NEW YORK -- Motorists using the Hudson River and Staten Island crossings will pay $8 in tolls during peak hours and PATH rail riders will pay $1.75 for all trips effective March 2, under a package of hikes approved yesterday by the Port Authority of New York and New Jersey. The toll and fare increases are the first since 2001 from the bi-state agency, which says the anticipated $312 million extra in annual revenue is critical to covering increased security costs since 9/11 and helping fund an ambitious long-term construction agenda that includes a new trans-Hudson rail tunnel. "There are clearly deficiencies in the transportation infrastructure in this region," said Anthony Coscia, the Port Authority chairman, who long has called for mass transit improvements as a way to ease metropolitan-area traffic gridlock. "We're making investments that will hopefully keep this region strong." Port Authority officials have pledged $3 billion for a second rail tunnel between New Jersey and Midtown Manhattan, a project slated to cost in excess of $7 billion. Additionally, the agency has proposed more than $3 billion in improvements over the next decade for the century-old PATH system. Under the plan, future toll hikes also will be tied to a cost-of-living index with increases periodically in $1 increments. The new toll hikes represent a 60-percent increase for motorists with E-ZPass during peak hours. They will lose the current $1 discount during peak hours, so effectively their costs will jump from $5 to $8. Drivers who pay the current $6 cash toll will also pay $8. Peak hours are 6 a.m. to 9 a.m. and 4 p.m. to 7 p.m. on weekdays and 12 p.m. to 8 p.m. on weekends. Off-peak E-ZPass discounts will remain at $2, while motorists with a new "Green Pass" tag -- for driving hybrids or other vehicles that get 45 miles to the gallon -- will save $4 during off-peak hours. Initially, the Port Authority proposed raising the current $1.50 PATH fare to $2, but decided to scale the increase back to $1.75 even though there was relatively little outcry to the overall fare and toll increases. "We want to keep PATH fares as low as possible because we want to encourage people to use mass transit," Coscia said. Sen. Robert Menendez (D-NJ), who criticized the agency for proposing a $2 fare, hailed the reduced increase. "I am pleased that the Port Authority recognizes that with all the energy, environmental, cost-of-living and traffic congestion issues that confront us, we should be encouraging PATH ridership as much as possible," Menendez said in a statement. The Port Authority will continue offering 10-, 20- and 40-ride discounted PATH tickets, with the average per-ride cost at $1.30 -- up from the $1.20 current rate. Additionally, the agency for the first time will offer seven-, 14- and 30-day monthly unlimited ride PATH cards, similar to those offered on the New York City subways. A 30-day card, for example, will cost $54. Seniors will continue to pay $1 for a PATH ticket. Meanwhile yesterday, the Port Authority also approved a deal with The Westfield Group for joint development of 488,000 square feet of retail space at the rebuilt site of the former World Trade Center. The Port Authority will invest $825 million and Westfield -- a major retail property owner -- will provide $625 million, with each to recoup its investment before equally sharing profits.