The possibility that the second New Jersey to New York rail tunnel could be canceled is a distressing sign of our current financial weakness and our unwillingness to invest in the future. New Jersey Governor Christie is correct when he argues the state cannot spend money it doesn't have, but he should be doing a better job of understanding the long term impact of his short-sighted decision. Anyone trying to get around in New Jersey knows that traffic is getting worse every year. While most of the traffic is not coming from people trying to get into Manhattan, some of it is. While it is not practical for people living in New Jersey's suburbs to get around Jersey on mass transit, people traveling to and from the City have every reason to avoid the drive. Every driver removed from the state's roadways reduces traffic and increases New Jersey's economic viability. How much would Jersey's drivers pay for a little less traffic? Perhaps Governor Christie should try to find out. However, reduced local traffic is only one benefit of the tunnel. Increased real estate values are another major benefit of the tunnel project.
In the long term, New Jersey's economic well-being depends on both continued close connections with New York City as well as reduced travel time within the state. The train tunnel project contributes to achieving both goals. The economic benefits of improved mass transit connections to New York are obvious. In fact, all the Governor needs to do is to look at the impact of the Midtown Direct train line (which opened in the 1990's) on real estate values in the towns along the route. The Regional Plan Association did just that, and then projected the economic benefits of the rail tunnel for New Jersey property owners. In their report, The ARC Effect, the Regional Plan Association noted that three New Jersey transit projects in the 1990s "boosted home values by $11 billion. This represents $250 million a year in new property tax revenue for municipalities."
According to Regional Plan Association Senior Planner Juliette Michaelson, the train tunnel:
...could increase home values within two miles of train stations by a cumulative $18 billion. For stations within 70 minutes of Midtown, this translates to an average of $19,000 per home. The effect is most pronounced nearest the stations, with an estimated increase of $29,000. Higher home values means higher tax bases, and higher tax bases reduce the pressure to raise property tax rates.
I assume the Governor and his staff have read these projections and either don't believe them, think we are too poor to invest in the future, or are trying to get someone else to assume the risk of cost over-runs. I hope this is simply a bargaining ploy, because if it's not, it is a mistake of almost tragic proportions. Since New York City will grow with or without New Jersey, the likely impact will be to drive real estate pressure elsewhere. The property values that would go up in New Jersey will shift to the Bronx, Brooklyn, Queens, Westchester, Nassau, and elsewhere in Manhattan--all places with decent rail connections to New York's core business districts. With the opening of Grand Central Terminal to the Long Island Railroad, Long Island will attract renewed development. Even Staten Island, with its free ferry, will do better than New Jersey in the competition for new residents.
Since the costs of the tunnel overruns can be financed over time, and the economic benefits of the tunnel will be seen in the future, it might make sense to ask those benefiting from the tunnel to do a little more to finance it. A tax on gasoline, a property tax surcharge and a surcharge on train tickets could help finance the tunnel. You could even delay levying these new taxes until the tunnel opened and the benefits of the state's investments began.
Of course, as Governor Christie has learned, in this Tea Party driven political environment, the surest way to gain attention and support is to sip a cup of no tax tea. I know he thinks his state is over-taxed, but does he also oppose investment and building the infrastructure needed for future prosperity?
American government has built the infrastructure needed for economic development throughout our history. Security, safety, justice and shared infrastructure are fundamental and irreducible functions of government. When wealthy conservatives attack infrastructure investment, they are attacking the basis of their own wealth. Imagine our modern economy without ports, airports, roads, bridges, satellite communications and the internet. Imagine our history as a nation without land grant colleges, the first cross- continental railroads, the Erie Canal, the Tennessee Valley Authority, the Colorado River project and our national parks. The idea that the private sector can thrive without public investment is a hoax and dangerously misleading. Private enterprise is the best way to generate wealth, but the conditions needed to ensure a thriving private sector include an efficient, effective and forward looking public sector: one that is capable of investing in projects like the new train tunnel from New Jersey to Manhattan. It would be nice to have that type of government.