Gateway Program is Largely Local

Commentary

Gateway Program is Largely Local

Largely local project should be funded primarily by local government.

U.S. Senators Chuck Schumer and Cory Booker have put a hold on the nominations of Derek Kan–Undersecretary for U.S.D.O.T. for policy, Adam Sullivan–Assistant Secretary of Transportation for Government Affairs, and Ronald Batory–Federal Railroad Administration Administrator. The hold is not due to concerns about their qualifications or experiences; all were approved by voice votes by the Senate EPW or Commerce committees. Instead it is a result of two Senators trying to force the White House into committing federal funds to the largely local Gateway Program.

The Gateway Program and the tunnel under the Hudson River are two different entities whose names are often used interchangeably. However, the Hudson River tunnel is actually one component of the Gateway Program. Gateway is a compilation of eight projects designed to improve commuter and intercity passenger rail. (The Eight Gateway projects are in geographic location from east to west: Penn Station, the Hudson Tunnel Project, the Secaucus Junction Station, the Portal North and South Bridges, the High Line State of Good Repair and Extension, the Sawtooth Bridge, the 4th track at Harrison, and Penn Station Newark.)

There are many questions concerning the federal government’s proper involvement with the Gateway Program. What aspects of the program are federal? Unlike President Obama who had a “fund anything and everything related to transportation” approach, the Trump Administration is using the principles of federalism to decide which transportation projects to fund. On this basis, projects with a national significance such as the Interstate highway system and freight rail should receive some federal funding while those that affect one state, city, or metro area should not receive federal funding.

The Gateway Program includes two types of improvements: intercity freight and passenger rail (mostly Amtrak), and transit (commuter rail). Intercity passenger rail lines move passengers from one state to another making them nationally significant. (Freight rail that moves goods across the country is also nationally significant.) Commuter rail service that moves people within one metro area is not nationally significant. (The fact that the New York metro area is spread out across three states does not make its commuter rail nationally significant.)

Examining the projects, some have both a federal and local component while others are clearly local in nature.

Expanding NY Penn Station would allow future passenger rail service, but the tracks are primarily used by commuter trains. Ditto for the new Hudson Tunnel. A number of Amtrak trains (Acela and Regional) pass through the tunnel but more capacity is needed to accommodate New Jersey commuter rail trains. Most of the other projects are more local in nature, particularly the Highline and fourth track at Harrison.

Let’s calculate the potential federal role based on the fraction of intercity trains that pass through the corridor. Approximately 35% of the trains on the corridor are intercity trains operated by Amtrak. In order to find how much funding the federal government would provide under this criterion, we multiply the percentage of intercity trains using the corridor by the total cost of each element to get the federal share of funding. We multiply 0.35 by the Penn Station and Hudson Tunnel, 0.20 by the Secaucus Junction, Portal North and South Bridges, and Sawtooth Bridge. The other improvements are largely local, so we don’t include any federal funding for them. We also agree that the federal government should share in the 10 percent buffer or overage for Megaprojects, which is $945 million for these projects. As a result, the total federal funding for all of the projects is $8.9 billion.

Gateway Program: Project Components and Cost

Project Component Cost What It Does Federal

Share

Cost
Penn Station $5.9B Expands Penn Station for future capacity 35% $2.1B
Hudson Tunnel Station $12.9B New two-track tunnel and retrofit of existing tunnel 35% $4.5B
Secaucus Junction Station $3.4B Expansion of tracks and platforms 20% $0.7B
Portal North and South Bridges $3.5B Addition of South Bridge and Replacement of North with higher-level bridge (Portal North $1.6B, Portal South ($1.9B) 20% $0.7B
The Highline ??? Replacement and expansion of bridges 0% $0.0B
Sawtooth Bridge $1.1B Replacement and expansion of structure 0% $0.0B
4th Track at Harrison ??? Expands from 3-4 tracks through Harrison 0% $0.0B
Penn Station Newark ??? Platform and pedestrian circulation improvements 0% $0.0B
Total $26.8B 30% $8B
Estimated Overage $2.7B 35% $0.9B
Actual Total $29.5B 30% $8.9B

Clearly, the Obama Administration’s proposed $15 billion is too high a share. (The Obama proposal was more of a political promise, because they knew the numbers did not add up). But even the more proportional $8.9 billion may be challenging to fund.

Under the FAST Act, transit receives approximately $11.8 billion of funding per year. However, much of that is for salaries and program administration. The largest capital grant program for commuter rail is the $2.3 billion Capital Investment Grant (CIG) program. This program is not just for the New York metro area but the entire country. (Some Urbanized Area Formula funds could be used but New York has other transit needs as well). In the past, such megaprojects would be funded by earmarks. However, Republicans in Congress have rightly sworn off earmarks, and it is unlikely that they will change their minds for a program connecting two very Democratic states. So if the federal government gives the city 25% of the total CIG program and the region uses $100K of the federal Urbanized Area formula, that totals $675 million per year. At that rate, it would take 13.2 years of federal funding just to reach $8.9 billion.

So where is the funding going to come from? Schumer and Booker don’t seem to know and probably don’t care. This is simply the latest (largely local) infrastructure project for the New York City region. State and local politicians don’t have the courage to ask local residents to pay higher taxes or user fees so they argue that any New York City project is national in order to get funding from taxpayers in Atlanta and Dallas. The Greater New York region is one of the largest, wealthiest metro areas in the world. It’s time that local residents start footing more of the bill for their infrastructure.

Baruch Feigenbaum is Assistant Director of Transportation Policy at Reason Foundation a non-profit think tank advancing free minds and free markets. Feigenbaum has a diverse background researching and implementing transportation issues including revenue and finance, public-private partnerships, highways, transit, high-speed rail, ports, intelligent transportation systems, land use, and local policymaking.