Chris Christie sure has a knack. The New Jersey Governor keeps shocking the political class on behalf of taxpayers, most recently by terminating work on a new passenger-train tunnel that was supposed to run under the Hudson River into Manhattan.
Mr. Christie lowered the boom last week, citing cost overruns from a federal audit that had revised the tunnel price to as much as $14 billion, up from $8.7 billion only two years ago. “The only prudent move is to end this project,” he said. “I can’t put taxpayers on a never-ending hook.”
Reaction in liberal land: OMG. The tunnel was the country’s largest public works project, and believers in the virtues of all government things immediately bemoaned his decision as one more sign of the decline of Western civilization. “Killing the ARC Tunnel will go down as one of the biggest public policy blunders in New Jersey’s history. Without increased transportation options into Manhattan, New Jersey’s economy will eventually be crippled,” Senator Frank Lautenberg said.
Well, well. To govern is to choose, or ought to be. And the reason New Jersey and so many other states can’t afford new “infrastructure” is because the politicians who’ve been running the state have blown the budget on everything else. For years, Democrats in Trenton have steered ever-more state revenues to government employees and their pensions, while squeezing state spending on the core purposes of government such as roads. Mr. Christie is telling them that the jig is up, and that a government that tries to do everything ends up doing nothing well.
From 2001-2008, New Jersey government spending increased by nearly 59%. Not to worry, Trenton said: Tax increases can pay for it all. Over that period the sales tax, income taxes and levies on cigarettes, casinos, corporate businesses and hotel occupancy all went up. The state also raised billions of dollars in new fees and tolls. The Tax Foundation says New Jersey’s state-local tax burden is the nation’s highest and, at 8.95%, its income tax is among the highest.
But even that hasn’t raised enough revenue, so the state has also maxed out its credit card. In 2009 the state’s bonded debt hit almost $52 billion, up from $16 billion in 2001. Add unfunded pensions and retiree medical benefits and total future state obligations now top $130 billion. In fiscal year 2010, the first $2.5 billion in state revenues went directly to service debt. The state’s Transportation Trust Fund’s annual $895 million budget is now entirely consumed by debt service.
In 2002, pension costs were 8.6% of the New Jersey budget. In fiscal 2011, they’re 16%, and that doesn’t include a $3 billion payment the state was supposed to make toward its $46 billion unfunded liability. Had that not been postponed, the pension share of the budget would have been 26.5%.
The tunnel flap is a microcosm of the crowding out of public works caused by liberal governance around the country. In New York state, bridges like the Tappan Zee over the Hudson River are in desperate need of repair, even as its Medicaid program is larger than that of Texas and Florida combined. The 6th Street Bridge in Los Angeles needs repair and earthquake retrofitting, but Sacramento is busted.
In Washington, meanwhile, President Obama now wants an “infrastructure bank,” though the $812 billion stimulus was supposed to pay for thousands of such “shovel-ready” projects. Instead, it went mainly for transfer payments, and Mr. Obama acknowledged in an interview this week that there are no “shovel-ready” projects.
Transportation Secretary Ray LaHood was so stunned by the tunnel cancellation that he paid a personal visit to lobby Mr. Christie to change his mind. The Governor listened to the options and gave the project a two-week reprieve. Yet without new federal spending commitments, nothing is likely to change. Washington has promised $3 billion for the tunnel, but cost overruns currently accrue to the state. With the project forced to pay prevailing union wages, and a history of corruption in New Jersey construction, cost overruns are a certainty.
The tragedy here is that the U.S. does need better roads and more modern public works. Many such projects would be worth the money by contributing more to general economic efficiency and growth than they cost. But they’ve been crowded out by the liberal vote-buying politics of transfer payments and government union payoffs.
Here’s a modest proposal that Mr. Christie might consider making to his many liberal critics. If Democrats in Trenton and government unions will agree to his recent pension reforms, then he’ll go ahead with the tunnel. Liberals need to choose between their dreams of an endless welfare state and the more basic obligations of government.
