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NY and New Jersey announced Thursday how they will pay for their share of an estimated $13 billion project to build a new rail tunnel under the Hudson River and other improvements, with New Jersey's outgoing governor outlining a plan that calls for progressively steeper fare hikes for train riders in his state during the next 20 years.

The commitment from the governors follows a 2015 framework agreement in which the federal government will fund 50% of the Gateway Tunnel project.

The Port Authority of NY and New Jersey will commit an additional $1.9 billion, the states said in a joint statement.

"The commitments we make today mark a pivotal milestone in the construction of the Hudson River Tunnel Project, and builds on the work we began earlier this year with the early construction of the Portal North Bridge Project", said New Jersey governor Chris Christie "It positions the project to immediately compete for federal Capital Investment Grant funds".

Amtrak, which owns the tunnels and most of the tracks along the corridor, has estimated the existing tunnel into NY could fail in 10 to 15 years due to saltwater damage caused by Superstorm Sandy in 2012.

The Hudson River Tunnel project is critical to the regional and national economy, according to New York, New Jersey and Amtrak officials.

"The Gateway Tunnel is critical to the long term vitality of the entire Northeast region and one of the most important infrastructure projects in the country", Cuomo said.

The tunnel is an essential part of the Northeast Corridor that connects NY and New Jersey and is the nation's most critical major infrastructure project, according to a joint press release issued by the governors' offices. "Gov. Christie can't undo the damage of cancelling ARC now, but we should find a fairer way to fund Gateway construction that doesn't ask daily commuters to pay for every penny of New Jersey's contribution to the Gateway project".

NY and New Jersey would pay half the cost.

NJ Transit customers will be expected foot the cost of New Jersey's share of the project cost through user charges on trains using the new the tunnels in and out of Manhattan. "Now the federal government must fulfill its commitment to fund the other half and make this urgent, long-overdue project a reality".

President Obama promised the feds would pay for the other half, but President Trump hasn't said whether that commitment stands.

In letters sent to the U.S. Department of Transportation, the two governors say that they plan on underwriting a portion of the project's cost by relying on a loan from the DOT's Railroad Rehabilitation and Improvement Financing Program, reports Crain's.