Select Committee Focuses Attention on NJ Transit’s Funding Woes

John Reitmeyer | December 13, 2019 | Transportation, Budget
Senate president promises that a new revenue source for the beleaguered people mover will be identified by February
Credit: Edwin J. Torres/ Governor's Office
Experts testified that NJ Transit relies too heavily on passenger fares due to chronic, insufficient support from the state budget.

Momentum may finally be building in the State House for establishing a dedicated source of revenue to support New Jersey Transit’s bus and rail operations on a permanent basis — a development long sought by transportation advocates.

The need for a stable and predictable source of funding for the state’s beleaguered mass-transit agency was identified as a primary issue Thursday during the latest meeting of a select committee of senators looking into why NJ Transit continues to struggle to provide reliable service.

A panel of experts who testified before the committee repeatedly returned to the issue of funding, noting NJ Transit relies too heavily on passenger fares due to chronic, insufficient support from the state budget. The experts also faulted NJ Transit’s regular practice of diverting funds from its capital budget to support operations.

“As a state, we cannot continue to shortchange an agency of funding and of talent and expect a miracle, even if it is the holiday season,” said Janna Chernetz, deputy director of the influential Tri-State Transportation Campaign, which has long advocated for a dedicated funding stream for NJ Transit.

Among the ideas for generating new revenue discussed were funding sources like sales and business taxes, and fees on real estate and development. And while no specific revenue source was endorsed by the panel Thursday, Senate President Steve Sweeney, who is chairing the meetings, did commit to coming up with a new funding proposal before the next state budget is due to be presented by Gov. Phil Murphy in February.

“We’re going to look at everything,” said the Gloucester County Democrat. “We are going to come up with a dedicated source of funding because that’s what (NJ) Transit needs at the end of the day, and our economy is actually going to benefit if we improve mass transportation.”

Reliability slips amid fare hikes

Once known as one of the nation’s top transportation agencies, NJ Transit has struggled in the wake of the Great Recession as state funding has not kept pace with increased ridership. In addition, NJ Transit has faced an increasingly angry customer base as reliability has waned despite a series of fare hikes implemented by former Republican Gov. Chris Christie.

Customers regularly lash out on social media whenever trains are late or other problems arise, often showering blame directly on Murphy, a first-term Democrat who has promised to turn the agency around.

While the state gas tax provides funding for NJ Transit’s capital investments, a major audit completed last year at Murphy’s direction brought attention to the agency’s ongoing heavy reliance on state budget funding to help subsidize daily operations.

With no dedicated source of revenue, the annual appropriation for NJ Transit from the General Fund has to compete with other needs when the state budget is assembled each year. The current practice also leaves the agency’s operating subsidy vulnerable to economic downturns, the auditors warned.

Murphy has drawn praise from transit advocates for working with lawmakers to beef up NJ Transit’s operational support since taking office in 2018. But his administration has also continued the practice of raiding capital dollars to support operations, another issue that was flagged by the auditors last year. And while Murphy promised as a candidate in 2017 to come up with a dedicated source of revenue for the agency, he has yet to put forward any proposals, now nearly halfway through his first term.

Credit: NJTV News
Janna Chernetz, deputy director of the Tri-State Transportation Campaign, testified on the need to properly fund NJ Transit.

During her testimony Thursday, Chernetz said passenger fares cover nearly 50% of the agency’s current operating budget, putting it out of step with most of its peers, she said.

“New Jersey Transit riders cannot bear this burden moving forward,” she said. “They have service that is inadequate … they should not have to pay another penny until their system is where it should be.”

Chernetz also warned lawmakers that NJ Transit is likely facing an operating deficit of $86 million heading into the fiscal year that begins in July, even after two straight years of increases in funding from the state budget.

“Collectively, we have all been talking about change,” she said. “However, those with the power to effectuate change have yet to make a move. You cannot expect change unless you make change.”

Potential revenue sources

Kate Slevin, vice president of state programs and advocacy for the Regional Plan Association, rattled off a number of potential sources of dedicated revenue. Moving the state sales tax back to 7% and making permanent a tax surcharge on business income that is due to sunset on Jan. 1 were among the options she discussed.

“The Legislature and governor must identify new, dedicated sources of funds that NJ Transit can count on for the long term,” she said.

Dedicated tolls and other highway fees, congestion pricing, and charges on producers of greenhouse gas emissions were identified as funding sources tapped by other mass-transit agencies in the U.S.

Meanwhile, the lawmakers were also urged by witnesses to press NJ Transit — which is in the process of finalizing a $500 million bond issue for new buses and locomotives — to work harder to replace diesel-powered buses with electric buses. That would cut down on long-term maintenance costs and ease pollution concerns, they said.

“You end up saving money by electrifying,” said Doug O’Malley, executive director of the New Jersey Environmental Federation. “That is a message that I can’t emphasize enough.”

As the hearing came to an end after about two hours of testimony, there was no clear consensus among committee members about exactly what to do next. But there did seem to be general agreement that NJ Transit will need additional operating revenue in the near term.

“This (Murphy) administration is doing their best, but at the end of the day this is not good enough,” Sweeney said.

Reached after the hearing ended, Matthew Saidel, a spokesman for Murphy, said the governor “is pleased to see the Legislature focused on working with the administration to address Trenton’s failures under the Christie Administration.”

But Saidel declined to say whether Murphy himself has been working on any new funding proposals for NJ Transit.

See also: NJTV News’ coverage of the hearing.