Trump Admin Slams NY-NJ Proposal to Fund Gateway Tunnel Project

'Unserious' plan offers to pay state share entirely through federal loans

New Jersey Governor Chris Christie and New York Governor Andrew Cuomo

New Jersey Governor Chris Christie and New York Governor Andrew Cuomo / Getty Images

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A funding announcement by New York and New Jersey for the Gateway tunnel project is being written off as "entirely unserious" by administration officials, who tell the Washington Free Beacon the states are billions of dollars away from where they need to be to get a deal done.

Governors Andrew Cuomo (D., N.Y.) and Chris Christie (R., N.J.) announced in a joint statement their "commitment to fund 100 percent of states' half of new Gateway tunnel," and the federal government will fund the other half of the multibillion-dollar project, even though the Trump administration has made no such commitment. New York and New Jersey are pledging $1.75 billion and $1.9 billion, respectively, the statement said.

Details included in the statement, however, reveal all the funding being offered by the states is in the form of federal loans.

In letters, both New York and New Jersey write that their portions will be covered entirely through the Department of Transportation's Railroad Rehabilitation and Improvement Financing (RRIF) loan program.

A senior administration official who spoke to the Free Beacon says the proposal to fund half the project through federal RRIF loans and the other half with federal grants is not something it would consider.

The official also says neither state has even begun the application process for RRIF loans, which typically require upfront payments that vary in size based on the credit worthiness of the applicant. The states have applied for the federal grants but they are still in the first stages of the application process, the official explained.

"New York and New Jersey’s submission on file proposes the federal government pay 85 percent of the project costs, for a tunnel where 9 out of 10 passengers are local transit riders," the official said. "This is entirely unserious."

The idea to use federal loans to fund the states' portion of the project is a departure from the framework deal for the project reached with the Obama administration in 2015, when the states agreed to pay half of the project's cost in cash. The agreement was a "nonbinding handshake deal," and the Trump administration has never committed to honoring it.

The administration has indicated it is open to including funding for the project in its $1 trillion infrastructure plan expected early next year. President Trump also met with Sen. Chuck Schumer (D., N.Y.), one of the projects biggest advocates, in September to discuss the project.

The official told the Free Beacon, however, that the states will need to provide "significant funding" for the project and are billions of dollars away from where they need to be to strike a deal.

Schumer praised the joint announcement by New York and New Jersey, saying in a statement that Cuomo and Christie had "done their part."

"Now that New York and New Jersey have done their part, and reached a funding plan, it’s time for the president to commit to fully fund the vital Gateway tunnel project because it is so important to our regional and national economy," Schumer said in a statement. "The ball—and the future of the Gateway tunnels—is in the president’s court now."

Schumer's office didn't respond to follow-up questions regarding criticism of the states' plan to cover their proposed share entirely with federal loans.

Schumer, who tried but failed to hold up DOT nominees over funding for the project, has previously said the project could cost up to $20 billion.

The funding plan put forward by the states is for just $11.1 billion, partially slashing costs by abandoning plans to rehabilitate an existing train tunnel damaged during Hurricane Sandy. The proposal estimates an added $1.6 billion would be needed for tunnel repairs.

Officials from both states failed to respond to requests for comment on the criticism from the administration.

New Jersey says it plans to pay back the proposed loan by putting the cost on New Jersey Transit passengers. It said a 90-cent fee would be implemented in 2020 and increase to $1.70 in 2028 and further to $2.20 in 2038.

New York committed to proposing in its budget "an appropriation each year over a 35-year period to pay debt service on a $1.75 billion fixed interest loan." It said it "expects to recoup its debt service costs from the new infrastructure revenues and offsets."

The terms of the proposed loan remain unclear because neither state has applied.

Brent Scher   Email Brent | Full Bio | RSS
Brent Scher is a staff writer for the Washington Free Beacon. He graduated from the University of Virginia, where he studied foreign affairs and politics.

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