The federal government alerted New York and New Jersey that their request for over $5.5 billion in Capital Investment Grants (CIG) for a major tunnel project could "exhaust the program entirely," throwing water on the states’ hopes that their proposal could fit into the Trump administration's upcoming infrastructure plan.
The administration had already criticized the plan by the states to fund their Gateway Tunnel Project half with federal grants and half with federal loans as "entirely unserious," but the concerns were formalized in a letter sent to state officials in December by the Federal Transit Administration.
"The assumption that $5 billion or more in CIG grant funds will be available to New York and New Jersey for this one project lacks recognition of the impact that such funding would have on the availability of funds for the remainder of the country," wrote K. Jane Williams, FTA's deputy administrator.
"As contemplated, this request could exhaust the CIG program entirely," she wrote.
Williams said there is no precedent for CIG grants being used to fund 50 percent of a mega project such as the proposed tunnel project, and characterized it as a "local project where 9 out of 10 passengers are local transit riders."
Williams also stressed that the "50/50" funding agreement the states say they reached with the previous administration is "nonexistent," though she said the agency remains "open to paths" that would enable the project to go forward.
In a response to the letter, New York argued that the upcoming infrastructure plan "must begin with Gateway."
"We look forward to engaging with the administration and the federal government in 2018 to move this critical project forward, and are heartened by your willingness to explore paths to enable it," wrote state budget director Robert Mujica. "We look forward to hearing details of the federal plan for reviving the nation's infrastructure, and hope that any national program with the ambition to improving our infrastructure must begin with Gateway."
White House officials have previously indicated to the Washington Free Beacon that funding the Gateway Tunnel Project would not be a top priority in the upcoming infrastructure plan.
The White House, in a statement this week, alluded to the fact that it would not be open to funding a project that would limit its ability to fund needed projects across the country.
"We’re glad to see that members from New York would like to maintain that line of communication and welcome their continued participation as we work to fix our broken infrastructure system so that all qualified and responsible projects can go from concept to construction quickly and efficiently," White House deputy press secretary Lindsay Walters told the Free Beacon.
A spokesperson for New Jersey governor Chris Christie (R.) expressed confidence that the administration will address funding the tunnel project in its upcoming infrastructure plan.
"There is no doubt the administration understands the economic significance of the Hudson Tunnel Project, and the urgency of moving this forward for the Boston-Washington corridor," said Brian Murray. "We are confident that, as the White House advances an infrastructure proposal this year, federal funding for the most important transportation project in the United States will be addressed."
State officials will have support in their fight for tunnel funding from their Senate delegation, which, led by Senate minority leader Chuck Schumer (D., N.Y.), has been blocking federal appointments until the administration pledges to fund the tunnel.
The White House has called this "pointless obstruction" by Schumer and said it will have no impact on infrastructure decisions.