The money might be better spent on New Jerseys roads, which are rated among the worst in the nation.
New Jersey Gov. Chris Christie has come under intense criticism for threatening to cancel the largest infrastructure project in the nation, a new rail tunnel connecting New York City with the Garden State. But Mr. Christie is right to be skeptical.
Much of the censure is coming from an “infrastructure über alles” crowd that too readily ignores that the costs of these big projects are often grossly underestimated and their benefits significantly exaggerated.
The rail tunnel, known as the Access to the Regions Core, or ARC, is meant to relieve the overcrowding in the already-existing rail tunnels under the Hudson River shared by Amtrak and New Jersey Transit trains. Currently, many commuter trains have to deposit passengers at an alternate rail station in Hoboken, N.J., where commuters then take subway-style trains into Manhattan. The ARC would create a direct link to midtown Manhattan for many of these commuters.
The tunnel has been in planning for two decades and during that time cost estimates have soared to nearly $9 billion from the original $5 billion. Mr. Christie says a recent analysis by the Federal Transit Administration estimates the final price tag would actually be nearer to $14 billion.
But the amounts committed by the federal government and the transportation agency (the Port Authority of NY & NJ) are capped at $6 billion ($3 billion each). Jersey taxpayers would be responsible for cost overruns—and the states transportation trust fund is already entirely devoted to servicing previous debt.
The transportation fund is tapped out in part because the legislature has for years swept money from the gas tax into the general budget, where it has financed everyday operations instead of build roads, bridges and tunnels. And residents are in no mood for more taxes.
The fiscal track record of mega-projects like this rail tunnel is not good—not in New Jersey or elsewhere. Bostons Big Dig, which involved burying the citys central artery highway and carving out a new underground tunnel to Logan Airport, was projected in 1982 to cost $2.8 billion. The final bill was nearly $15 billion. Bay State taxpayers had to pony up half of that because, as in New Jersey, the state was responsible for most cost overruns.
The Big Dig, completed in 2005, remains controversial because it drained away money that might have gone to other, more modest road projects. Mr. Christie fears that would happen in New Jersey, where roads are already rated by the Reason Foundations Performance of State Highway Systems as among the worst in the nation. Improving them might be a better way to spend money.
The state has bitter experience with runaway public construction projects. A decade ago the state Supreme Court ordered the legislature to build and refurbish urban schools. The project was supposed to cost $2 billion. The legislature expanded the program to include more schools, running up the tab to $8.6 billion. The public authority formed to manage the project proved so corrupt and inept that it did only half the work before it ran out of money. The politicians had to borrow another $3.9 billion to finish the job.
The economic benefits of the new rail tunnel would have to be enormous to justify its growing cost. Are they? One group, the Regional Plan Association, has estimated that the tunnel would increase property values along train routes in New Jersey by some $18 billion and produce some $375 million a year in additional real estate taxes.
Such lofty estimates ignore that property taxes are already so high that they are constraining the growth of property values, as fewer and fewer potential buyers show up willing to pay the premium necessary to live in prime commuting towns.
The tunnels potential economic benefits are also constrained by the limits to growth within New York City. New York City has seen no new net job growth in more than 40 years. New Jersey residents make up about 12% of Manhattan workers. Theyd have to grab a bigger share of the stagnant New York job market for the tunnel to provide much benefit, or the state would have to lure more Manhattan workers to its towns. But such gains are likely to be incremental at best and unlikely to be sufficient to spark a significant economic windfall for New Jersey.
Rail tunnel advocates also tout environmental gains. The Sierra Club estimates that the tunnel would take some 22,000 cars off the states roads and significantly reduce greenhouse emissions. But these estimates rest on job growth projections in New York City that are dubious at best. Moreover, the environmental estimates ignore the source of the significant gains that Jersey and other states have made on air quality over the last four decades.
One study, published in May in the journal Environmental Health Perspectives, found that the coefficient of haze, a measure of the quantity of dust and smoke in the atmosphere, has decreased by 75% in New Jersey since the early 1970s, even though average daily vehicle traffic over the Hudson River between New Jersey and New York has increased by 50% in that time. The real gains in air quality came not because of increasing use of mass transit but thanks to unleaded gasoline and better emissions controls on cars and trucks.
The Christie administration is still reviewing the project, and it may yet find that the tunnel is worth doing if the state can protect taxpayers against cost overruns and make a more realistic determination of the tunnels benefits. The governor understands the need to invest in the future through smart public works. But given the track record of mega-infrastructure spending and the profligate political culture under which this tunnel was conceived, Mr. Christie is right to take a hard second look.
Original Source: http://online.wsj.com/article/SB10001424052748703440004575548280684121298.html