President Donald Trump on Monday released his $200 billion infrastructure plan and it does not look good for New York and New Jersey. Because the plan shifts the financial burden from the federal government onto states and localities, relying on incentives to spur private investment, major projects will struggle to find funding. This includes the Gateway Tunnel project, a proposal to construct a new rail tunnel under the Hudson River and repair the existing one. As the only intercity passenger rail crossing into NYC from NJ, the tunnel is a critical link for nearly 200,000 daily passengers. While the Obama administration considered Gateway a priority and committed half of the project’s cost in 2015, the Trump administration has scoffed at the idea.
This will be a big week for Infrastructure. After so stupidly spending $7 trillion in the Middle East, it is now time to start investing in OUR Country!
— Donald J. Trump (@realDonaldTrump) February 12, 2018
Fixing the tunnel is estimated to cost roughly $12.7 billion, while the rest of the Gateway Program, including replacing the Portal Bridge, is estimated at $23.9 billion. Last month, the states of NY and NJ, along with the Port Authority, committed a total $5.5 billion for the tunnel project and urged the federal government to provide its share.
The deputy administrator of the Federal Transit Administration, K. Jane Williams, said “there is no such agreement” for the federal government to fund the other half. “We consider it unhelpful to reference a non-existent ‘agreement’ rather than directly address the responsibility for funding a local project where nine out of 10 passengers are local transit riders,” Williams responded last month in a letter to Gov. Chris Christie and Gov. Andrew Cuomo.
Trump’s proposed plan commits $200 billion in federal funding over 10 years to stimulate state and local spending. About $100 billion will be used to encourage local investment in infrastructure in the form of grants. The plan allocates $50 billion for construction in rural areas, $20 billion for non-repair projects and $10 billion for capital financing.
Typically, funding for federal-aid highways is split federal-state 80-20 and major transit projects are funded 50-50 in a federal-local split. Under Trump’s plan, the feds would only commit funding if the state can find 80 or 90 percent of the funding through increased state or local taxes, like tolls or a gas tax.
While the White House said the administration is open to talking about Gateway with NJ and NY, leaders of the project have said it will be unable to finish without significant federal funding.
“With the proposal they made, it’s hard to see how you could build Gateway,” Sen. Chuck Schumer said on Sunday. “I’m worried about the infrastructure bill because instead of the federal government doing what it’s done since 1820 — putting money to build highways, roads — they’re going to say ‘let the private sector do it.’ That will result in tolls, Trump Tolls I would call them, across the country, in highways that we now are able not to have tolls on.”
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