Fighting Over Funding for Gateway Doesn't End With Spending Bill

(Bloomberg) -- The battle over designating money for the Northeast Corridor rail project is finished, but the war over funding it goes on.

The $1.3 trillion spending measure approved by the House on Thursday doesn’t contain direct financing for the Gateway rail tunnel and bridge project linking New Jersey and New York City after President Donald Trump made his firm opposition clear to Republicans in Congress.

“It gives Donald Trump the decision on Gateway,” House Speaker Paul Ryan said of the bill on Fox News.

But advocates for the project say that the White House and Republican leaders are mistaken if they think New York and New Jersey got shut out.

New York Senator Chuck Schumer, the Senate minority leader and a champion of the plan, said there’s a “firm” $540 million for Gateway through money allocated to Amtrak for capital improvements and in formula grants that New York and New Jersey officials have agreed to use for the project.

“I would bet now that the president sees that Gateway is happening that they’re not going to stand in the way,” Schumer told reporters Thursday at the Capitol.

‘Preferential Treatment’

The Department of Transportation said in a statement Thursday that the spending bill, headed for final passage by the Senate, “removes preferential treatment for the New York and New Jersey Gateway projects.” The statement also said that the department reviews all federal grants to Amtrak and the president appoints its board members.

The comments highlight a broader disagreement about the role of the federal government in funding large infrastructure projects like Gateway, with the Trump administration arguing that New York and New Jersey must provide more “skin in the game,” and local officials arguing that states don’t have the resources to build big projects on their own.

“States and the private sector must play a role, but only the federal government has the tax base and funding capacity to underwrite these major new infrastructure upgrades,” said Kathryn Wylde, president of the Partnership for New York City, a civic organization representing scores of corporate chief executives.

The $30 billion Gateway program encompasses several projects, including a new $12.7 billion rail tunnel under the Hudson River to supplement a failing, century-old tunnel and a new Portal Bridge over the Hackensack River. The link between New Jersey and Manhattan for New Jersey Transit and Amtrak is critical to the Northeast Corridor, which runs from Boston to Washington and carries more than 750,000 passengers daily.

Gateway advocates had sought $900 million in directed money for the projects in the spending bill, but Trump pressed congressional leaders to remove language specifically steering funds to the program. The administration declared victory, saying there’s no reference to Gateway in the bill.

But Schumer and other Gateway proponents pointed to $650 million in additional financing allocated to Amtrak’s Northeast Corridor account, saying with that level of funding, Amtrak can commit at least $388 million directly to Gateway. There also is $153 million that will flow to the two states by formula, plus $2.9 billion in discretionary grants for which projects sponsors can apply.

“This is going to be a good way to get the project started,” said Mike Friedberg, executive director of the Coalition for the Northeast Corridor, a group of transportation advocates and businesses. “Once you start it, you’re going to see the need.”

Still, Transportation Secretary Elaine Chao wants more state funding on the grounds that almost all proposed money for the tunnel would come from the federal government through either loans or grants, crowding out other projects. New York and New Jersey officials dispute that and say they had a deal, forged during the Obama administration, for the federal government to fund half the cost, a deal the Trump administration doesn’t acknowledge.

Tom Wright, president of the Regional Plan Association, a New York urban policy group, said both sides can claim victory with the spending bill because there’s no specified funding for Gateway but enough money to keep the program going for now.

“It kind of takes the heat out of this particular flashpoint and says, ‘Let’s have a conversation about what is the federal role in infrastructure, what is the local role, what are the mechanisms we want to do to fund these?” he said. “All of that can now be discussed.”

--With assistance from Arit John Henry Goldman and Erik Wasson

To contact the reporter on this story: Mark Niquette in Columbus at mniquette@bloomberg.net.

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Joe Sobczyk, John Harney

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