While NJ Transit’s vote to increase fares by 15% puts an immediate budget question to bed, it is far from the end of debate about the bigger picture of solving the financial woes of the nation’s third largest transit agency.
“This gets us to next year,” NJ Transit CEO Kevin Corbett said April 10 after the agency’s board voted to increase fares starting July 1, and hike the rates by an additional 3% annually starting on July 1, 2025 and continuing with no end date.
Looming on the horizon is a projected $766 million fiscal gap in fiscal year 2026, which starts on July 1, 2025. The fare hikes reduced that from original projections of $917 million.
One way to close that $766 million gap is Gov. Phil Murphy’s proposed corporate transit fee, which would levy a 2.5% tax on the earnings of about 600 companies in New Jersey that make a profit of at least $10 million a year.
But a bill that would make that fee happen still hasn’t been introduced in the state legislature. While proposed by the governor, it requires the state legislature to introduce and pass legislation first.
Though progressives have lauded the idea for the tax, New Jersey’s business community and Republican state lawmakers have sharply rebuked it. Business leaders have said it would make the state even unfriendlier to large corporations and job creators.
State Senate, Assembly, and Murphy administration officials said Friday they had no updates on when legislation would be introduced.
If approved, it would be the closest thing NJ Transit has had in 40 years to a dedicated funding source. Corbett described it as the “third leg of the stool” that makes up NJ Transit’s funding.
Except earlier this month, Murphy hinted that it wouldn’t be permanent.
During his remarks to a business group in early April, the governor implied the corporate transit fee would have an end date and that NJ Transit will be expected to be self-sufficient or close to it.
“This corporate transit fee — it has never been my assumption this is forever and always a huge fiscal hole to be filled. NJ Transit needs to find a way toward being able to stand, if not on its own, largely on its own or more on its own,” Murphy said in response to a reporter’s question.
“So, what that looks like and when it occurs, to be determined,” he added. “But we’re not gonna ask folks to keep putting money into something that’s actually on its feet financially down the road and doesn’t need that.”
Advocates interviewed by NJ Advance Media and who spoke during NJ Transit’s board meeting sharply criticized that statement, saying that public transit is a public service and no transit system in the world is self-supporting.
“No systems in the USA are even close to self-sustaining, in part because public services are generally not required to be self-funded,” said Zoe Baldwin, Regional Plan Association state programs vice president. “Transit systems, like roadways, are not cash-positive; both are subsidized by federal and state tax dollars because they add great value to the regions and people they serve.
Murphy’s comment misses the argument that transit is part of essential infrastructure, similar to roads, fire departments, police, schools, road maintenance, postal service and healthcare, Baldwin said.
“We support them with public funding because they are mission critical to the basic functioning of our state,” she said.
Private sector railroads sought to free themselves of money losing passenger and commuter service for decades in the last century, which led to state support when they petitioned to abandon those services.
In the 1980s, Conrail, which New Jersey and other states contracted with to run commuter trains, announced it would no longer run those trains for the states. That eventually led to the creation of commuter agencies such as NJTransit, Metro North and SEPTA in suburban Philadelphia in the early 1980s.
“Governor Murphy’s comments are very troubling because it says to me, he is not interested in passing on a healthier system to his successor, but is fine to leave the system ailing, leaving problems he swore he would solve if it killed him, unsolved,” said Renae Reynolds, the Tri-State Transportation Campaign’s executive director.
“What is more troubling about the statement is its attempt to curb our enthusiasm and vision for the future,” she said.
The future of NJ Transit shouldn’t be one that sees fares increasing over and over again in perpetuity, Reynolds said.
“It should be a vision that seeks to find new ways to support mass transit and stabilize the cost for riders,” she said. “His comments describe NJ Transit as if it were a private corporation seeking a bailout rather than a public utility that needs more investment.”
Murphy administration officials did not respond to a request Friday to address the criticism or to clarify the governor’s remarks.
Neither the 15% fare increase nor the annual 3% annual fare increase will close next year’s financial gap, Reynolds and Baldwin said.
Those fare hikes also will not provide any meaningful improvements for the additional costs, Reynolds said. Fare revenue helps fund NJ Transit’s operating budget, not the capital budget that funds major projects and equipment purchases.
“The only transit system I’m aware of that is farebox-positive is Hong Kong’s MassTransit Railway, which has actually turned a profit in the past,” Baldwin said.
But the MTR also serves one of the densest urban areas in the world, uses funding structures not available to NJ Transit and does not service sprawling suburbs the way NJ Transit does, she said.
“Misguided comments like this penalize riders and vilify transit agencies by holding transit to a completely different standard than roads,” Baldwin said.
NJ Advance Media staff writer Brent Johnson contributed to this report.
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Larry Higgs may be reached at lhiggs@njadvancemedia.com. Follow him on X @CommutingLarry
