A Port Authority work on the Trans-Hudson train line, talks on a radio as a PATH train approaches in the tunnel, on Nov. 27, 2012, in Hoboken, N.J.
Julio Cortez/AP

Christie’s other traffic jam

Updated

The greatest threat to New Jersey Gov. Chris Christie’s political future may be “Bridgegate,” the unfolding scandal centered on evidence that his staff engineered a massive traffic jam as an act of political retribution. But Christie’s constituents could face longer term consequences from another transit-centered controversy from the governor’s first term.

In 2010, Christie decided to kill a project called Access to the Region’s Core, a years-in-the-making effort to build a new rail tunnel from New Jersey to New York City. Proponents of the project say it could have created as many as 44,000 jobs in and around the state and hiked local property values by up to $18 billion. A recent report [PDF] from the office of New York Governor Andrew Cuomo even suggests that an additional tunnel under the Hudson River connecting New Jersey and New York could make regional infrastructure more resilient in the face of disasters like Hurricane Sandy.

Up With Steve Kornacki, 1/26/14, 10:34 AM ET

Why this very popular project was stopped

The ARC Tunnel was supposed to help ease travel in one of the most densely populated areas of the country. That is until New Jersey Governor Chris Christie…
“Going back to when I first started in 1996, people always talked about the need to have a trans-Hudson tunnel for rail service built, but it was spoken of in almost mythic proportions,” Assemblyman John Wisniewski, a Democrat and fervent critic of the Christie administration, told msnbc. State officials spent years trying to get the project up and running.

“Then it actually got legs, got moving, and ground was broken, which was incredible,” said Wisniewski. “And even better, there was a huge allocation of federal money.”

Yet Gov. Christie abruptly scrapped the project during his first year in office. In doing so, he willingly gave up $3 billion in promised federal assistance, infuriated a local senator, and provoked the federal Department of Transportation to demand some of its money back. More importantly, critics say Christie may have stunted his state’s economic development in such a way that it could take decades to recover.

“I have a lot of bitterness about this. I think that the future of our state has been very, very seriously compromised,” said Martin Robins, director emeritus of Rutgers University’s Alan M. Vorhees Transportation Center and original director of the ARC project.

So why did Christie kill the new tunnel? Ostensibly, he was worried about cost overruns; but an independent inquiry by Congress’ investigative arm found no evidence of the massive price inflation which Christie predicted. To many of the governor’s critics, the death of the ARC tunnel looks more like a political ploy, crafted to boost his reputation and pocket billions of dollars in construction funds at the expense of New Jersey’s transit system and economic well-being.

The two men who allegedly led this effort at the Port Authority are David Wildstein and Bill Baroni—both of whom have subsequently been caught up in the Bridgegate scandal.

On September 10, 2010—less than nine months into his first term—Christie ordered a month-long pause in new ARC expenditures, during which time the ARC Executive Steering Committee would compile a report on the projected cost of construction, originally pegged at $8.7 billion. On October 7, the committee issued a memorandum projecting that the total cost of the project “is likely to top $11 billion and could exceed $14 billion.”

Christie promptly announced the cancellation of the project, citing the state’s strained finances in the wake of the recession.

“I have made a pledge to the people of New Jersey that on my watch I will not allow taxpayers to fund projects that run over budget with no clear way of how these costs will be paid for,” he said in a statement. “Considering the unprecedented fiscal and economic climate our State is facing, it is completely unthinkable to borrow more money and leave taxpayers responsible for billions in cost overruns. The ARC project costs far more than New Jersey taxpayers can afford and the only prudent move is to end this project.”

Officials in the federal Department of Transportation (DOT) were reportedly appalled. Transportation Secretary Ray LaHood had committed $3 billion to the project, hundreds of millions of which had already been spent. Now, after a decade and a half of work and planning, Christie had decided to shut down the project in the space of a month.

Up With Steve Kornacki, 1/26/14, 10:33 AM ET

The politics of the Port Authority

Jim McQueeny, former chief of staff for Sen. Frank Lautenberg, Rep. Frank Pallone, D-N.J., WNYC’s Andrea Bernstein, and Baruch College’s Brian Murphy…
LaHood rushed to Trenton, where he persuaded Gov. Christie to delay cancellation of the project for two weeks. In the meantime, members of DOT and NJ Transit would work together to try and keep it afloat.

Over the course of those two weeks, DOT offered concession after concession, according to local press: “a federal loan, the use of private financing and an offer to split the cost of $1.1 billion in overruns with the state and the Port Authority of New York and New Jersey.” But none of those options satified Christie, who again killed the project on October 27. Robins said he believes that Christie was always going to cancel the ARC project, regardless of the outcome of the review and DOT negotiations.

“I know that the staff at NJ Transit was beside themselves,” he told msnbc. “They were not listened to.”

A spokesperson for NJ Transit declined to comment for this article. A former NJ Transit employee who was present at the time of the review said that he had signed a non-disclosure agreement, but added that he had “a lot of feelings” about the process.

Evidently, the late Sen. Frank Lautenberg, D-N.J., also had a lot of feelings. In a blistering statement to the press, he accused Christie of making “the biggest policy blunder in New Jersey’s history.

“The Governor has put politics before performance, and it is the people of New Jersey who will pay the high price,” he said.

Christie stood firm, insisting that the “long-term fiscal health” of New Jersey was at stake. While critics were more than a little skeptical, it wasn’t until 2012 that independent investigators released a comprehensive fact-check of that claim. In April of that year, the nonpartisan Government Accountability Office (GAO) released the findings of a thirteen month investigation into the ARC tunnel cancellation. Their conclusion: As of October 2010, estimates for how much the ARC project would cost ranged from $9.78 to, at most, $12.43 billion. And whereas Christie had said that the state of New Jersey would be on the hook for 70% of the total cost, the GAO found that the real number was closer to 14%.

Meanwhile, the project cancellation did not exactly come free. An incensed LaHood, who declined to comment for this article, demanded that New Jersey return the $271 million which the federal government had already poured into the project. Christie refused, and hired the law firm Patton Boggs to negotiate a settlement with DOT. Ultimately, New Jersey only had to return $95 million—plus over $1 million in legal fees for Patton Boggs. The law firm—which now represents Christie’s reelection campaign and the New Jersey Republican State Committee in the Department of Justice’s Bridgegate investigation—did not return a request for comment, and Christie spokespeople did not respond to multiple requests for comment.

Despite all the fallout from the ARC project cancellation, New Jersey voters did not punish Christie. In fact, support for his decision to kill the project grew in hindsight, from 51% in October 2010 to 56% two months later.

“My guess is, he was appealing to people’s basic instinct that government is too big, inefficient, bloated, and just wastes their money,” said msnbc’s Steve Kornacki, a close observer of New Jersey politics. “I think any time you dangle a price tag around these big public works projects, you can get people going in that direction.”

The cancellation may have also been an attempt to establish Christie’s fiscally conservative bona fides with the national Republican base.

“If you look at the time of it, Christie was having that big year with [cutting] pensions, going after teachers’ unions, making a series of plays that were translating really well on the Republican national stage,” said Kornacki.

That’s where Wildstein and Baroni, Christie’s men at the Port Authority, come in. Killing the tunnel had freed up some $1.8 billion which the Port Authority had pledged towards the project. And while that agency was established to serve both New York and New Jersey, the ARC funds all wound up going to infrastructure upgrades inside the latter state. In January 2011, Christie announced that the $1.8 billion would go towards upgrading crumbling New Jersey roads, including the historic Pulaski Skyway.

Such projects are supposed to be paid for out of the New Jersey Transportation Trust Fund, but the trust fund had been hovering near bankruptcy for years. Even now, all of the fund’s income goes towards financing debt, said the Tri-State Transportation Campaign’s Veronica Vanterpol.

“The Transportation Trust Fund was meant to be a sustainable vehicle for funding these projects, and that was created in 1984,” she said. “The problem is that one of the main revenue sources, which is the state’s gas tax, has not kept up with inflation even though the transportation needs of the state have grown.”

Christie had pledged during his first gubernatorial campaign that would not raise New Jersey’s gas tax under any circumstances. That meant the only way he could pay for upgrading infrastructure was by issuing more debt and raiding the Port Authority’s ARC tunnel funds. According to a recent report from investigative journalist Andrea Bernstein, that may have been the plan all along.

“According to documents and interviews with more than a dozen top-level sources, the governor made clear from the get-go that the agency would be the source of cash for New Jersey’s hard-up infrastructure budget,” writes Bernstein. “And he and his team proceeded to wrangle billions from the bi-state authority to further his political goals—much of that for projects that had never been under the Port Authority’s jurisdiction before.”

Wildstein and Baroni allegedly worked within the Port Authority to kill the tunnel project so they could redirect the money toward New Jersey road projects.

Although the ARC project may be dead and buried, New Jersey may still eventually get its second rail tunnel to New York. Last May, the Department of Transportation offered New York $185 million for a project known as Gateway, which would serve the same needs as ARC. But the project is still not fully funded, and it could be years before construction begins.

Meanwhile, the Port Authority’s $1.8 billion is set to run out in 2016, leaving the New Jersey Transportation Trust Fund in much the same shape it was before.

“From a transportation perspective, it’s been a total and complete disaster, and I think we’re going to suffer probably for the rest of my life,” said Robins. “People my age will have to live with Christie’s decisions.”

Chris Christie, Culture of Corruption, New Jersey and Scandals

Christie's other traffic jam

Updated