New Jersey Transit is the only mass transit system of comparable size in the United States that does not enjoy some form of dedicated tax revenue to support its operating budget.

New Jersey Transit plans to hike bus and rail fares next year as operating expenses rise. The agency already diverts a significant portion of its capital budget to operations just to keep pace with the demands of moving its passengers every day. The transfer is the second largest share of the operating budget, coming after fares (which make up about 40 percent of the total). Governor McGreevey’s blue ribbon transportation panel identified this transfer as a major problem for NJ Transit’s infrastructure, and others agree. Legislation proposed by State Assembly transportation committee chair John Wisniewski would phase out the practice over a number of years, but such a mandate would require the state or transit riders to take on another significant portion of the operating budget.

A dedicated funding source to support operating expenses is standard practice for most of the country’s larger transit systems. For example, Los Angeles’ Metropolitan Transportation Authority currently gets about 54% of its operating budget from a dedicated local sales tax. Fifty-four percent of Boston’s MBTA operating funds are derived from a dedicated portion of the statewide sales tax. NY’s MTA agencies, Philadelphia’s SEPTA, San Francisco’s MUNI, the LIRR, and the Chicago Transit Authority all receive significant operating support from dedicated state or local taxes, or a combination of both.

State and Local Dedicated Funding for Transit Operations in 2002 (millions)

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