancel the ARC Tunnel continues as the feds have sent New Jersey Transit a letter formally requesting the return of over $271 million in federal funding. The letter — available here as a PDF — is the second such notice sent to the state, and while New Jersey Transit has disputed the amount requested, the feds have set a December 24 deadline for payment.
If New Jersey falls to contest the validity of the amount requested or pay by Christmas Eve, the FTA will consider the state delinquent in its payments. If the delinquency date is reached, the FTA can pursue numerous options. It could report New Jersey to credit and bond rating institutions, and it can request interest of six percent annually. Finally, it can forward the debt to the U.S. Department of Justice for collection enforcement as well.
Ultimately, the feds have “deobligated” New Jersey from repaying all it is had doled out for ARC because $77 million of the initial $348 million went unspent. Thus the state must pay the difference, and by the time they do so, New Jersey will have sunk $600 million into project planning for a total loss of $871 million. “We now know that his looking out for our financial interests will cost New Jersey taxpayers at least $271 million,” John Wisniewski, chair of both the New Jersey Democratic State Committee and New Jersey Assembly Transportation Committee, said. “To make matters worse, the governor has now pledged New Jersey money to help finance New York’s subway expansion — without even seeing a plan or a cost estimate. It doesn’t seem like he’s being much of a financial watchdog, only a theatrical bulldog.”
23 comments
Boondoggle! ;-D
I’d want my money back too. Good for the feds!
If the No. 7 tunnel option came in even at just 50 percent over the current estimated budget and New Jersey gave the money back, they’d still be facing less of a financial hit to go ahead with that project than the final estimated cost on the ARC project before it was scrubbed (and due almost entirely to the super-sub-basement station that would have eaten up the bulk of the cash to carve out — something a Flushing line extension could forgo since the Hudson Yards station will already be at a lower level than both the Lincoln Tunnel’s tubes and the Hudson River rail tunnels leading into Penn Station).
I like this part from the NorthJersey.com article:
Or as I put it, “Obama to New Jersey: Drop Dead.”
That’s unfair of Obama. There’s nothing wrong with Jersey that bulldozers can’t fix.
I’m glad to see a high level of maturity and lack of pettiness on this site. Props to the Obama administration for rising above petty partisanship showing such fiscal rectitude. This is the reason our federal budget is in such good shape. Finally, thanks to Frank Lautenberg, he of his Manhattan apartment (he’s way to cool to actually LIVE in New Jersey) and 20 foot high letters spelling his name in the Secaucus swamp. Way to support your state, Frank! I mean, the state you visit when not living in your Manhattan place.
I take it your jab about maturity and pettiness is directed at other commenters and not me, right? Do you really think New Jersey can just keep hundreds of millions of dollars of federal taxpayer money that was supposed to go to a specific project? Of course they have to return it as any private entity who broke a contract would as well.
It’s directed at commenters’ cheerleading for sticking it to New Jersey. I have no idea whether NYC was required to give up cash to the feds for prior transit projects that were canceled or delayed into oblivion, such as prior attempts at the 2nd avenue subway, but that’s something you could look into if you wanted. For an administration that has shown zero interest in safeguarding the public fisc, this sending of a bill is a transparently petty attack at a perceived enemy (Christie). It’s lame. I’d love to see ARC built in any form, as it’s literally better than nothing, but there is a real and crucial issue of cost here that just can’t be ignored. Being catty towards NJ is just unserious.
“For an administration that has shown zero interest in safeguarding the public fisc”
true, the bush administration was a paragon is fiscal conservatism … and rick perry wasn’t of course making any political hay by suing a democratic administration to spend more money … and eric f’s animus is showing when he talks about lautenberg’s domicile (http://www.politickernj.com/wa.....ed-signals) …
so it’s ok to bash individuals on spurious grounds, that’s serious, but making a little joke is “unserious”
Who is rick perry? What part of Jersey is he mayor of?
ah – so if there’s a federal v. state, politically charged demand about money payments, but it’s not in new jersey, or perhaps if it shows that goppers do the same things as democrats do, it doesn’t count! that was a mature, serious response, eric.
Listen, I don’t care who gave who the money and for what. If you were given scholarship money for college, and the college were to suddenly burn down, you’d have to give the money back. It doesn’t belong to you. If you’ve been given money for a tunnel, and you don’t build anything with the money, you have to give the money back. Period.
Hold on a second. You are saying that if you gave a kid scholarship money the kid used to pay for tuition, and then the college burned down, you’d demand the money back from the kid, even though he already disbursed it to the college? You Christie haters are c-r-u-e-l.
Jersey used the money for design and property acquisition, they aren’t sitting on unspent cash. There’s a difference.
The scholarship example is maybe a little drastic, but to clarify, for every infrastructure project in which the feds give money to states, the state must complete the project or surrender the money. Unless the money is specifically earmarked for planning or design studies, the conditions of the grant require completion. For instance, if the MTA stopped working on the Second Ave. Subway tomorrow, they’d have to return over $1 billion to the feds even though the money has been spent on partial construction.
In New Jersey’s case, the feds are forgiving $77 million of the initial federal outlay because that had been approved for and spent on the early stages. It’s requiring that the state repay the unused money. New Jersey doesn’t get to keep unused federal dollars after canceling the project, and had the state built more of the tunnel and spent that money, it would have to find a way to reimburse the feds.
so it seems that all is going according to law. doing things according to law makes people “christie haters” apparently.
I haven’t read the statute or contract, so I’ll take your word for what the law is, but it seems like a silly law. All concerned budgeted on a project that was coming in way overbudget, and NJ had no way to pay for it. Think of it this way, let’s say that the Second Avenue Subway project was 90% done, but then it turned out that some unanticipated geological problem made completion of the project literally impossible. Or more realistically, some late-filed enviro lawsuit scuttled the project. Should NYC be forced to give back all the federal money expended up to that point? Seems like a silly result to me. The massive overrun on the NJ project is simply another type of the same concept. Anyway, I would love to see ARC — or some other tunnel project — built, but I’m standing by my contention that the bill is a petty gesture made at a political enemy for political reasons.
Think about the alternative – if that law didn’t exist, Christie would simply take the $3B and spend it on on widening the Turnpike.
Here’s the language from the law itself:
49 U.S.C. § 5309(g)(3)(B)(iv).
You’ll have to take that up with Congress.
“for reasons within the control of
the applicant”
Sounds like an out to me.
“if that law didn’t exist, Christie would simply take the $3B and spend it on on widening the Turnpike”
Christie would take money already spent, make it magically unspent and then send it to the Turnpike? I want to hire you as my accountant.
Let me try to explain this to you in explicit terms.
New Jersey’s prior leadership signed a financing agreement — a contract — with the federal government that guaranteed that New Jersey would cover cost overruns. When Christie examined the project, he decided that it would likely run over cost but didn’t do a thorough audit to determine exactly how much over cost it would be. At that point, he decided not that New Jersey absolutely could not afford to pay for it but that he didn’t want to pay for it. Thus, he canceled. That is absolutely a reason within the control of the applicant even if the initial agreement placed a higher burden on New Jersey than Christie would have liked.
Meanwhile, as Ben and others have repeated, New Jersey has to return unspent money, not money already been spent. That’s why the feds are forgiving nearly a third of the money they’ve so far sent to New Jersey for the project’s early work. New Jersey can’t keep unspent money that’s supposed to go for a project that won’t be happening now.
Does that make more sense?
Yes, it certainly makes sense that unused money would be returned.
[…] Federal Transit Administration, as I reported earlier this week, is demanding $271 million in ARC Tunnel money in the wake of Gov. Chris Christie’s decision to cancel the project, and New Jersey […]
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