Chair, members of the Board, thank you for the opportunity to comment on NJ TRANSIT’s proposed Fiscal Year 2027 Operating Budget.
Regional Plan Association appreciates that this budget reflects a significant increase in state support for public transportation. The increased operating subsidy, continued support made possible through the Corporate Transit Fee, and reduced reliance on one-time revenue sources represent important progress toward a more stable and sustainable funding model for NJ TRANSIT. Continued recurring state investment remains essential to preserving that progress.
At the same time, we remain concerned that this budget continues the automatic 3 percent annual fare increase. Riders have now experienced repeated fare hikes while continuing to shoulder a disproportionate burden of the agency’s funding needs. We continue to believe affordability should be treated as a core performance metric alongside reliability and safety.
More importantly, this budget raises questions about whether those annual increases are accomplishing their intended purpose. While the new budget reflects a 3 percent fare increase, it also projects the same $980 million in farebox revenue that was budgeted for FY2026. NJ TRANSIT notes that fare revenue is expected to exceed FY2026 projections through a combination of higher fares, ridership growth, and reduced fare evasion, but the budget nevertheless suggests that annual fare increases are largely offsetting slower-than-expected ridership recovery rather than generating meaningful new operating resources. If automatic fare increases are no longer producing substantial net gains, they deserve renewed scrutiny as a long-term budget strategy.
We are encouraged by the Board’s action authorizing nearly $26 million for NJ TRANSIT’s participation in the Sawtooth Bridges Early Enabling Package. Advancing project development for one of the nation’s most significant transit bottlenecks is an important step toward improving reliability, increasing capacity, and ensuring the long-term resilience of the region’s rail network.
We are encouraged by the overall direction of this budget but remain mindful of the continued reliance on preventive maintenance funding to support operating needs. The budget increases Federal Preventive Maintenance funding by $90 million and introduces an additional $40 million in State Transportation Trust Fund preventive maintenance funding. While these transfers help balance the operating budget in the near term, they also shift capital resources away from investments that improve and modernize the system. Over time, continued reliance on capital funding to support operations may make it more challenging to maintain assets in a state of good repair and advance the infrastructure improvements riders deserve.
This reliance is further underscored by the Board’s concurrent authorization of a new Revolving Credit Agreement and Grant Anticipation Note with Bank of America, entered into specifically because the timing of federal preventive maintenance fund receipts does not align with NJ TRANSIT’s operating cash flow needs. We understand the cash-flow rationale for this financing. However, the need for it also illustrates how dependent the operating budget has become on preventive maintenance reimbursements—funds intended to preserve and improve the system, not to finance day-to-day operations.
Several expense categories also merit continued attention. Materials and Supplies increase by 19.1 percent, Services increase by 15.4 percent, and Tolls, Trackage and Fees increase by more than 21 percent. NJ TRANSIT specifically identifies a 77 percent increase in Port Authority tolls and fees as a significant driver of those costs. While many of these increases reflect contractual obligations and inflationary pressures outside the agency’s direct control, they reinforce the need for continued collaboration among transportation agencies and continued efforts to identify efficiencies so future budget pressures are not disproportionately passed on to riders.
Finally, while this budget represents a marked improvement over recent years and reflects a welcome increase in recurring state support, we remain concerned about NJ TRANSIT’s financial outlook beyond this fiscal year. The Corporate Transit Fee is still a relatively new revenue source and while it has substantially strengthened NJ TRANSIT’s finances, its long-term performance through volatile economic conditions has yet to be tested. Moreover, the current authorization expires in 2028. These realities underscore the importance of continuing to build a durable, diversified, and recurring funding strategy that does not rely on fare increases or the use of capital resources to support operating expenses.
Overall, this budget moves NJ TRANSIT in the right direction. Increased state support provides a stronger foundation than the agency has had in years, and investments in critical infrastructure such as the Sawtooth Bridges project are encouraging. This momentum should now be used to continue the transition from crisis budgeting to a sustainable, predictable funding model that gives riders, taxpayers, and policymakers confidence in the agency’s long-term future.
Thank you for your consideration.
