No fare hikes in NJ Transit’s $2.9B budget, but fiscal cliff still looms

NJ Transit’s board approved roughly $2.9 billion in spending for the 2024 fiscal year Wednesday night that comes with no fare hikes, but it remains unclear how the long-struggling agency will meet the $1 billion-plus funding shortfall it faces in the coming years.

The board approved the budget unanimously and without discussion, though some members of the public who spoke during the meeting urged a dedicated source for the beleaguered transportation network.

“Through the operating budget and capital funding approved today, NJ Transit will ensure the continued safety and reliability of our system, deliver a high-quality experience for our customers, and improve our overall service, without imposing any fare increases,” NJ Transit President and CEO Kevin Corbett said in a statement.

Unlike transit agencies in most other states, NJ Transit has no dedicated source of funding. The agency’s budgetary needs are met annually through a series of diversions and transfers, a practice NJ Transit will continue into the next fiscal year.

NJ Transit has struggled to regain ridership after the pandemic, which cut farebox revenue by roughly 90% in 2020. Officials are projecting $776.3 million in fare revenue in fiscal year 2024, or roughly a quarter less than what the agency earned pre-pandemic, according to budget documents.

The agency does not expect ridership will completely recover in the coming years. Instead, it has assumed 15% to 20% of riders will continue working remotely at least part of the time.

Its budget assumes no fare increases, though agency officials have signaled they would consider fare hikes and service cuts to make up for staggering shortfalls the agency is set to face in the future. They’ve revealed few details about what a potential downsizing might entail.

Officials expect NJ Transit revenue to fall $119.4 million short of expenses in fiscal year 2025, when the agency is set to spend the last $749.3 million of its federal pandemic aid. The agency faces a $917.8 budget gap in the following year.

The transportation network will continue to fund operations by drawing funds from its capital budget, which pays for train and track maintenance, along with other repairs and capital projects.

“Over the past 10 years, NJ Transit’s lost $10 billion from capital to operating transfers to pursue preventative maintenance measures,” said Corey Hannigan, active transportation program manager for the Tri-State Transportation Campaign. “This has severely limited the agency’s ability to expand service, redesign routes, electrify the bus fleet, and modernize its infrastructure.”

The new fiscal year’s $334 million transfer is slightly reduced from the $362 million diverted under the previous budget. An annual diversion from the Clean Energy Fund will also be reduced from $82.1 million to $70.1 million.

Those reductions are made up for by a $142 million state operating subsidy, which was up $42 million over last year. The transit network will receive $440 million from the New Jersey Turnpike Authority as part of a 2021 funding agreement between the two agencies.

NJ Transit expects it will spend $808.8 million in federal pandemic funds in fiscal year 2024, with commercial revenue and reimbursements accounting for the remaining $297.4 million in funding.

A new headquarters

The budget’s approval comes a day after NJ Transit announced the signing of a controversial $440 million lease at 2 Gateway Plaza in Newark.

The new site lies a stone’s throw away from Newark Penn Station and was the most expensive of the options under consideration, according to NorthJersey.com.

Agency officials have said they sought a new site despite recently purchasing their old headquarters because that site was in need of repairs that would take years to complete.

“NJ Transit has now negotiated a lease agreement that provides the best value for New Jersey’s taxpayers, for our customers, and our employees,” Corbett said. “This new headquarters provides the modern office environment required to properly run the nation’s largest statewide transit system.”

It has drawn controversy over its high costs — ones that come as the agency faces a steep fiscal cliff — and ties between the building’s owner, Onyx Equities, and Gov. Phil Murphy.

Onyx Equities co-founders John Saraceno Jr. and Jonathan Schultz and a family member of Saraceno’s have contributed more than $47,000 to Murphy’s gubernatorial campaigns since 2016, according to campaign finance filings.

Republicans have called for legislative hearings into the agency’s selection process for a new office location and on Tuesday requested Corbett transmit a series of documents related to the site that the agency declined to disclose during legislative budget hearings over concerns of tainting the bidding process.

“The public has a right to know how this occurred, and right now they just haven’t been open about any of the process,” Sen. Tony Bucco (R-Morris) said. “When these deficits hit, they’re talking about cutting service, about reducing staffing, increasing fares. This is going to have a direct impact on the taxpayers in the state and the folks that utilize New Jersey Transit.”

NJ Transit, an independent authority, is not required to seek legislative approval for its leases. Most other state agencies must have leases approved by the Joint State Leasing and Space Utilization Committee.