NJ Transit Fare Hikes In Effect Today, More Increases Could Be Coming Down Pike

Given state’s seemingly intractable transportation-funding problems, no easy answers for agency or commuters that rely on its trains and buses

NJ Transit
Taking a New Jersey Transit bus or train will cost on average 9 percent more starting today under a fare hike the agency’s board approved over the summer.

For New Jersey Transit — which already relies more heavily on rider fares than many other transit agencies in the United States — the hike comes on the heels of a whopping 25 percent increase that went into effect in 2010.

And, unfortunately for commuters, more fare hikes could be looming thanks to a combination of hard-to-solve financial problems. They include agency resources that are already stretched thin, a lack of resources and full support from Trenton politicians, and a decimated state Transportation Trust Fund that’s been left in no position to help ease the burden.

Despite this situation, and despite alarms sounded by advocates, Gov. Chris Christie said earlier this year that the lack of stable funding for transportation projects was a not a crisis, something he stressed again on Monday while speaking to business leaders in Morris County.

“New Jersey Transit riders are going to pay more for worse service, and no promise of improvements,” said Doug O’Malley, director of Environment New Jersey, one of several organizations that have been trying to bring more attention to the state’s transportation-funding problems this year.

“This fare increase is a stealth tax hike on transit riders, and it’s time for our state leaders to stop pretending like looking the other way is an answer,” O’Malley said.

For New Jersey Transit, increased costs tied to workers’ compensation, insurance, and employee healthcare and pensions were all blamed earlier this year when agency officials said they were facing a $120 million budget shortfall. They identified about $40 million in savings before coming up with the plan to hike bus and train fares to bring in another $77 million.

New Jersey Transit’s board voted unanimously in July to increase fares, despite the objections of commuters. That vote came after Democrats who control the Legislature sent Christie a state spending plan in late June that included no additional funding to offset the agency’s remaining budget hole.

Christie, a second-term Republican, put forward his own state budget proposal in February that slightly increased overall funding for New Jersey Transit, but not by a big enough margin to cover all of the agency’s spending needs.

Rising costs tied to public-worker pensions, health benefits, and debt-service on state borrowing ate up most of the overall $1 billion spending increase in Christie’s budget, leaving little money for investments in other areas, he said at the time.

The $33.8 billion spending plan Christie eventually adopted for the fiscal year that began July 1 slightly reduced New Jersey Transit’s state subsidy to $33 million, but money he raided from other sources, including the state’s Clean Energy Fund, was used to boost to nearly $400 million the overall funding for New Jersey Transit.

Still, it was not enough to fill the agency’s budget gap.

Transportation advocates have called for a more predictable and robust source of state funding for New Jersey Transit instead of the oft-repeated scramble for money that occurs each year as the state budget comes together. That puts more pressure on fares — and New Jersey Transit already uses fares to cover roughly 40 percent of it expenses, ranking 9th in the United States among transit agencies that rely on revenue from fares versus other sources.

And further complicating the transit-funding problem is the weakened position of the state’s Transportation Trust Fund. Supported primarily by revenue from the state’s gas tax, the trust fund pays for road, bridge, and rail improvements throughout the state. But the gas tax, unless it’s raised, will only generate enough revenue to cover the fund’s significant debt by the middle of next year.

The current funding plan for the trust fund is using a combination of borrowed money and revenue from outside agencies like the Port Authority that was originally earmarked to help pay for the canceled ARC commuter tunnel.

The plan, which expires when the current state fiscal years ends on June 30, is also relying on a drawdown of cash balances and a $242 million loan repayment by New Jersey Transit. That’s brought out charges, strongly denied by the agency, that the fare hike is being used to help stave off a gas-tax hike for one more year since Christie is now seeking the GOP’s presidential nomination.

But Michael Phelan, co-founder of the New Jersey Commuters Action Network, said leaders of both parties need to work together to resolve what he said is a “crisis” situation.

“Everyone in our state benefits from good transportation and everyone needs to play a role in investing in these systems so that New Jersey continues to be a place where businesses want to grow and families will want to live, work and succeed,” Phelan said.

For his part, Christie has not ruled out a gas-tax hike, but he’s also maintained any increase should only come as part of a deal with lawmakers that also provides New Jersey residents with more “tax fairness.” And legislative leaders from both parties last month said during a business summit in Atlantic City that they’re willing to negotiate a tradeoff that would involve generating new revenue from a gas-tax hike in exchange for cutting the state’s estate and inheritance taxes. A more detailed proposal is expected to emerge later this year after the November election, which will feature all 80 Assembly seats on the ballot.

But such a swap would create a huge budget hole for the state, according to a report released earlier this week by New Jersey Policy Perspective, a liberal think tank based in Trenton. That’s because New Jersey’s estate and inheritance taxes bring in $755 million, making them the fourth-largest source of annual revenue for the state budget behind the income, business, and sales taxes.

And though lawmakers want as much as $2 billion in additional revenue from a gas-tax hike, that money would flow right into the Transportation Trust Fund, leaving behind a $755 million deficit in the state budget that would put the state in an even weaker position to help cover gaps in New Jersey Transit’s operating budget.

“The bottom line is that proposals to eliminate the estate or inheritance tax would deprive New Jersey of resources needed to promote widespread prosperity, while benefiting a relative handful of the state’s highest net-worth households the most,” the report said. “The Garden State does not need, and cannot afford, to take this step backward.”