As Pols Hail NJ Transit Reforms, Key Questions Lurk About Agency Funding

John Reitmeyer | December 21, 2018 | Transportation
New law increases size of the mass-transit agency board, adding members drawn from bus and train riders

Credit: Edwin J. Torres/Governor's Office
Gov. Phil Murphy signing the NJ Transit reform bill in Summit yesterday
Gov. Phil Murphy praised the adoption yesterday of a law bolstering legislative oversight of New Jersey Transit and overhauling its management, reforms designed to make the beleaguered mass-transit agency more transparent and accountable to its riders.

But left unaddressed by Murphy and lawmakers as they celebrated their achievement is the bigger issue of getting the cash-starved system back on more stable financial footing.

And the agency’s finances could soon get even more complicated. The governor will be putting forward a new state budget early next year, and broader concerns about taxes and fiscal policy are already starting to roil Trenton. Murphy, a first-term Democrat, promised on the campaign trail last year to establish a dedicated source of revenue for the transit agency — beyond fares paid by riders — but he’s spoken little about the subject since.

Asked whether he’s still interested in establishing dedicated funding for NJ Transit during a signing ceremony for the reform bill in Summit yesterday, the governor said there wasn’t “anything new to report” and he could not make any promises. He did say that his administration would be “loath to make the commuter bear the burden” going forward.

But Murphy wouldn’t commit to freezing fares beyond the end of the current fiscal year. “We’ve already committed to no fare increases through June 30 — I’d love to see our ability to extend that — but it’s too early to tell,” he said.

Funding is ‘inadequate, uncertain, and unsustainable’

The reform legislation that the governor signed yesterday was inspired by both a comprehensive audit conducted by his administration earlier this year and a series of legislative hearings convened in the wake of a fatal rail accident at Hoboken Terminal in 2016.

Those hearings raised concerns about political patronage in NJ Transit and a failure to make significant progress installing positive train control safety equipment during former Gov. Chris Christie’s two terms in office. The auditors found that the agency’s board needed access to more technical expertise and the agency routinely used capital funds to support operating expenses thanks to an “inadequate, uncertain, and unsustainable” revenue stream.

The reform bill that was approved by the Legislature earlier this week makes a number of changes to NJ Transit’s management structure, including expanding the size of the governing board from eight to 13 members.

Credit: NJTV News
NJ Transit
The board must now include at least one regular bus commuter and one regular rail commuter; there will also be four transportation-policy experts appointed by the governor’s office and legislative leaders. It will continue to be chaired by the commissioner of the Department of Transportation — a gubernatorial cabinet position — and representatives from the unions for the largest rail and bus employee groups will hold two nonvoting positions.

The new law also adds steps NJ Transit must take when it makes major service changes or raises fares. The agency is required to convene both daytime and evening hearings — and at least two board members must attend — when major service changes are proposed. Full board votes also must now be held to approve any major services changes or fare hikes.

New reporting and disclosure requirements

The law, which takes effect immediately, also beefs up legislative oversight of NJ Transit by requiring the agency to submit two-year revenue and ridership projections to lawmakers annually. The latest reports on accident and safety performance will also have to be regularly disclosed to the governor and lawmakers, along with information about any discrimination or sexual harassment lawsuits. In addition, the law includes a general requirement that top agency officials appear before lawmakers when called upon.

NJ Transit will also have to create an in-house position of chief ethics officer to investigate allegation of unethical or illegal behavior, and establish a whistleblower-protection program and a toll-free hotline that employees can use to report improper conduct. The position of customer advocate will also be established, one of the key recommendations included in the audit.

“This reform puts into law the simple concept that NJ Transit works for commuters, and not the other way around,” Murphy said.

Senate Majority Leader Loretta Weinberg (D-Bergen) said the law wasn’t a “panacea” for an agency that continues to struggle with overcrowding, delays and last-minute cancellations. But it should show riders that the governor and lawmakers have heard their frequent complaints about the service, she said.

“This (law) responds directly to the concerns of the many commuters who too often felt that NJ Transit had stopped listening to them and stopped caring about their needs,” said Weinberg, a prime sponsor of the reform bill.

The law was a bipartisan effort

Assemblyman John McKeon (D-Essex), another champion of the legislation, held up the bipartisan cooperation behind it as a model for the governor and lawmakers as they deal with the broader funding issue. Other sponsors were the GOP leaders in the Legislature Senator Tom Kean Jr. and Assemblyman Jon Bramnick, both of Union County.

“Let us now, as we did in a bipartisan way moving forward on this legislation, do in a bipartisan way, working with the administration, to make sure that NJ Transit, both rail and bus and all of our internal transit systems, are properly funded,” said McKeon. “I hope that’s what the lesson is for all of us going forward.”

For his part, Murphy has made repairing an agency that was once considered one of the nation’s top mass-transit systems a top priority, linking it to a broader effort to jumpstart the state economy. The governor has also repeatedly said that it will require more state funding to achieve that goal, and operating aid for NJ Transit was boosted by Murphy and lawmakers in the first state budget he enacted earlier this year.

But such funding is subject to the vagaries of the state’s annual budget health. New Jersey is once again facing significant fiscal pressure, including rising debt payments and public-employee benefits costs. Revenue collections are also barely keeping pace with projections through the first half of the current fiscal year, despite a round of recently enacted tax hikes.

Sensitivity on taxes and spending

When Murphy was asked earlier this week about the possibility of another tax hike next year, he refused to rule it out, an answer that drew an immediate negative reaction from concerned legislative leaders in both parties.

His noncommital response yesterday on the establishment of a more reliable, dedicated source of revenue for NJ Transit underlines the reality that lawmakers could soon be facing a major dilemma just as the full Assembly is gearing up for re-election in 2019: Force a fare hike on riders or accept a dedicated tax to secure NJ Transit’s long-term health.