New Jersey Governor Chris Christie, who scrapped a commuter-rail tunnel to New York in October, said he won’t repay $271 million in federal funds for the project, a decision that may cost the state $52,000 a week in interest.
The Federal Transit Administration began charging the fee April 29, after Transportation Secretary Ray LaHood rejected a state appeal to keep the money, according to a person familiar with the details who wasn’t authorized to speak on the record. The Current Value of Funds Rate, used to calculate interest on overdue debt, is 1 percent, meaning the state may be billed $2.71 million a year.
“This is not a partisan issue anymore,” Christie, 48, a Republican, told reporters in Trenton today. “This is about whether that money will stay in New Jersey and be used for road projects in this state, or the federal government so it can go to another state.”
LaHood’s decision marks the second time since March that Christie’s administration has been warned the state may be on the hook for a large sum. Advocates for inner-city schools have petitioned the state’s highest court to order Christie to restore $1.6 billion cut from education budgets.
LaHood rejected Christie’s assertion that New Jersey was justified in calling off the tunnel because of potential cost overruns. He said New Jersey Transit must return funds provided by the Federal Transit Administration for the tunnel before Christie canceled the project.
‘Broke the Terms’
“The taxpayers, acting through FTA, committed more than a billion to NJT in exchange for which NJT was committed to build a defined transit improvement for the benefit of the American people,” LaHood said in a letter to U.S. Senator Frank Lautenberg, a New Jersey Democrat. “After the initial contract was entered into and later expanded at Governor Christie’s request, the State of New Jersey broke the terms of the contract.”
The state has racked up $803,000 in legal fees to the Washington firm of Patton Boggs LLP fighting the tunnel bill, said Paul Wyckoff, a spokesman for New Jersey Transit.
Moody’s Investors Service on April 27 downgraded by one step its rating on New Jersey’s general-obligation debt to Aa3, fourth-highest, amid concerns that fixed costs may rise to as much as 30 percent of the state budget and crowd out other expenses. Only California and Illinois have lower ratings.
The Transportation Department declined to comment, Olivia Alair, a spokeswoman, said today in an e-mail.
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