Facing huge deficits, NJ Transit proposes 15% fare hike, the first in 9 years
- Oops!Something went wrong.Please try again later.
NJ Transit is proposing to increase fares 15% — its first hike in nine years — and would install 3% annual fare increases indefinitely after that, according to a plan presented by NJ Transit officials Wednesday.
The proposal would also preserve service at current levels for the next fiscal year, which begins in July.
It is expected that state aid will remain unchanged from the current fiscal year at $652.1 million. In addition, agency officials said they found $44 million in internal cost reductions and $52 million in revenue enhancements.
The fare hike could add about $106.6 million in revenue, NJ Transit officials predict.
Story continues below photo gallery.
The Murphy administration has known for at least two years that a fiscal cliff was on the horizon for NJ Transit — a forecast that has only ballooned in size and scale over that time.
Yet state aid for this current budget cycle is lower than in fiscal year 2020, when it was $668.6 million. No plan was developed by Gov. Phil Murphy and the Legislature to make up for lost farebox revenues, and now riders will likely have to shoulder much of this burden through fare hikes.
More: Legislators tried to give NJ Transit board more teeth. But it seems largely defanged
More: Murphy's chief of staff also heads DOT. Can she keep doing both effectively?
"Today's fare hikes directly result from New Jersey's continued failure to address a well-known problem, and NJ Transit riders deserve better," said Zoe Baldwin, the New Jersey director for the Regional Plan Association, a nonprofit advocacy and research organization that studies transit, housing and sustainability in the tri-state area.
The association "believes that small and predictable fare increases make sense to offset rising costs, but a large one-time increase like the one announced today will cause unnecessary pain for families already struggling with a skyrocketing cost of living," Baldwin said.
"There are many ways to address NJ Transit's looming fiscal cliff without resorting to such drastic measures, and we are incredibly disappointed that none of the other options were seriously explored before riders were saddled with this fare hike," she said.
Bailey Lawrence, a spokesman for Murphy, said officials are continuing to "pursue additional avenues" to respond to the agency's budget needs.
"Governor Murphy looks forward to the beginning of public hearings on NJ Transit’s fare adjustment proposal and supports the agency’s efforts to solicit robust public feedback in order to best understand the potential impacts of fare adjustments on New Jersey residents and commuters," Lawrence said.
Assembly Speaker Craig Coughlin urged NJ Transit's board to "consider the impact higher fares will have on bus and train passengers who rely on NJ Transit's service" before making a final decision.
"I commend the agency for considering non-farebox savings and revenue enhancements to help close the budget gap," Coughlin said. "The Legislature will continue to explore options to help support transportation in the state."
Senate President Nicholas Scutari came out against NJ Transit’s plan but did not offer any alternative ideas to address the agency’s funding shortfalls.
“NJ Transit is obviously in need of additional financial support, but continual fare increases will not fix the problem," Scutari said. "We simply cannot rely on everyday commuters to carry the burden of NJ Transit’s billion-dollar deficit, nor should we count on one-shot funding mechanisms to fill the hole.”
Kevin Corbett, NJ Transit's president and CEO, said that "a decision to propose a fare adjustment is always the last resort, having held the line on any increases for nearly a decade."
"Before advancing this proposal, NJ Transit looked internally and identified $44 million in internal savings and $52 million in revenue enhancements," he said. "However, those actions were not enough to eliminate the budget gap entirely."
What you need to know about the proposal
The proposal includes these details:
The 15% fare hike would take effect July 1, 2024, and 3% annual fare hikes would begin July 1 of each subsequent year and continue indefinitely.
The plan, as is, would not include any service cuts in fiscal year 2025, but there are no guarantees past that.
The agency found $44 million in internal cuts for the coming fiscal year. It’s unclear what those cuts are, as they are not explained in the agency presentation.
The agency identified $52 million in “revenue enhancements” that include more fare enforcement, increasing advertising and sponsorships, placing a 30-day expiration date on one-way tickets and ending the Flexpass pilot.
Under this plan, NJ Transit would still find itself with a $766.8 million deficit in fiscal year 2026.
What's causing the deficits
Several factors are contributing to NJ Transit’s fiscal cliff. For one, farebox revenue is still down from what was collected before the pandemic because ridership has returned only to about 80% of what it was in 2019.
In the years since the pandemic, federal COVID aid has filled the gap, but that money will run out this fiscal year.
The other reason the agency cites is the jump in costs to run the system of trains, buses, light rail and disability services. Those cost increases include:
A 30% increase in inflation.
An additional $30 million in operations expenses for added service on bus routes abandoned by private carriers last year.
An increase in costs for contractual services, such as Access Link, private bus carriers and two of the light rail systems, along with higher costs from labor contracts.
A 47% rise in health care costs.
One reason not mentioned is the decision to move the agency’s headquarters, which will cost around half a billion in rent over the 25-year lease, plus other annual escalating costs for parking, and $54 million approved in December to move in.
That decision has been scrutinized by lawmakers and others, given that there were alternative spaces that were more than $111 million cheaper and the option to stay at the current building, which NJ Transit owns. It could have updated the elevators, HVAC and other systems for as little as $58 million, according to a report from Savills, the real estate consultant hired by NJ Transit to study the options.
How to make your voice heard
For commuters and members of the public who wish to weigh in on the proposal, there will be 10 public hearings, and those not able to attend can submit comments online at njtransit.com/hearing, via mail at Public Hearing Office – Fare Proposal Comments, One Penn Plaza East, Newark, NJ 07105, or through email, hearing@njtransit.com.
Here are the dates and information for the public hearings:
Monday, March 4, from 11 a.m. to 1 p.m. at the Cherry Hill Public Library, conference center, 1100 Kings Highway North, Cherry Hill.
Monday, March 4, from 6 to 8 p.m. at the Atlantic City Convention Center, meeting room 309, 1 Convention Boulevard, Atlantic City.
Tuesday, March 5, from 10 a.m. to noon at Passaic County Community College, Paterson Room, 1 College Boulevard, Paterson.
Tuesday, March 5, from 6 to 8 p.m. at the Bergen County Administration Building Conference Center, 2 Bergen County Plaza, 1st Floor, Hackensack.
Wednesday, March 6, from 10 a.m. to noon at the Trenton Transit Center, 72 S. Clinton Ave., Trenton.
Wednesday, March 6, from 6 to 8 p.m. at the Belmar Municipal Building, council chambers, 601 Main St., Belmar.
Thursday, March 7, from 10 a.m. to noon at the Berkeley College Woodbridge Campus Student Center, 430 Rahway Ave., Woodbridge Township.
Thursday, March 7, from 6 to 8 p.m. at Kean University, North Avenue Academic Building conference center, Room 606, 1000 Morris Ave., 6th Floor, Union.
Friday, March 8, from 10 a.m. to noon at the Frank R. Lautenberg Rail Station, long hallway, County Road and County Avenue, Secaucus.
Friday, March 8, from 6 to 8 p.m. at NJ Transit headquarters, 9th-floor boardroom, 1 Penn Plaza East, Newark.
Those who require a sign language interpreter, language assistance or other accommodations to participate in the public hearing have to contact the public hearing office at 973-491-8520 or 800-772-2287 between 8:30 a.m. and 5 p.m. by Friday, Feb. 16. The public hearings will not be livestreamed.
The comment period will end Friday, March 8, at 11:59 p.m. After that, the proposal will go before NJ Transit’s board for a vote.
Looming annual operating deficits
News of the post-pandemic fiscal cliff was well known before this announcement.
In March 2022, the fiscal cliff was estimated to be $549.3 million for fiscal year 2026, and by July 2022 the estimate had increased to $842.6 million. Not even a year later, the timeline had moved up as COVID relief dollars were running out more quickly than anticipated and farebox revenue lagged.
In April 2023, the fiscal cliff was predicted to begin in fiscal year 2025 starting at $119 million. The next year it would expand to $917.8 million.
NJ Transit board Chair Diane Gutierrez-Scaccetti announced in April of last year that a “restructuring” analysis would begin to determine where the agency could trim costs ahead of the governor’s budget address in February 2024.
No report has been produced. In December, Corbett, the president and CEO, said another state agency was in charge of hiring a consultant to complete the analysis.
At that time, a state Transportation Department spokesman didn’t answer numerous questions about why a consultant was being hired eight months after the restructuring was announced and declined to comment on the consultant because of “ongoing procurement.”
Meanwhile, Murphy let a corporate business tax surcharge sunset last year, even though it could have generated about $1 billion annually and some said it should have remained on the books and been directed to NJ Transit, including Scutari, the Senate president.
“Drastic fare hikes won’t solve NJ Transit’s structural financial problems, especially when the agency has never had a dedicated funding source,” said Alex Ambrose, a policy analyst at the advocacy group New Jersey Policy Perspective. “Policymakers chose corporations over New Jersey’s working families when they gave ultra-wealthy businesses like Amazon and Walmart a $1 billion tax cut.”
Some in the business community maintained that ending the surcharge was the right call.
“Governor Murphy made the correct call in letting the CBT temporary surtax expire," said Michele Siekerka, president and CEO of the New Jersey Business & Industry Association. "Looking for sustainable and dedicated funding for NJ Transit which excludes more business tax increases that make New Jersey less competitive is also the correct call.”
The state of service
NJ Transit officials argued that these fare hikes are necessary in order to capitalize on the improvements they’ve made throughout Murphy’s six years in office, including advancing around $4 billion in capital projects since 2018, up from just $60 million in 2017, adding bus service, installing positive train control before the December 2020 deadline, and making technology improvements.
But some say they haven’t felt those improvements.
Tim Palladino, an Old Bridge resident who frequents North Jersey Coast Line trains and the 139 and 76 bus routes, said he wants to see improved reliability before fare increases.
“I’m disgusted by the news of fare hikes," he said. "They have done nothing to improve service or fix bus and trains. As someone who uses both services, sometimes trains are a little worse than the buses.”
Bus operations have added new routes, expanded service on others and extended some routes, which has largely resulted in significant gains in ridership, bringing it back to essentially pre-COVID levels.
Rail service, however, continues to suffer from high numbers of train cancellations. There were 3,519 trains canceled in 2023, up from 3,291 cancellations in 2017. Rail on-time performance was about 91.2% in 2023, about the same as in 2017, when it was 91%.
Rail could see some improvement in cancellations once new equipment comes online in the coming years, alleviating the biggest cited reason for train cancellations in 2023. Other reasons, like Amtrak signal issues, can’t be helped. Unlike other commuter railroads in the country, NJ Transit shares tracks with freight railroads and Amtrak, including on the Northeast Corridor, the busiest stretch of track in the country.
In recent years, Corbett, the NJ Transit president and CEO, has repeatedly said that maintaining service levels — and not decreasing them because of the lower ridership — was critical to regaining ridership when people began returning to public transportation for work, errands and recreational travel.
It’s also one of the driving reasons this proposal didn’t include service cuts next year — but that’s not a guarantee in future years.
"These budget challenges are not unique to NJ Transit," Corbett said. "Transit agencies across the country are facing similar deficits due to continued lagging ridership compared to pre-pandemic levels, dwindling and depleted federal COVID relief funds, and continuing substantial increases in mandatory, non-discretionary and contractual escalations."
Though some public transportation agencies, such as SEPTA in Pennsylvania and WMATA in Washington, D.C., have not yet received additional state support to address their fiscal crises, BART in San Francisco and the MTA in New York did, and it helped them avoid significant cuts and fare hikes.
This article originally appeared on NorthJersey.com: NJ Transit proposes 15% fare hike due to huge deficits
