Business tax extension among Steve Fulop’s plans to ‘fix’ public transit in New Jersey

Jersey City Mayor Steve Fulop, who is seeking the Democratic nomination for governor in 2025, is calling for an extension of a surcharge on highly profitable businesses to help fix NJ Transit’s fiscal woes.

Fulop said extending the 2.5% surtax on business profits above $1 million — a move Gov. Phil Murphy opposes — could help the agency avert a $1 billion fiscal cliff it faces in the coming years. He pitched the proposal as part of his campaign’s new transit plan, which includes other ideas like implementing a congestion tax aimed at New York drivers entering New Jersey and halting NJ Transit’s contracts with private bus carriers.

Using the surtax revenue to plug NJ Transit’s budget “matches almost perfectly with the gap that exists today,” Fulop told reporters Monday.

“It clearly is an attainable goal because it is something that’s been done before. I think a new governor leaning into this as a priority, especially with the current status of New Jersey Transit is … a responsible step,” he said.

The surcharge, which is set to expire at the end of 2023, is expected to bring in roughly $1 billion annually and would be enough to cover the shortfalls NJ Transit faces starting next year. But it would do little to simplify the agency’s patchwork funding. NJ Transit’s current budget is $2.9 billion.

The transportation network is funded through a shifting mix of fare revenue, federal funds, state subsidies, and diversions, but federal funds that have kept the agency afloat during the pandemic are due to run dry in the fiscal year that begins next July.

Fulop said he would likely seek to keep the existing funding streams, which include money from the New Jersey Turnpike Authority and diversions from the state’s clean energy fund and NJ Transit’s own capital fund.

He said he would not seek to add additional funding sources beyond the corporate business tax surcharge.

“The gap is a billion dollars. I think we’re going to come in with an approach of saying, ‘We’re going to solve for a billion dollars and have that dedicated,’” Fulop said.

It’s not clear whether there are enough votes to extend or revive the surcharge. Democratic lawmakers in Trenton, who have expressed concerns about affordability following Republican legislative gains in 2021, agreed during this year’s budget negotiations to let the surtax expire, though Senate President Nicholas Scutari (D-Union) in May suggested it could be extended to fund new property tax relief programs.

Legislators could still extend the surcharge, which was passed into law as part of Murphy’s first budget and extended in later budget cycles, before it sunsets at the end of the year, or they could reinstate it after it stops being functional.

Fulop said he believes, if elected governor, he could get the surtax through the Legislature in 2026, citing its passage under Murphy at a time when the governor was butting heads with Trenton’s Democratic leaders.

“It does say that for a new governor, this is an attainable goal. That’s very clear,” he said. “It’s a priority for us and we’re being clear with that.”

Fulop isn’t the first gubernatorial hopeful to promise fixes to the long-hounded transit agency. Murphy won his first term in part on a promise to fix NJ Transit “even if it kills me.”

Private buses

Fulop, a former Jersey City councilman who has led that city as its mayor since 2013, said he would seek to phase out NJ Transit’s contracts with private bus carriers, citing past fraud and recent service reductions, including some in Jersey City.

“I do not believe that New Jersey Transit should be in business with private vendors on bus routes,” he said.

The comments follow recent disruptions to NJ Transit bus services. DeCamp Bus Lines in April announced it would stop providing commuter bus services, setting off a scramble to find replacements for their NJ Transit routes.

And A&C Bus Corporation’s July announcement that it would stop servicing four Jersey City bus routes in October has spurred a similar shuffle, though with a significantly longer runway.

To Fulop, the service cuts are a sign of a mismatch between the state’s goals and those held by private carriers.

“A private operator has an incentive to make money,” he said. “That’s the nature of their business as a private operator, and there’s also an understanding that transit systems in this country are not going to make money for the most part, so you have a fundamental misalignment between the private operator and the objective of the state.”

It’s unclear how much such a transition would cost NJ Transit, though Fulop suggested the state could expand its own bus fleet through bonding. Some private carriers lease their buses from the agency.

He also urged regular audits for private bus carriers, noting at least one had previously faced accusations of fraud and erosion of services for riders.

Academy Bus LLC last February agreed to pay the state $20.5 million to settle fraud charges against it over accusations that it regularly missed scheduled trips and then knowingly misreported bus service statistics to the state.

Heading across the Hudson

Among Fulop’s policy proposals are ones that could pit him against New York. He said New Jersey should seek to impose a congestion toll on New Yorkers commuting into the Garden State, mirroring a New York policy that New Jersey is seeking to invalidate in court.

New Jersey should enact regional congestion pricing with its neighbors, Fulop said, and failing that, New Jersey should consider enacting its own version of the policy, which seeks to encourage the use of mass transit by levying larger tolls on commuters in certain circumstances.

“Whether it’s Outer Bridge or the Goethals Bridge or the Bayonne Bridge, there’s a lot of entry points that New York drivers come into New Jersey as well,” Fulop said. “If we’re in the congestion pricing conversation, there should be a regional conversation about it.”

He said New Jersey should be more willing to veto commission meeting minutes of the Port Authority of New York and New Jersey — a maneuver that could delay certain projects — to gain leverage over New York in negotiations. Murphy has threatened to issue such a veto over New York’s congestion pricing plan.

New Jersey should also seek to wrest control of the Port Authority’s PATH system from the bistate agency, Fulop said, charging New York and its commissioners do not see its operation as a priority.

Doing so would add hundreds of millions of dollars to NJ Transit’s looming deficits, but Fulop suggested revenue from congestion pricing on New York commuters could help defray the costs. It’s unclear how much revenue such a policy might accrue.

“The same way the MTA is using the congestion pricing in New York to offset some of their expenses, New Jersey should be doing the same. Instead of complaining to the courts, we should be doing the same and looking to solve the issues here,” he said.

Fulop’s idea of a congestion toll for New York drivers was panned by Rep. Josh Gottheimer (D-05), a vocal critic of New York’s congesting pricing plan. Gottheimer, who is rumored to be eyeing a gubernatorial run himself in 2025, said in a statement the Fulop idea would lead to New Jersey commuters paying three tolls — one for driving into New York, one for driving in Manhattan below 60th Street, and a third to cross the Hudson River again.

“That makes zero sense. Instead, we should be encouraging everyone to come to Jersey — not implementing our own congestion tax which will hurt our families, small businesses, tourism, and local economies. Here in Jersey, we all need to stand together against New York’s absurd congestion tax. Bottom line: the Fulop tax is wrong for Jersey,” Gottheimer said.

Fulop’s plan also calls for light rail expansion, state-run micro-transit systems in some of New Jersey’s densest cities, and expanded Motor Vehicle Commission hours and online services, among others.