NEWARK — NJ Transit's board unanimously approved a controversial fare increase Wednesday to hike ticket prices 15% on July 1 and 3% every year after that.
NJ Transit President and CEO Kevin Corbett said the agency was left with no choice to help close its more than $100 million budget gap after making $96 million in internal cuts to agency operations, ending popular fare discount programs and receiving no commitment from state officials that additional aid would close the coming fiscal year’s shortfall.
“I only have limited tools in the toolbox," Corbett said. "That leaves us with two options: cut service or raise revenue, raise fares. We’ve been saying all along, since the pandemic, we don’t want to get in the death spiral that it seems some agencies do where they cut service, cut costs, and then there's less ridership, less frequency and more and more people abandon the transit systems.”
The last time NJ Transit straphangers had a fare increase was in 2015, when ticket prices rose on average 9%. Although this plan avoids service cuts, a nearly $1 billion budget gap lingers next year, and there is no guarantee service won't be cut in the future.
'Backdoor tax on working families'
The decision was derided by some as a rubber stamp and premature, given that it comes before key decisions and analysis have taken place about the agency's fiscal future.
“What this fare increase is, essentially, is a backdoor tax on working families. It’s not right. It’s unconscionable,” Hoboken Mayor Ravi Bhalla said, before reading his personal cellphone number aloud and encouraging board members to call him about their vote. “They say that this board of NJ Transit is nothing more than a rubber stamp of the governor’s policy. Are you all a rubber stamp of the governor’s policy? Please prove me wrong.”
Board members Shanti Narra and Kiabi Carson tried to assure the public this was not a rubber stamp vote, with Carson saying, “It’s a 'yes' considering all the factors,” and not a decision made lightly.
Narra said she voted a “reluctant yes,” a difficult decision that came after “intense conversations” with her peers on the board.
“Without anything happening, without the Legislature or the governor later on this year, right now, the alternative are service cuts and job losses, and in terms of job losses that’s going to be devastating,” Narra said. “Everything is uncertain, and all we can do as a board — with the fiduciary duties that we have — is to deal with the situation as it exists right now, as unpleasant and as gut-wrenching as it is.”
'It’s unfair, it’s unsustainable and we need to do better'
“No fare hikes” chants rang out from about 20 straphangers rallying outside NJ Transit's Newark headquarters before the meeting.
“I’m coming out here to plead to whoever is in charge of making these decisions to really step back and see what you're setting the future for us to be like,” said Stephanie Martinez, who said she and her family rely on the bus for daily life and are frustrated with late service and poor conditions of some buses.
“It’s unfair, it’s unsustainable and we need to do better, Governor Murphy needs to do better, in investing in public transit and investing in our future,” Martinez said.
The board's vote comes about a month after the conclusion of 10 public hearings held around the state. The overwhelming majority of comments were from riders who voiced their disapproval of the increase, those who sought more assurances about improvements to service and some who wanted to wait and see how other budget negotiations would unfold to provide additional financial aid to the agency.
Some questioned why the agency signed a 25-year lease to move NJ Transit's headquarters from a building it owns to the most expensive option presented by the agency's broker despite cheaper alternative spaces or fixing up the current space for less money.
Murphy has reassured riders that now is a "fair" time to increase fares, arguing that his administration has "largely fixed" NJ Transit during his six years in office. A number of improvements have taken place, including hiring sprees to fill roster gaps in bus operators and locomotive engineers, growing the capital program from just $60 million from the last administration to around $4 billion, and adding hundreds of bus trips at an additional $30 million cost.
But by nearly every performance metric, the agency is performing about the same or worse as it was in 2017, the last year of former Gov. Chris Christie's tenure, with trains and buses breaking down more frequently, more train cancellations, and on-time performance down across all modes except the metric used for buses.
“This is going to be a terrible hardship on the riders,” said Gloria Mills, who rides all four modes of NJ Transit, including Access Link, whose riders will be especially burdened by these increases. “NJ Transit knew that this fiscal cliff was coming for years. They should have been planning on larger conglomerates and large corporations that will be able to be taxed.”
Could Legislature, Murphy have prevented fare increases?
Among the repeated concerns voiced by public speakers at NJ Transit's fare hearings and before Wednesday’s vote was that the board should have waited to vote on the measure until the state budget process concludes.
One of the central policy decisions being debated is a proposal by Gov. Phil Murphy to create a corporate transit fee, a 2.5% tax on companies that earn more than $10 million in profit, which would take effect Jan. 1, 2024. It is estimated to generate $1.023 billion in fiscal year 2025 and the second half of fiscal year 2024, and around $850 million in fiscal year 2026.
Murphy said he would dedicate those dollars to NJ Transit, but his administration indicated that it would begin sending that aid to the agency in fiscal year 2026. It's unclear why the Murphy administration hasn't proposed to use the money collected in fiscal years 2024 and 2025 to plug NJ Transit's funding gaps this coming fiscal year.
That could have eliminated or reduced the need for the fare increases and other disputed budget cuts at NJ Transit, such as ending the popular FlexPass program, instituting a 30-day expiration date on paper tickets, eliminating bonuses for newly hired bus drivers and eliminating a locomotive engineer class.
However, Murphy recently said his corporate fee proposal was not meant to be a “permanent solution for NJ Transit” and that the funding is only until “NJ Transit gets back on its feet again, and I have no doubt in my mind that it will,” reported the New Jersey Monitor.
Details of how the corporate transit tax could work — assuming legislators have any interest in bringing back a corporate business surcharge after letting the last one expire in 2023 — won't be settled until budget negotiations end June 30.
Where is the restructuring analysis?
Meanwhile, a long-awaited restructuring study of NJ Transit is mysteriously stalled.
Diane Gutierrez-Scaccetti, NJ Transit's former board chair, announced that a restructuring analysis would get underway "very quickly" in April 2023.
A year later, the work has just begun.
Questions were posed to the state Departments of Transportation and the Treasury, the two agencies in charge of procurement for this contract, about why the analysis didn't start sooner, about the scope of the study and about why the consultant's contract is being withheld despite a public information request filed by NorthJersey.com more than two months ago.
The North Highland Company, the same Atlanta-based consultant group Murphy hired to audit the agency when he took office in 2018, was hired to conduct the analysis, but the start date of its contract is Jan. 8, 2024, with an end date of Jan. 7, 2025, according to NJ START, Treasury's procurement website.
Though the exact scope of the contract is not known, Gutierrez-Scaccetti, who is now Murphy's chief of staff, said last April that "everything was on the table" and could include consolidating the corporate structure, looking at fares and weighing service realignments, which usually means service cuts.
