New plan cuts more than $1B off New York rail tunnel cost New York and New Jersey have submitted a plan that cuts more than $1 billion off the cost of a new rail tunnel under the Hudson River

NEWARK, N.J. -- New York and New Jersey submitted a new plan for a rail tunnel project under the Hudson River that cuts nearly $1.5 billion off the previous cost estimate, as officials seek to break a funding impasse with the federal government that has stalled progress in recent years.

The plan announced Friday envisions design and construction savings that would reduce the new tunnel's estimated cost from just over $11 billion to $9.5 billion. Repairing the existing century-old tunnel that was damaged in 2012's Superstorm Sandy, and is a source of frequent delays due to crumbling infrastructure, would cost about $1.8 billion, or about $200 million more than previous estimates.

The net cost decrease means the states will seek $5.4 billion from a federal grant program instead of $6.8 billion, project officials said in an email Friday.

It isn't clear how that will affect the project's prospects. The U.S. Department of Transportation has given the tunnel and an associated rail bridge project in New Jersey low ratings that have disqualified them from the Capital Investment Grant program.

Department officials have said the low ratings are justified because of the total cost of the request — which dwarfs any other project around the country — and because the states plan to fund their share of the project, between $5 billion and $6 billion, with federal loans. Project officials have argued that the practice is in line with what other states have done.

More than 400 trains and roughly 200,000 passengers pass through the tunnel and over the Portal Bridge in New Jersey daily on trains operated by Amtrak or New Jersey Transit. An analysis commissioned by the two operators this spring found that passengers traveling between New Jersey and New York have experienced rail delays of two hours or more 85 times between 2014 and the end of 2018.