March 6, 2018 / 5:56 PM / 7 months ago

U.S. says New York, New Jersey must pay more for 'Gateway' project

WASHINGTON, March 6 (Reuters) - U.S. Transportation Secretary Elaine Chao said on Tuesday that New York and New Jersey need to shoulder more costs to build a critical tunnel under the Hudson River and denied that the Trump administration had agreed to finance the project.

“New York and New Jersey have got to up their local share,” Chao said at a contentious hearing in the U.S. House of Representatives. “New York and New Jersey are two of the richest states in the country... They need to step up.”

President Donald Trump urged House Speaker Paul Ryan last week not to include funding for the $30 billion so-called “Gateway Project” in a pending spending bill, according to a congressional aide.

Chao confirmed Trump has been pushing to stop congressional funding. “The president is concerned about the viability of this project and the fact that New York and New Jersey have no skin in the game,” she said.

In July, a House panel backed $900 million in new funding for the tunnel that is essential for northeast U.S. transportation.

Representative Albio Sires, a New Jersey Democrat, sharply questioned Chao and said it “seems like this project has come under attack” by the administration. Failure of an existing tunnel under the Hudson could have major economic impacts, he said.

In September, Trump and Chao met with top elected officials from New York and New Jersey over Gateway. “We made no commitments,” Chao said.

The project would also repair an existing century-old tunnel before it becomes unusable in the next decade.

Failure of the lines in the current tunnel, which was heavily damaged during 2012’s Superstorm Sandy, could come within a decade and would hobble commuting in a densely packed metropolitan area that produces 10 percent of the nation’s economic output.

Democrats including New York Governor Andrew Cuomo have said an agreement was reached during the Obama administration under which the Port Authority of New York and New Jersey would finance 50 percent of the Gateway project with user fees, while the federal government would cover the other 50 percent.

The Port Authority builds, operates, and maintains critical transportation and trade assets throughout the New York-New Jersey region.

Chao denied any such agreement had ever been reached during the Obama administration. “There’s no documentation,” she said.

In December, New York and New Jersey on Thursday committed $1.75 billion and $1.9 billion, respectively, to fund the new tunnel under the Hudson River.

But Chao said the two states were offering just a small fraction of overall costs and urged them to commit to funding in writing.

“This project is vital to fifty million people in the northeast corridor and to our American economy,” said U.S. Senator Charles Schumer, a New York Democrat.

During the hearing, the Trump administration’s plan to use $200 billion in federal funding to try to win up to $1.5 trillion in infrastructure improvements over 10 years, while shifting many costs to individual states, came under criticism from Democrats. (Reporting by David Shepardson Editing by Tom Brown)

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