Before New Jersey Transit implements any plan to raise bus and rail fares, the state legislature and Governor Codey should pledge to increase the state’s annual appropriation for NJ Transit’s operating budget.

While it is relatively well-known that New Jersey’s transportation construction funding programs is running dry, the fact is that NJ Transit has faced an operating budget crisis for years. The agency has created new services, built new lines and attracted large numbers of new riders without enjoying sufficient operating support increases from Trenton.

The problem has led to a significant use of NJ Transit capital funds for operating expenses. The result is deferral of needed infrastructure investment and constant pressure on the operating budget.

Last year, Governor McGreevey raised Trenton’s contribution to NJ Transit’s operating budget, saying the move was a "first step" to stem the tide of Transit’s capital budget diversion. However, the increase mainly filled the hole created by a big cut from 2002 to 2003 — especially if inflation is taken into account.

Direct State Aid for NJ Transit Operations

Legislation proposed by State Assembly transportation committee chair John Wiesnewski would phase out NJ Transit’s use of capital funds for operating expenses. This is a sound measure, but a lot more support from the state will be needed to make up all that money in the operating budget.

New Jersey is at the point where it needs to consider a dedicated source of mass transit operating budget support. Within the MTA service area, NY State dedicates portions of a variety of tax streams to fund transit operations.  The Mass Transit Operating Assistance Fund receives proceeds from corporate franchise, utility, insurance company, and bank taxes, and from a sales tax surcharge. In Massachusetts 1% of a statewide sales tax is dedicated to transit operations.  The state is obliged to cover MBTA operating deficits if sales tax revenue falls below a base amount — $645 million for 2001, rising with inflation for future years.

Composition of NJ Transit Operating Budget

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