When Governor McGreevey rejected an increase in the state gas tax last week, he cited "families struggling to pay new bills" in a period of economic uncertainty. New Jersey commuters, however, could soon face the prospect of higher fares if the NJ Transit isn’t spelled from its ongoing budget woes. Transit already receives inadequate operating subsidies from Trenton, and relies on regular raiding of its capital budget to cover day-to-day expenses. As the agency’s capital investment deficit increases, it may again look to fares to ease the pressure.

Fares rise from time to time, but NJ Transit should resist such a move while other transportation revenue measures have been ruled out. After its last fare hike — a 10% rise in spring, 2002 — Trenton simply cut state funding for operations, offsetting the additional $9.6 million raised (MTR #366). In essence, NJ Transit riders were singled out for a tax increase to help meet the state’s fiscal shortfall. Given the ongoing budget crunch, history could repeat itself if a fare hike is pushed through while a gas tax hike is deferred until after the 2005 election.

Fares —estimated to generate $537 million in FY 2004 — already make up about half of NJ Transit's operating budget, one of the highest shares nationwide. Given that ten percent of New Jersey workers use public transportation — double the national average — any further fare increases should be approached as judiciously as a hike in the gas tax. And it’s important to keep in mind that NJ Transit’s customer base is not just white-collar train riders — about two-thirds of transit riders in the Garden State use buses.

The report released last month by the governor’s transportation commission shows large budgetary needs at NJ Transit. The agency faces an $85 million operating deficit by fiscal year 2005 without new revenue and requires $490 million over ten years to restore its bus and rail system.

In the next five years, overhauls or replacements will be needed for one-third of the bus fleet, one-half of the diesel train fleet, and all of the Arrow II electric rail cars. And to keep pace with dramatically growing ridership, the agency also hopes to purchase 130 bi-level rail cars for $250 million.

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