The $1.5 billion is money that New Jersey has already committed to the project. The problem is determining where it will actually come from, since the state’s Transportation Trust Fund will go bankrupt in 2011 unless it is replenished. Fixing the TTF is therefore essential to demonstrating to USDOT that the local portion of project funding is in place, a prerequisite for federal matching funds.

The deadline seems legit. An NJ Transit spokesperson told MTR: “The ARC project’s construction schedule anticipates a funding agreement with the federal government in 2009. Before a funding agreement can be executed, there is a statutorily required congressional notification period, which dictates having the local funding in place by October.”

In other words, if the state can’t stabilize its transportation financing by October, a Full Funding Grant Agreement (a commitment from the Federal Transit Administration to fund a specified portion of the project costs) could be delayed until 2010 at the earliest. Every year counts, as the existing trans-Hudson tunnel has no leftover capacity during peak hours and NJ Transit has limited options to accommodate increasing ridership. Turnover at USDOT and the FTA as a new presidential administration settles in could further compound any delay.

Image: Cross-section rendering of Penn Station expansion. (From ARC Public Hearing Presentation/NJ Transit)