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E-Mail Raises Questions About NJ-NY Tunnel Funding

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TRENTON, N.J. (AP) – As early as March, Gov. Chris Christie’s administration may have been considering withholding the state’s $2.7 billion portion of money to pay for a new tunnel from New Jersey to Manhattan, according to an e-mail and conversations from a high-level state Transportation Department official.

Last week, the governor ordered a 30-day halt to all new work on the tunnel over concerns that the $8.7 billion project would go over its budget and New Jersey would be forced to cover the overrun, which Christie says is now between $2 billion and $5 billion.

In an e-mail to a staffer for U.S. Sen. Frank Lautenberg of New Jersey, who helped secure $3 billion in federal funding for the tunnel, David Kuhn, the executive director for capital investment strategy for the New Jersey Department of Transportation, called New Jersey a “critical commerce corridor” for the entire country but said the state shouldn’t be forced to pay for the tunnel, which is known as Access to the Region’s Core.

“ARC is an important piece of the country’s economy and merit’s additional consideration as a project of national significance,” Kuhn wrote on March 30, according to a copy of the e-mail obtained by The Associated Press. “New Jersey should not be saddled with any of the cost of this project.”

Lautenberg spokesman Caley Gray said the staffer quickly called Kuhn to ask for clarification. Gray said Kuhn told the staffer that the Christie administration believed the federal government should pay for the project entirely.

The staffer asked Kuhn to double-check with other officials about those statements, and minutes later received a call from state Transportation Commissioner Jim Simpson, according to Gray’s account of the conversations.

Gray said Simpson told the staffer that Kuhn had misspoke and that the administration fully supported the project. The staffer said Simpson then asked him to keep the conversations quiet so that no one got fired.

A week later, Christie sent a letter to Transportation Secretary Ray LaHood restating New Jersey’s $2.7 billion commitment to the project.

Requests to speak with Simpson and Kuhn were denied and DOT spokesman Joseph Dee said the department had no comment specifically on the e-mails or conversations.

However, Dee said it was “critically important to the Christie administration and to the taxpayers of New Jersey to determine if the ARC project can be built within budget.”

“The point of the administration’s 30-day review,” Dee said, “is to verify cost estimates and to ensure that all necessary controls are in place.”

The tunnel, scheduled to be completed in 2018, is the largest federal transportation project in the country and is expected to double train traffic in and out of New York City during peak commute times, from 23 to 48 trains. Officials have estimated it will create 6,000 construction jobs and add at least 40,000 new jobs after it is completed.

The price of the tunnel has nearly doubled as well. It started at $5 billion in 2005 and grew to $8.7 billion by 2008. In recent months, Federal Transit Administrator Peter Rogoff has made public statements that put the price tag between $9 billion and $10 billion.

New Jersey is on the hook for any cost overruns above the $8.7 billion. Meanwhile, the governor also has to come up with a way to replenish the Transportation Trust Fund, which pays for road work and improvement to existing rail lines and is set to run out of money by July.

Democrats suspect the Republican governor is looking to use the state’s portion of the state tunnel money for the trust fund. The governor says the issues are separate: “The first decision we need to make is to find out how much the ARC tunnel is going to cost and who’s going to pay for it.”

Christie has been steadfast in his refusal to raise any taxes, including the gasoline tax — among the nation’s lowest — to pay for the nearly broke transportation fund.

Democrats have cautioned that the state is in jeopardy of losing the federal funding committed by the government, which federal transportation officials said is the largest grant of its kind ever given.

But Christie seems unfazed.

“I don’t care how much federal money is involved, I am not taking a flier on a project that I don’t know how to pay every nickel for,” Christie said this week. “And I’m not doing that with the money of the taxpayers of New Jersey,”

Christie also said this week that he made the decision on the 30-day moratorium after learning of a federal audit of the project that said New Jersey Transit didn’t have an adequate plan to combat waste, fraud and abuse on the project. The audit was released in May.

“This review is an appropriate and prudent response to concerns raised in a recent federal audit,” Dee said.

NJ Transit executive direct James Weinstein has said Christie didn’t know about the federal audit when he reaffirmed New Jersey’s commitment in April, but he has said there have been discussions about using the tunnel money for the transportation fund. However, he stressed no decisions had been made.

Weinstein and Simpson were scheduled to meet with federal transportation officials on Friday in Washington, D.C.

(Copyright 2010 by the Associated Press. All Rights Reserved.)