New Jersey Turnpike Tolls

A vehicle, right, merges into the single line at the only cash-collecting toll both operating at the northbound side of the New Jersey Turnpike Interchange 18W Toll Plaza, Thursday, April 25, 2019, in Carlstadt, N.J. EZ Pass toll riders, center left, travel northbound without stopping.

(The Center Square) – The New Jersey Turnpike Authority has approved a deal to make tens of millions of dollars in annual loan payments to finance New Jersey’s share of a $16 billion rail tunnel project.

Under the agreement, which was approved unanimously by the commission on Tuesday, the authority will make $124 million in annual loan payments beginning in 2033, to cover the state's share of funding for a project to build two new rail tunnels under the Hudson River and rehabilitate two existing tunnels.

Earlier this year, New Jersey agreed to cover 25% of the costs for the project using low interest, long term federal railroad loans to finance the state’s share. New York is picking up another 25% of the costs. 

The remainder of the costs for the project would be covered by federal grants, transit officials say, but that money has not been finalized. 

The agreement also requires the authority to make $1.66 million monthly payments to the Gateway Development Commission, a newly-formed panel overseeing the tunnel project. Earlier this month, the commission approved a $58 million operating and capital budget. 

New Jersey officials say the project is aimed at preventing a commuting nightmare, when one of two existing 112 year-old tunnels under the Hudson River is taken out of service for a year to repair structural damages caused by Hurricane Sandy in 2012. 

Amtrak officials say the upgrades will reduce capacity in the tunnel by an estimated 75% during the project.

"The turnpike recognizes that New Jersey’s integrated transportation system depends on the functional and efficient operation of all components of that system, including commuter rail transportation provided by NJ Transit,” Turnpike Authority executive director John Keller wrote in the agreement. 

Keller said suspension of rail service through the tunnels when there is a problem has a "negative ripple effect" on New Jersey roadways. 

"Inefficient, unreliable commuter rail service along the Northeast Corridor detrimentally impacts the Authority roadways, specifically the Turnpike, which becomes an alternate travel route for members of the public who would otherwise utilize commuter rail service," he wrote.

Groups representing motorists have criticized the project, which they said will force the turnpike authority to increase tolls to pay for the loans for the project.

New Jersey commuters are already expected to pay more next year under a toll hike, which goes into effect on Jan. 1 under an existing state "indexing" law.

The Turnpike Authority collected $2.2 billion in toll revenue during the first 11 months of 2022, about $130 million above budget projections, according to state data.

The $16 billion Gateway project, including rehabilitation of the existing tunnels, is estimated to be completed in 2035, Turnpike officials said.