UPDATE 1-New Jersey governor to re-examine tunnel funding

* Largest infrastructure project in U.S. reconsidered

* Debate illustrates U.S. quandary: stimulus or cutbacks?
(Adds comments by U.S. DOT, Christie spokesman)

By Jon Hurdle

PHILADELPHIA, Oct 22 (BestGrowthStock) – New Jersey Governor Chris
Christie will examine a report this weekend on an $8.7 billion
rail tunnel after the federal government urged him to
reconsider his cancellation of the project, his spokesman said
on Friday.

The tunnel between New Jersey and Manhattan would be the
largest U.S. public-works project and has been backed by
Democratic politicians who argue that major infrastructure
projects can boost sluggish economic growth.

Christie, a Republican, pulled funding for the tunnel on
Oct. 7 but is reconsidering his decision at the request of U.S.
Transportation Secretary Ray LaHood, a Republican former
congressman.

“The governor expects to get a report from (New Jersey
Transit Executive Director) Jim Weinstein on recommendations,
conclusions from the fed/state working group,” Christie’s
spokesman Michael Drewniak wrote in an e-mail on Friday. “The
governor will consider that through at least the weekend.”

LaHood said on Friday that he wants to find a way to keep
the tunnel project alive.

He released Transportation Department estimates that the
tunnel exceeded the initial cost estimate by at least $1
billion, costing between $9.775 billion and $12.708 billion.
The project also includes a new bridge that would cost an
additional $775 million, LaHood said.

Drewniak said the figures showed the entire tunnel project
could cost up to $13.475 billion, supporting Christie’s
concerns that it would be too expensive.

“The hurdle remains unchanged,” Drewniak said in a
statement. “He is not willing to saddle New Jersey taxpayers
with a public-works project with such a large, indeterminate
cost overrun projection with no way to fund it.”

By withdrawing state funding from the project, which would
have created 6,000 jobs, the governor took one side of a clear
divide in U.S. politics ahead of Nov. 2 elections — one that
sees big government and higher taxes as a threat to
prosperity.

The tunnel would run alongside the century-old Hudson River
commuter train tunnel that links New Jersey and Manhattan’s
Pennsylvania Station. Transit advocates say it is crucial to
relieving a transportation bottleneck.

New Jersey’s economy depends heavily on commuters who work
in New York City and financial analysts say the state’s
economic growth will choke without the new tunnel.

COST OVERRUNS

Christie said his state would be responsible for paying the
excess from the original estimate.

“We were willing to put our $5.7 billion on the table. But
… I cannot afford to put close to $10 or $11 billion on the
table. The people of New Jersey don’t have the money,” Christie
told “NBC Nightly News” on Thursday.

Under the original financing deal, which was agreed to
before Christie took office earlier this year, New Jersey would
pay $2.7 billion, the Port Authority of New York and New Jersey
$3 billion, and the federal government $3 billion. Any overruns
would be paid by New Jersey.

Christie challenged his critics from The New York Times
op-ed page — and billionaire New York Mayor Michael Bloomberg,
a tunnel supporter — to pay the difference.
(Reporting by Jon Hurdle; Editing by Daniel Trotta and Eric
Beech)

UPDATE 1-New Jersey governor to re-examine tunnel funding