Citing post-pandemic ridership drops and the economic realities of a looming fiscal cliff, NJ Transit announced Jan. 24 it is proposing a 15% fare hike, effective July 1, 2024.

The agency noted in a press release and public notice that it has not raised rates since 2015, while still investing to improve services, operations and performance, and facing the effects and aftermath of COVID-19.

“Since the onset of the pandemic, NJ Transit ridership has returned to approximately 80% of pre-COVID levels, with many peak period trips at or exceeding pre-pandemic levels. However, NJ Transit is entering the fifth consecutive year of ridership that will be below pre-COVID levels, which has resulted in a reduction of nearly $2 billion in farebox revenue for the agency,” the transportation agency wrote in its press release.

“NJ Transit responsibly used federal COVID relief funding over a multi-year period to maintain full-service levels, however that funding will be exhausted in Fiscal Year 2025, which runs from July 1, 2024, through June 30, 2025. The COVID pandemic exacerbated the agency’s structural funding deficit that has existed since NJ Transit was created more than 40 years ago,” the announcement continued.

NJ Transit said it underwent an extensive budget assessment to identify and maximize cost reductions and revenue enhancements, noting increased costs on fuel, materials, operations, labor, health care and more. That work enabled the agency to reduce its preliminary budget deficit a bit. But, in order to close the remaining  $106.6 million budget gap, it says a systemwide fare increase of 15% is needed.

The proposal also calls for annual systemwide increases of 3%, effective July 1, 2025, that would go into effect July 1 of each subsequent year.

Policy problems

Before the plan is considered by its board of directors, NJ Transit will hold 10 public hearings in 10 counties from March 4-8, with morning and evening sessions included. The full public hearing schedule and further details on the fare adjustment proposal is available here.

The issue of NJ Transit’s looming fiscal cliff has rapidly flared up, rearing its head during the recent sunset of the corporate business tax (CBT) surcharge.

At that time, several lawmakers and advocacy groups called for leaving the CBT in place and using that revenue to plug NJ Transit’s budget deficit. Jersey City mayor and 2025 gubernatorial candidate, Steven Fulop, has led calls regarding the surcharge.

“I’m going to be the first to comment on this because I know front office is preparing it. There is a major problem with transit policy in NJ overall and it is unacceptable for NJ Transit to push a large fare increase on regular residents within months of a massive tax break on the largest corporations (CBT),” Fulop, a Democrat, wrote in a thread post on social media X. “It is just wrong. Despite the rhetoric of a fairer NJ this clearly the opposite and only undermines trust.”

“New Jersey Transit is obviously in need of additional financial support, but continual fare increases will not fix the problem. We simply cannot rely on everyday commuters to carry the burden of NJ Transit’s billion-dollar deficit, nor should we count on one-shot funding mechanisms to fill the hole,” said Senate President Nick Scutari, D-22nd District — who also floated potentially extending the CBT surcharge during the recent lame duck session, which enraged the business community before fizzling out.

“Mass transit is the lifeblood of the state’s economy,” Scutari said. “It contributes to environmental improvements, economic growth, and our quality of life. We want a world-class transit system that moves New Jersey into the future and NJ Transit is a key part of that system.”

“We’ve made a commitment to make New Jersey more affordable. Before making a final decision, I urge the agency’s board to consider the impact higher fares will have on bus and train passengers who rely on NJ Transit’s service,” said Assembly Speaker Craig Coughlin, D-19th District, in a statement. “I commend the agency for considering non-fare box savings and revenue enhancements to help close the budget gap. The Legislature will continue to explore options to help support transportation in the state.”

“New Jersey Transit’s proposed train, light rail, and bus fare increases are unacceptable and will only make it harder for our already financially strapped transit riders to make ends meet. We knew that NJT was facing a budget shortfall and Republicans have been sounding the alarms and offering solutions to address budget mismanagement issues like NJT, among others, for some time now,” Senate Republican Leader Anthony Bucco, R-25th District, told NJBIZ in a statement.

Bucco continued, “Unfortunately, we have been ignored. This is the exact type of result we feared as the Murphy Administration has proceeded with egregious spending habits, including allowing NJT to lease an extremely expensive new headquarters. This was just poor fiscal management that has now left transit riders and New Jersey taxpayers shouldering the bill. We need to be better stewards of taxpayers’ dollars and start cutting wasteful spending to address growing affordability issues such as this.”

“Governor Murphy looks forward to the beginning of public hearings on NJ TRANSIT’s fare adjustment proposal and supports the agency’s efforts to solicit robust public feedback in order to best understand the potential impacts of fare adjustments on New Jersey residents and commuters,” Bailey Lawrence, deputy press secretary for Gov. Phil Murphy, told NJBIZ in a statement. “The Murphy Administration has kept its promise to hold the line on fare increases until staffing, capital funding, and reliability had markedly improved at NJ TRANSIT, and we will continue to pursue additional avenues to respond to NJ TRANSIT’s fiscal needs.”

Stay with NJBIZ for further developments and reactions.

Editor’s note: This story was updated at 4:12 p.m. ET Jan. 24, 2024, to include a statement from the governor’s office.