New Jersey Gov. Chris Christie (R) announced today that he is standing by his decision to cancel the under-construction ARC (Access to the Regional Core) rail tunnel under the Hudson River from New Jersey to New York. According to the AP, Christie was given four financial options for salvaging the project, but said no agreement could guarantee that New Jersey taxpayers would not pay more than $2.7 billion for the completed project.

Earlier this month when Christie first voiced concern for the project, Wendell Cox defended his decision at

1. Exaggerating the Need for the Project The new rail tunnel is to serve a purported increase in commuter rail ridership to Manhattan jobs in the future. The project’s Final Environmental Impact Statement says that Midtown Manhattan’s employment will grow from its present 2.6 million by another 500,000 by 2030. This is unlikely. Manhattan’s entire employment (not just Midtown) peaked at 2.4 million in 2008. One might expect the planners could have gotten something so simple correct. Manhattan employment remains below 2001 levels and never rose more than 35,000 even at the peak of the last boom (annual figure, from 2001). The consultants also are projecting a 1.6 million population increase west of the Hudson River (New Jersey suburbs along with the New York counties of Rockland and Orange) by 2030. However, the New Jersey and New York metropolitan counties to the west of the Hudson are more likely to grow only 1.1 million, based upon official state projections (Note). The questionable population and employment projections reveal that the “need” for the new tunnel may have been grossly overstated.

2. Exporting New Jersey Jobs to New York Why should New Jersey pay to build more capacity so that its people can work across the state line? Why should they not work in New Jersey? New Jersey is often thought of an economic afterthought in Manhattan centric media and business interests (such as by The New York Times). In fact only a small share of New Jersey commuters travel to Manhattan for work. Even in the New Jersey counties that border New York, only 12% of commuters work in Manhattan. In the other New York metropolitan area counties in the metropolitan area, the figure drops to 5%.

The trends here are also important. Since 1956, every new job in the New York metropolitan area has been created outside Manhattan (Manhattan’s employment is 400,000 lower now than back then). New Jersey depends on New Jersey far more than it does New York. New Jersey has developed successful new office complexes in Jersey City, New Brunswick, along the I-287 Belt Route and elsewhere. Perhaps New Jersey should seek to minimize work trip lengths and encourage the next 500,000 jobs to be created in the state rather than in New York. Downtown Newark, for example, has excellent transit access and could use substantial new employment investment. This might prove more beneficial for New Jersey and its taxpayers.

3. Costs Could Rise Even Higher The tunnel could easily climb in cost beyond the now feared $14 billion. Big Dig cost escalation continued almost to the project’s opening. There is no reason to expect it will be different with the Hudson tunnel. It has been reported that one of LaHood’s options is simply to lower cost projections. New Jersey should buy that option only if the federal government underwrites all of the cost overruns. However, such a deviation from federal policy would bring stiff opposition from other parts of the country.

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