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How Long Can NJ Transit Keep Rolling with Flat State Aid?

Agency says it has no plans to hike fares; environmentalists unhappy with governor’s plan to shunt $82 million from Clean Energy Fund to NJT

NJ Transit

While overall spending would rise by roughly $1 billion under Gov. Chris Christie’s new budget proposal, there’s only flat funding to help support operations at New Jersey Transit, an agency that’s come under increased scrutiny from lawmakers after recent fare hikes and last year’s fatal train crash in Hoboken.

So far, NJ Transit officials have said they do not expect another fare hike will be needed during the next fiscal year, but transportation advocates say flat funding is really not enough for an agency that has routinely been forced to raid capital accounts just to keep annual spending balanced.

Environmentalists, meanwhile, have also been dragged into the debate over NJ Transit funding, as the Christie administration has increasingly relied on diverting money from the state’s Clean Energy Fund to help maintain agency operations. Christie’s fiscal year 2018 budget would raid another $82.1 million from the fund for NJ Transit.

NJ Transit and NJ’s economy

With the formal legislative review of Christie’s budget proposal kicking off this week, it’s now up to lawmakers to decide just how much of a priority it should be to increase aid for an agency that thousands of New Jersey residents rely on to commute to jobs that help to sustain the state’s economy.

“After the disaster in Hoboken, our hope is this doesn’t just get lost in the budget shuffle,” said Doug O’Malley, director of Environment New Jersey and co-chair of the New Jersey For Transit coalition.

In all, Christie’s $35.5 billion budget for fiscal 2018 calls for a roughly $1 billion increase in spending, with much of that going to cover rising employee-benefit costs, including a $650 million increase in the state contribution into the grossly underfunded public-employee pension system.

Support for NJ Transit would remain at $427 million in the new fiscal year, the same total that Christie set aside to help support agency operations during the current fiscal year, which closes at the end of June. As part of that allocation, the Christie administration is planning to provide NJ Transit with a direct state subsidy of $140.8 million. The agency will receive another $204 million transfer in funds from the New Jersey Turnpike Authority, and $82.1 million will be diverted to NJ Transit from the Clean Energy Fund.

During a briefing held with reporters last month, state Treasurer Ford Scudder suggested that rising costs associated with covering employee pension and healthcare obligations have effectively tied the state’s hands when it comes to the budget process. State aid for municipalities and local schools and funding for state property-tax relief programs would also be held flat under Christie’s proposal for the 2018 fiscal year, which begins in July.

Supplemental spending

While Christie is working with lawmakers to pass a $400 million supplemental appropriation for transportation spending that includes $140 million for NJ Transit, those funds are to support capital projects, not the agency’s general operating budget. Likewise, the new revenue that’s being raised after last year’s 23-cent gas-tax increase is supporting the state Transportation Trust Fund, an off-budget account that’s generally dedicated to funding road, bridge, and mass-transit infrastructure improvements, not operating expenses.

When the issue of the state budget came up during NJ Transit’s public board meeting last week, Executive Director Steve Santoro stressed that the agency is not proposing any new fare increases. That follows similar statements made by Santoro in recent months.

Still, lawmakers have been holding a series of hearings to go over NJ Transit’s safety record and finances in the wake of the September 29 crash at the Hoboken Terminal that resulted in one fatality.

Among those who testified at the most recent hearing was Janna Chernetz, senior New Jersey policy analyst for the Tri-State Transportation Campaign. She told lawmakers that fares now account for more than 50 percent of NJ Transit’s current operating budget, far more than similar mass-transit systems in other states. She said ideally NJ Transit would have a dedicated source of state revenue or some type of trust fund to sustain its operations. Developers that benefit from New Jersey taxpayers’ investments in transportation infrastructure could also be required to contribute support for the agency.

NJ Transit funding formula?

In the wake of Christie’s new proposal for only flat aid for the agency during the 2018 fiscal year, Chernetz said it may also be time to establish a funding formula to take the guesswork out of the annual budget process.

“At bare minimum, if you aren't going to dedicate funding, perhaps if the Legislature established some sort of ‘funding formula’ to determine the state subsidy NJT could plan their budget a bit better,” Chernetz said.

Environmentalists, meanwhile, are becoming increasingly frustrated with what’s become an annual diversion of the Clean Energy Fund to NJ Transit’s budget. Last year, the diversion was increased by $20 million, a practice continued by Christie in his proposed fiscal 2018 budget.

In all, more than $1 billion has been diverted from the Clean Energy Fund over the past 10 fiscal years. The fund is supported by a tax on New Jersey electric and gas users, and the revenue generated by the tax is supposed to be used to promote cleaner ways of producing energy. O’Malley said Christie has instead used the clean energy revenues as a “slush fund.”

“This is the epitome of budget raids,” he said. “We’re not seeing the energy efficiency investments that we should in this state.”

Troublesome safety record

Sen. Robert Gordon (D-Bergen) has been leading the legislative hearings on NJ Transit, which have revealed a safety record that lags behind the mass-transit systems in neighboring states. Maintaining only flat funding for the agency “seems to be a prescription for failure,” Gordon said in an interview with NJ Spotlight.

Even though Christie has the authority under the state constitution to propose the annual budget, lawmakers are the ones with the power to draft and approve the actual spending bill. Gordon said he hopes his colleagues determine that NJ Transit should be more of a priority as the annual budget-review process plays out this year.

“I hope that in the process we can get more resources to them,” he said.

Still, the constitution also gives Christie the authority to remove items from the spending bill using the line-item veto, and last year he took out millions of dollars in appropriations that lawmakers added to the original budget proposal for things like property-tax relief for seniors and disabled residents. So if lawmakers can secure an increase in funding for NJ Transit, it will likely have to come as a result of negotiations with the governor in the run-up to the June 30 deadline.

“When it comes to budget matters, the governor of New Jersey holds all the cards,” Gordon said.

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