WASHINGTON – The political battle over a major infrastructure project escalated on Tuesday when Transportation Secretary Elaine Chao confirmed for members of a House committee that President Trump doesn't want Congress to include any funding for the planned Gateway Tunnel in an omnibus spending bill.

The project has become a political football between the Republican administration and Democrats such as Senate Minority Leader Chuck Schumer from New York, who has blocked some of Trump's nominees from being confirmed because of controversy over funding.

Lawmakers are considering adding money for the project, which would link northern New Jersey with Manhattan in the long-delayed appropriations bill for the fiscal year that ends Sept. 30. The bill is supposed to be enacted by March 23.

U.S. Secretary of Transportation Elaine Chao
U.S. Secretary of Transportation Elaine Chao Brian Tumulty, The Bond Buyer

During a hearing held by the House Transportation and Infrastructure Committee on the president's infrastructure plan, Rep. Sean Patrick Maloney, D-N.Y., asked Chao, who had testified before the panel, about a recent Washington Post story that said Trump lobbied House Speaker Paul Ryan, R-Wis., last week against backing the project.

“I read it in the newspaper just like you did,’’ Chao said.

Rep. Sean Patrick Maloney, D-N.Y. is a member of the House Transportation and Infrastructure Committee
Rep. Sean Patrick Maloney, D-N.Y. is a member of the House Transportation and Infrastructure Committee Brian Tumulty, The Bond Buyer

Asked by Maloney if the report was true, Chao responded, “It apparently is.”

Maloney charged that Trump’s actions amounted to an effort to kill the project, but Chao responded, “Those are your words, not mine.”

“The president is concerned about the viability of this project,” she said.

Trump’s concern, Chao said, is that the project would consume all of the available federal funding. “If they absorb all of these funds, there would be no others left for the rest of the country,” she said.

A senior administration official later told reporters in a conference call that it is premature to earmark $900 million for Gateway in the 2018 omnibus spending bill when New York and New Jersey haven’t yet officially applied for federal loans or grants.

State officials want to obtain federal loans totaling $4.29 billion from the Railroad Rehabilitation and Improvement Financing program as well as a federal Capital Improvement Grant. They have counted the proposed assistance in estimating their local share of project costs to be 50%, even though they have not applied for them.

But Chao said New York and New Jersey have committed to only paying only a 5% state share of the project’s cost, which caused it to receive a “medium-low” rating last month on the Federal Transit Administration’s annual list for projects needing federal funding under the Capital Investment Program. Federal loans would count as federal, not state funds, even if the loans are repaid by the states, she said.

The Trump administration policy also could threaten other projects around the nation where state and local governments may also be relying on federal RRIF loans as part of their share of the project costs.

Draft applications for RRIF loans have been submitted for the All Aboard Florida Brightline between Miami and Orlando; the Dallas Area Rapid Transit Cotton Belt line; the Port of Charleston, S.C. intermodal facility; the Port of Everett, Washington terminal upgrades; and the Merchant’s Rail Bridge in St. Louis.

New York and New Jersey also have the option of seeking loan funding under the federal Transportation Infrastructure Finance and Innovation Act for the Gateway project. The website for TIFIA says local repayments of federal loans are treated as a state or local share of costs.

The $13.6 billion Gateway Tunnel project, which includes $2.17 billion in estimated interest costs, would develop a new two-track tunnel under the Hudson River serving an estimated 189,700 daily riders on Amtrak and New Jersey Path trains.

The new tunnel would replace the North River Tunnel owned by Amtrak which is more than 100 years old and needs to be taken out of service in order to be rehabilitated.

Democrats Albio Sires and Donald Payne of New Jersey also defended the Gateway project in what were at times heated exchanges with Chao.

The lawmakers also pointed out that the Trump administration would cut funding for Amtrak and the Capital Improvement Program in fiscal 2019.

Chao rejected suggestions that the federal government made any commitment to the Gateway project in the past, saying that her predecessor, Anthony Foxx, only made a commitment in 2016 at a campaign rally.

However, in November 2015 the governors of New York and New Jersey, along with Schumer and Sen. Cory Booker, D-N.J., announced they had reached an agreement with the U.S. Transportation Department on a 50% federal share for the project.

Chao told lawmakers Tuesday she has not seen any document showing there was such an agreement.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.