Sen. Steve Sweeney Unveils $500 Million Dedicated NJ Transit Funding Plan

Senate President Steve Sweeney revealed his plan to dedicate $500 million a year to NJ Transit’s operating budget. 

The proposal came on Feb. 21 after at times contentious Senate select committee meeting where NJ Transit President & CEO Kevin Corbett honesty was questioned and on the eve of Gov. Phil Murphy announcing his budget for the upcoming year.

The plan to fund the agency calls for the constitutional dedication of $300 million a year from the corporation business tax (CBT), $125 million from the New Jersey Turnpike, and $75 million from the Clean Energy Fund. Additionally, it would ban capital-to-operating transfers from state funding sources like the gas tax and sales tax, and put a hard cap on similar transfers from federal funds.

Consistent Funding

“The absence of consistent funding for NJ Transit operations has undermined its ability to provide safe and reliable service,” said Sweeney. “Dedicated funding will help prevent the diversion of resources needed to improve basic services so the agency can bring an end to the breakdowns, delays and service failures that have plagued the system far too long.”

Most major transit agencies in the nation have a dedicated source of operating funding that covers 50% or more of its non-farebox costs. Currently, NJ Transit gets just 1.6% of its revenue from dedicated sources.

Plan Details

The details of the plan are:

  • The $300 million a year from the CBT would be accompanied by legislation amending the surtax to keep it at 2.5% until the state makes its full actuarially required pension contribution in FY 2023. The extra 1% surcharge on companies making over $1 million is projected to raise $250 million to $300 million this year, rising in future years based on current collection patterns.
  • Dedicate $125 million annually in New Jersey Turnpike revenue currently going to NJ Transit’s operating budget on a permanent basis, either by constitutional amendment or statute.  
  • Dedicate $75 million annually from the Clean Energy Fund to NJ Transit’s operating budget on a permanent basis by constitutional amendment.  
  • Prohibit the transfer of capital funds to operating expenses from state revenue sources in the Transportation Trust Fund by constitutional amendment and put a hard cap on federal capital-to-operating transfers by statute.

Murphy noted most of the CBT is paid by out-of-state companies, while New Jersey’s motorists and the out-of-state drivers who pay a high percentage of turnpike tolls have a self-interest in reducing traffic and increasing mass transit.

“This is a comprehensive approach that shares the cost of NJ Transit’s dedicated operating revenue fairly,” said Murphy. “The uncertainty leaves an agency that requires stable funding at the mercy of fiscal conditions and political circumstances that can easily fluctuate. This has been a long-standing problem that needs a long-term solution.”

Needed Improvements

For NJ Transit to make needed service and performance improvements the state needs to end the practice of diverting hundreds of millions of dollars away from the capital projects, according to Murphy.

“The reason our trains and buses break down so much is that we don’t have the capital dollars needed to replace them on a timely basis,” said the Senate President. “We need to put capital dollars into capital. That’s the only way we can expand mass transit ridership to the levels we can and should achieve in the most densely populated state in the nation.”

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