A math lesson for Chris Christie
When the question of toll increases and spending for transportation was asked in Sunday’s debate, Chris Christie seemed to be lost. He gave the standard, prepared answer of bad roads, Corzine and toll hikes. Unlike Steve Lonegan, who gave two perfect examples of what is wrong with the transportation system in New Jersey, Christie did what he does best, give a wishy-washy response.
One of the two projects that Steve mentioned in his excellent response, is the new Hudson River Railroad Tunnel. Since this project is being financed with bonds that are backed by toll revenues, it represents the two “no-no’s” that Christie mentioned in his answer. Since Christie has acknowledged he cannot do math, I can understand his lack off financial comprehension regarding the ramifications of this project. Well, not a problem, I can help him out there.
As Steve Lonegan pointed out in the debate, he lead the fight to kill the toll increases. I am proud to say that I was at two of the hearings to offer my thoughts on these increase along with Steve. The following is a revised account of what I spoke about at these hearings.
The New Jersey Department of Transportation (DOT) and NJ TRANSIT have said that the new Hudson River Railroad Tunnel will create 6,000 construction jobs. They also claim that use of the tunnel will remove 22,000 cars from the roadways of the state, reducing the pollution and “carbon footprint” of those vehicles. A noble idea, but does it make any sense for the state of New Jersey?
In industry, it is typical to run an analysis to understand when you would see a return on your investment. For a piece of capital equipment, the return on investment should start within 18 months. With this tunnel, let us see what type of return we can figure on.
The price of this tunnel is calculated to be 9 billion dollars. If we take the elimination of 22,ooo cars as realistic, it will cost $410,000 to remove each car. Let’s say for this argument we figure each car has four passengers who will now take the train. It will cost $102,500 for each new passenger who will use this tunnel. If we assume that each passenger will go to work 250 days per year, then in 18 months he/she will have made 375 round trips. In order to get an 18 month return on investment, each round trip will have to cost $273.00. I don’t think anyone is going to pay that price for a train ride under the Hudson River. Now, lets say the cost of a round trip is $27.00 per, it will take 15 years to pay for the tunnel. Some might say that is a good deal, but just remember, all of the fare would have to go towards paying for the tunnel, what about the cost of the train ride itself? From my viewpoint, this investment is not that good of a deal, and will result in the taxpayers of New Jersey having to subsidise these riders for forever.
Further to this argument, those passengers will be going to New York City to work and spend a good portion of their money. It seems that the one group who really benefit from this tunnel is New York City. One thing everyone should know about this tunnel is that $3 billion of the cost is being paid by the federal government. The other $6 billion is being paid by New Jersey DOT and the Port of Authority. The only group missing is New York, either city or state. The very ones who will benefit the most from this project, are not contributing to it.
As I noted before, tthe powers that be call this a shove ready project and figure that 6,000 jobs will be created. If we divide 6,000 into 9 billion dollars, the cost for each job will be $1.5 million. Now, I don’t know where you come from, but where I come from, that is no bargain at all. A small business, with sales of $1.5 million could be employing 10 or 20 people for that amount of money, maybe more.
Once again, we do not need this tunnel! It will only benefit New York City. The cost of the tunnel can never be recouped, but will have to be subsidized by the taxpayers of New Jersey for ever. The idea of creating jobs at $1.5 million per job is just plain stupid! Why not take the money that New Jersey is suppose to contribute, $3 billion, plus it’s share of the Port of Authority contribution, another $3 billion and invest it to benefit the citizens of New Jersey?
So Chris, here is some real math. Not hard math, but real life figures that shows this project will cost New Jersey a ton of money, and not benefit the state at all! What are you going to do about it? You can’t lawyer your way out of this type of problem, so put on your think cap and for once tell the voters of New Jersey what you will do to make sure that $6 billion is invested to help them and not New Yorkers.
“I am not a crook.” Richard M. Nixon
“I want you to listen to me. I’m going to say this again: I did not have sexual relations with that woman, Miss Lewinsky.” William J. Clinton
“Being in this country without proper documentation is not a crime”! Chris Christie, Conservative (?) Republican Candidate for Governor.
Hi, Richard, I wanted to comment on the funding situation.
The Port Authority of NY & NJ (which operates and charges for the automobile bridges and tunnels into NYC, whose congestion should be eased by the new train tunnel) is paying about 34%.
The federal government (Amtrak should be able to run more trains through the old tunnels) is paying about 34%.
NJ Transit (whose trains will have sole use of the new tunnel) is paying about 17%.
NJ toll revenues (from the approach highways, whose congestion should be eased by the new train tunnel) are paying about 14%.
So the transportation entities whose congestion problems would be eased are contributing to the project. How is that unfair?
May 21st, 2009 at 7:39 amDSDan:
First thing, why should tolls from the NJ Turnpike, GSP and Atlantic City Expressway be used to pay for this tunnel? Why should DOT funds, which come from the gas tax be used for this project? Take out that one-third, $3 billion and use it to upgrade roads, fix bridges and in general make the road system in New Jersey better.
As far as the Port of Authority, if they want to contribute, fine, but make sure that the contribution comes from New York’s share of the pie. Keep New Jersey’s share to be used for projects that benefit a majority of the citizens of New Jersey. Let them take New York’s money for rebuilding the World Trade Centers and use it to build the tunnel.
This project will not contribute one permanent job to New Jersey’s economy. The projection for New York City is 44,000 permanent jobs (2 people in each of those 22,000 cars) http://www.ble.org/pr/news/headline.asp?id=26101 .
How do we know this, how many people commute to New Jersey from New York City?
Your statement about the new tunnels only being used by NJ Transit is also wrong. One of their arguments is that they would be able to run more trains each morning and afternoon which would require them to use all of the tunnels, not just the new ones. Plus one thing about NJ Transit, why is NJ Transit running trains to New York? NJ Transit’s only concern should be transportation in New Jersey, not out of it.
A governor of New Jersey should start putting the people of New Jersey first, not the citizens of New York City. That governor should also be aware of the costs of these projects and the borrowing that is required to fund them. If Christie wants to be governor, he should know how New Jersey is borrowing billions of dollars to create jobs in New York City.
May 21st, 2009 at 8:34 amRichard:
These kinds of arguments can go on forever without proper resolution. The problem is that the government should not be in the transportation business in the first place.
Privatize the trains and roads, and let private, profit making business make the decision as to whether a tunnel is a good investment.
I trust private companies making decisions about their own money a lot more than I trust governors and other government officials to make decisions with other people’s money that do not have to be profitable.
May 21st, 2009 at 8:57 amEd:
I couldn’t agree with you more!
May 21st, 2009 at 9:01 amIn my view it is another boondoggle like Ted Kennedy’s “Bib Dig”.
The $9,000,000,000 original cost is probably underestimated.
The financing is bonds backed by toll revenue.
The project is planned to take cars off the road thus reducing toll revenue forcing toll increases on those that do not use the tunnel
May 21st, 2009 at 10:07 am@ Richard
Thanks for your prompt response!
You’re totally right that if the infrastructure wasn’t there, the people living in NJ wouldn’t be able to easily commute to NYC and contribute to their economy (and pay their income taxes). But if the infrastructure wasn’t there, the people working in NYC wouldn’t be able to easily live in NJ and contribute to our economy (and pay our insane property taxes). NJ and NYC share mutual goals–I hope you’re not implying that the NJ/NYC border infrastructure is solely NYC’s concern.
As to why those funding sources (Port Authority, NJ Transit, and NJ tolls revenue) were chosen, take a look at how you get from NJ to and from NYC.
If you drive, you can take the Turnpike and pay tolls to NJ, and then you pay bridge or tunnel tolls to the Port Authority.
If you take the train, you pay NJ Transit to travel to Newark, and then you can either pay NJ Transit or the Port Authority (the PATH train) to travel from Newark to NYC.
In other words, the revenue collectors for the infrastructure are the funding sources for the new tunnel, which is how it should be.
I agree with you that the NJ tolls have the least to do with the border infrastructure, which is why they are paying the least (though you could probably make a strong case that they should pay even less) into the new tunnel.
Finally, as far as I know, NJ Transit will be the sole user of the new tunnels. I wasn’t implying that they would stop sharing the old tunnels, only that no one else would use the new tunnels.
@ Ed
I don’t disagree with you at all. But I see the likelihood of meaningful privatization happening within the NJ/NYC blue-state political climate as being very low, so I’ll take the infrastructure improvements where I can get them.
@ Oldguy2
May 21st, 2009 at 10:27 amI agree that this project will provide rampant opportunities for waste and corruption. But I don’t think that that (justified) fear should be enough to stop what appears to be a useful infrastructure improvement. Instead, we should be doubly vigilant, like the MIT civil engineering team did when they exposed the shoddy practices of the Big Dig.
DSDan:
I understand where you are coming from, but I have to disagree with a good part of it. NJ Transit should have nothing to do with getting people from New Jersey to New York City. If anyone should, that would be the Port of Authority or Amtrak. Port of Authority does it right now by owning the bridges and tunnels that cross the river.
Instead of moving citizens of New Jersey to work there, how about encouraging businesses to locate in New Jersey and provide those jobs here? That way all of the citizens of New Jersey would benefit. Again, not one cent of New Jersey money should be dedicated to job development in another state. Let those states worry about their own job creation.
Finally, one point I was trying to make is that all of this would have to be subsidized by the citizens of New Jersey, who would never see a pay back for their investment. This is not only wrong, but it is a classic case of “thief by deception” which is being used by all of those politicians.
Ed is right about privatization. At one time, railroads like the Pennsylvania and New York Central provided the service to New York. The tunnels under the river were paid for from private funds. Even the PATH line was built by private money, then taken over by the Port of Authority. Again, New Jersey should not be in this business at all, spend our money here.
May 21st, 2009 at 10:52 amDown here in South Jersey they are talking about putting windmills in the center of the Expressway/Parkway to capture all that wind energy from the cars going by. Uncle Floyd wants to point them to North jersey to get the pine scent up there. Both plans have equal merit.
In Ocean City they put in a $4.5 million solar project and you can see how much electricity it produces real time on the Internet. It looks like it will take about 200 years to get the $4.5 Million back. The company that sold the system did 2 systems partially funded by NJ BPU. The company then folded, laid off the NJ workforce and merged with another company. The other company makes concentrators that heat how water tanks and run steam generator. The solar panels they sold to the State are not commercially viable.
May 21st, 2009 at 11:46 amRussOCNJ:
I will have a post on windmills either today or tomorrow. It is about time we give Christie a science lesson.
May 21st, 2009 at 12:51 pmI agree the state shouldn’t be in the business. If it is a good deal, let private investors jump in and reap the profits.
Besides we are getting bailout money… the state is broke!
May 21st, 2009 at 5:01 pmDSDan:
I agree that Blue Jersey/Blue New York are not about to privatize transportation. However, that does not mean we should not advocate the proper solutions.
The concepts of “profit” and “return on investment” about which Richard commented above only have meaning when you are talking about money. However, the proponents of government run public transportation have a slew of other agendas other than money that they use in deciding to build public transportation. For example, they seek to build public transportation to alleviate supposed pollution problems associated with “too much” automobile use. Of course such agenda items make profit and ROI calculations impossible: by defintion, the utopian builders of public transportation are making us compare apples to oranges when they focus on anything other than money as the criteria for whether a project should proceed.
As for taking as much government help as you can get under the circumstances, I will just remind you to be careful: as TARP has shown, with government dollars comes government control. The Post Office and the Public Education system are hardly models to which we should aspire under any circumstances.
May 21st, 2009 at 5:20 pmDSDAN,
The tunnel would be a great idea if we were flush with cash… we are broke!
It is a matter of priorities. I just wouldn’t put building a tunnel at the top of the list.
The deficit spending has got to stop!
May 22nd, 2009 at 9:08 amOne reason why NJ should not subsidize this line is that it primarily benefits real estate owners in New York. This is transportation to NY and it makes NY office buildings relatively attractive compared to NJ office buildings.
However, the basic reason that this project should not be built is that it just doesn’t make sense.
Even if getting 22,000 cars off the road were worth the price, what are the chances that 22,000 cars will no longer go through the Holland Tunnel, Lincoln Tunnel or GW because of this project every day? None!!
Because this is a fictitious number. If someone takes the railroad from North Jersey and goes to Hoboken, they can take the PATH to either Wall Street, 33rd Street, Port Authority, Jersey City or Newark. And, its similar if they go to Newark where they also have the rail option.
Someone can also take the bus to New York from almost anywhere in Northern or Central Jersey. And, a lot of those buses run without operating subsidies unlike the rail lines.
So this line will simply cannibalize existing forms of public transportation. It may harm existing private operators who now have another publicly subsidized form of transport to compete with. The stupidity of this project is mind boggling.
June 1st, 2009 at 11:12 pm