N.J. Transportation Chief Urges Financing Plan for Rail Tunnel

In the midsts of working on a $33 billion fiscal 2009 budget, New Jersey Transportation Commissioner Kris Kolluri reminded lawmakers of the need to devise a financing plan by year-end for the state's $1 billion to $1.5 billion contribution towards a new passenger rail tunnel to Manhattan.

On Tuesday, Kolluri spoke before the Assembly Budget Committee regarding transportation issues within the state's $33 billion budget for fiscal 2009, which begins July 1. Discussion went beyond next year's budget and included future transportation infrastructure needs for the state.

While lawmakers must pass a balanced 2009 budget before July 1, by the end of this calendar year the state must also demonstrate to the federal government how it will finance its portion of a $7.5 billion tunnel development called the Access to the Region's Core, or ARC project.

Current funding plans include $3 billion from the Port Authority of New York and New Jersey and officials hope to gain $2.5 billion to $3 billion from the federal government in matching funds. In early February, the Federal Transit Administration assigned the ARC project a priority rating of "medium high" and will designate how much the tunnel will receive from Washington later this year.

Gov. Jon Corzine's strategy is to include New Jersey's $1 billion to $1.5 billion ARC contribution within his debt restructuring plan, which includes selling up to $38 billion of debt backed by multiple toll increases of 50%. Bond proceeds would then pay down half of the state's $32 billion of debt and fund the Transportation Trust Fund Authority for 75 years.

The TTFA finances state highway and NJ Transit capital projects, but without a new revenue stream or other restructuring it would run out of money after fiscal 2011. If the authority were fully funded via Corzine's debt restructuring, that could leave the state free to use future federal highway dollars to support New Jersey's ARC contribution.

"We have to figure out all our local contributions plus the federal contributions," Kolluri yesterday said in a phone interview. "To date, we think the feds are committing to $2.5 billion to $3 billion, but we have got to demonstrate that we have all of our local share locked up with a long-term plan in place."

In May 2007, NJ Transit, which oversees the new tunnel development, announced its plans to use future federal highway funds for its $1.5 billion contribution for the ARC tunnel in anticipation that the Corzine administration and lawmakers would replenish the TTFA.

Yet after unveiling the debt restructuring plan in early January, the initiative has yet to gain strong support in the Legislature and lawmakers have placed the proposal on the back burner in order to work on the fiscal 2009 budget. An alternative plan submitted by Assemblyman Jon Wisniewski, D-Middlesex, chairman of the Transportation and Public Works Committee, includes lower toll hikes but proposes increasing the gas tax and privatizing the state's lottery system. That plan has not advanced in the Legislature either.

Kolluri declined to offer other financing plans should the governor's debt restructuring proposal fails to pass and said the administration's goal is to finance immediate and future transportation infrastructure needs.

"We will continue to impress upon the people and the Legislature the importance of establishing a long-term funding mechanism," Kolluri said.

The tunnel development is a joint project between the Port Authority and NJ Transit, with construction set to begin in 2009 and last through 2016. Current plans call for two single-track tunnels to run under the Hudson River, connecting Newark to a new station planned for midtown Manhattan.

 

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