The coronavirus pandemic is wreaking havoc on New York’s economy, and even though the outbreak may be slowing, there’s no telling when the state might return to some semblance of normalcy. The state will stay effectively shut down through at least May 15, with a high likelihood that varying degrees of social distancing rules will remain in effect after that. And with hundreds of thousands of unemployment claims in the state and the vast majority of the economy at a standstill, New York could be facing a major recession.
Right now, the federal government is focused on short-term relief bills meant to prevent a larger economic collapse. But lawmakers on both sides of the aisle have expressed support for a major infrastructure bill to help jump-start the economy. Although the timing on that bill is unclear, it could advance the Gateway rail tunnel under the Hudson River and keep subway improvements on track.
Late in March, President Donald Trump and Democratic congressional leaders floated the possibility of passing a major infrastructure bill as the fourth part of the federal coronavirus relief package. Trump suggested investing more than $2 trillion to help get the economy going again, and House Speaker Nancy Pelosi was pushing her own job-creation plan. The federal government for years has been trying to pass a major bipartisan infrastructure bill, and the looming economic crisis could provide the incentive for lawmakers to act.
An immediate investment in infrastructure doesn’t appear likely as the $484 billion bill largely provides more funding for a small-business loan program, hospitals and coronavirus testing. Both the president and Democratic leaders agree it would help create much-needed jobs as the country attempts to return to normal. In New York, a new focus on infrastructure could be just what the Gateway Program Development Corp. needs to begin work on the new Hudson River rail tunnel between New York and New Jersey. Owned by Amtrak, the current tunnels provide crucial access to the Northeast Corridor, but at over 100 years old, the tunnels are in dire need of repair. A new pair of tunnels would not only allow the old ones to temporarily close for repairs, it would also eventually alleviate the current traffic bottleneck.
Stephen Sigmund, a spokesman for the Gateway Program Development Corp., said that the Hudson River is the “biggest” transportation infrastructure project in the region right now. It is just awaiting final federal approval and the last of the federal money it needs to move forward. “As you come out of this crisis, you need badly to stimulate the economy,” Sigmund said. “And Gateway is a very, very significant infrastructure project that could help do that.” According to Sigmund, initial estimates found that the project would create 72,000 direct construction jobs and $19 billion in economic activity. Those numbers are from two years ago, and Sigmund said that if anything, they have increased since then.
The tunnel project is still awaiting for its environmental impact statement to be approved, which the development corporation originally submitted two years ago. Despite a commitment from President Barack Obama in 2015 to fund half of the project, President Donald Trump has opposed providing federal dollars and his administration continues to delay the project. Earlier this year, the project appeared to be moving forward as the administration cleared part of the Gateway program for funding – the Portal North Bridge in New Jersey – but still not for the crucial tunnel part of the project. And in March, the administration said it would not release an environmental impact statement anytime soon. But Sigmund said that the world is vastly different now than it was at the beginning of March when that decision was made. “I think there’ll be a very significant reassessment of all sorts of things, but particularly things that can move the economy forward,” Sigmund said. A spokesperson for U.S. Senate Minority Leader Charles Schumer, a longtime advocate for the Gateway Program and the Hudson River rail tunnel, did not return a request for comment about his priorities for a potential infrastructure bill.
Major infrastructure legislation could also help keep the Metropolitan Transportation Authority’s capital projects on track at a time when the agency is facing massive budget shortfalls. The MTA has already received nearly $4 billion under one of the coronavirus relief bills, but the agency is now asking for another $3.9 billion as its revenue forecasts continue to worsen and it needs more aid to cover its operating costs. Without additional federal funding, the agency may have to borrow money or take money out of its capital budget just to stay afloat. Already, the MTA has suggested that key long-term improvement projects may face delays as a result of the crisis.
Abbey Collins, a spokeswoman for the MTA, said that right now, the agency is hyper-focused on getting the necessary operating dollars, which will help to keep the capital budget intact. That money is for critical improvements, such as modernizing the signaling system and getting stations into compliance with the Americans with Disabilities Act. Collins said that the agency desperately needs more federal aid, and it hasn’t determined yet what projects would take priority over others if it faces long-term funding shortfalls.
Nicole Gelinas, a senior fellow at the Manhattan Institute, said that down the line, the MTA will likely need supplemental federal support if it doesn’t want to fall behind on capital projects and improvements. She suggested that the next phase of the Second Avenue subway line would be the first project on the chopping block if the MTA doesn’t receive additional federal aid. Gelinas added that even before the coronavirus, the MTA’s financial situation was fairly tenuous, and its $51.5 billion capital plan is not the most transparent or sound proposal. For example, it relies on $15 billion from congestion pricing, which still has not received federal approval and whose implementation will likely be delayed due to the pandemic. And even if it were quickly approved, Gelinas predicted the revenue it would generate would be lower since fewer people are driving right now.
While additional investment may not necessarily create new jobs, it would ensure that projected jobs are not lost and that New York City can keep moving efficiently when it begins to reopen. “It’s more making sure the recession is less deep than it needs to be,” Gelinas said. “But I also think if we don’t do subway modernization, subways can’t run closely enough together and you’re hurting the private sector economy.”