NJ Transit Emerges Unscathed From Trenton’s Battle Of The Budget

John Reitmeyer | July 12, 2019 | Budget
Net financial support for the beleaguered transit agency is up $75 million in the recently approved spending plan

NJ Transit
Spared from the recent budget acrimony in Trenton that caused dozens of appropriations to be placed in reserve or clipped altogether was a $75 million boost in funding for New Jersey Transit, the state’s beleaguered mass-transit agency.

The increased aid is now pushing state budget support for NJ Transit operations up to a record high, and it comes at a crucial time as the agency continues to be the subject of near-daily complaints from riders who’ve grown frustrated with everything from cancelled trains to outdated equipment.

NJ Transit has yet to adopt its own operating budget for fiscal year 2020, but officials have said the increased state funding will help pay for station and equipment repairs, and be used to improve customer-service efforts, among other items. The additional aid will also allow for more hiring, including the train engineers that are key to preventing cancellations, the officials said.

What remains to be seen is whether the funding boost can be sustained in future years, and whether commuters will see enough of a difference in service to make it difficult for lawmakers to make cuts in the future.

A rare point of agreement in State House

Disagreements over several key issues elsewhere in the budget, including lawmakers’ refusal to enact a millionaires tax sought by Murphy, led to the governor’s decision to remove nearly $50 million from the final version of the $38.7 billion budget that he signed June 30. Those appropriations were deleted by Murphy using line-item veto powers authorized by the state constitution.

Murphy also put another $235 million in appropriations in reserve in response to fiscal concerns he raised about the budget bill that legislative leaders sent him last month.

But escaping Murphy’s scrutiny was an extra $50 million in funding for NJ Transit operations that lawmakers also put into their budget bill. That funding added to the net $25 million increase that Murphy’s original FY2020 budget request called for. And despite their resistance on issues like the millionaires tax, the governor ultimately praised lawmakers for one-upping him on NJ Transit funding this year.

“We said from moment one, that if there was a way forward to increase the funding, we would be open to that,” Murphy said during a recent news conference in Secaucus where NJ Transit funding was discussed.

In all, the total state budget subsidy for NJ Transit went up year-over-year from $307.5 million to $457.5 million in FY2020, marking an increase of nearly 50 percent. But the subsidy is also being supplemented by the diversion of funds from dedicated accounts, like the state Clean Energy Fund and the New Jersey Turnpike Authority, a fiscal maneuver that began during former Gov. Chris Christie’s administration in the midst of the Great Recession. Under the recently approved budget, NJ Transit is being weaned from those sources.

Such diversions accounted for roughly 67 percent of the total state funding that was sent to NJ Transit during Christie’s last year in office, according to data provided by the Department of Treasury. By contrast, the FY2020 state spending plan — Murphy’s second — relies on such diversions to cover roughly 32 percent of the total state aid that’s going to NJ Transit, which is $668.6 million. The net $75 million increase factors in the removal of a $50 million diversion from capital reserves that was used last year, and also reduces the diversion of NJTA funds by $25 million.

Improvements coming at stations, and in manpower

While NJ Transit hasn’t provided a detailed accounting of exactly how the extra state funding would be spent, the agency has identified a number of key areas that will benefit from the increased state aid. The list includes rail and bus-station improvements that will involve cleaning, painting and other repairs. The money will also fund bus and train repairs, including fixing doors, seats and bathrooms. Station announcement systems will also be improved, as will fare collections, officials said.

The funding will also allow for improved customer service and more hiring, including of train engineers, officials said. That should help bolster ongoing efforts to address an engineer shortage that is one of the causes of the frequent train cancellations that frustrate commuters.

Credit: NJTV News
Kevin Corbett
“We’ve made significant strides, but this is only the beginning,” said NJ Transit executive director Kevin Corbett during the news conference in Secaucus.

But even amid the progress, major funding concerns remain for NJ Transit. For example, an $82.1 million diversion from the Clean Energy Fund remains in the state budget to fund NJ Transit energy costs, which is the same amount that was taken from the same fund during Christie’s last year in office. A total of $129 million is also still being diverted from the NJTA to help cover mass-transit spending. And while the raiding of capital funds for daily operations is being reduced, it still remains a significant source of revenue, according to agency budget documents.

Also left uncertain for now is what will happen after FY2020, especially if there is a major recession that reduces state general-fund revenues.

Audit: Old funding model ‘unsustainable’

The need for a long-term funding fix was highlighted in a comprehensive audit released last year that called NJ Transit’s current revenue model “unsustainable.” And it was Murphy himself who talked about establishing a dedicated source of revenue or even a new tax for NJ Transit when he was a candidate for office.

But one source of pride for Murphy is the fact that, unlike during Christie’s tenure, rider fares have thus far remained stable under his watch.

“NJ Transit is one of the starkest, and I would argue, most consequential examples of how the wrong choices by a governor or a Legislature can adversely affect the people that we serve,” Murphy said.