February 17, 2005

Recommendations and Comment Concerning Proposed New Jersey Transit Fare Increases for Fiscal Year 2006

The New Jersey Association of Railroad Passengers (NJ-ARP) is deeply disappointed with the substance, structure and timing of New Jersey Transit's proposed fare increase proposal.

NJT has announced an approximately $60 million budgetary shortfall for fiscal year 2006, and is proposing to close the gap by raising rail fares about 13.3% for peak-period rail passengers riders, and up to 32.1% for off-peak riders. NJ-ARP commends NJT for rejecting service cuts, as a fallback other transit operators have employed during the last several months.

We readily acknowledge NJT's stated reasons for the hike are justified -- fuel, health benefits and security costs -- but this double digit-boost is emblematic of decades of inaction by state government that can no longer be ignored.

We voice special concern that off-peak riders are being asked to shoulder a disproportionate amount of the hike and that the increase in the "change in terminal fee" is excessively large.

For decades, state government has consistently ignored the root causes of the current transportation crisis and adopted "Band-Aid" fixes rather than a permanent solution.

As such, NJ-ARP submits that the real cause of the state's immediate transportation crisis is that the funding mechanism -- both capital and operating -- is broken. It needs to be fixed - quickly!

A principal reason for the proposed fare boost is that New Jersey, the most densely populated state in the nation, has no mechanism intact to fund mass transit operational needs. Annual operating shortfalls have been closed by transferring $2.1 billion dollars from capital programs to operations. A separate, independent operational funding mechanism currently does not exist.

NJ-ARP reiterates our call for a stable, secure and substantial funding mechanism that deals solely with the operational requirements of the state's mass transit services providers, principally New Jersey Transit.

More immediately, NJ-ARP questions the rationale that leads the agency to propose a 32.1% rise in off-peak rail fares. According to the NJT's October 2004 "Quarterly Ridership Trends Report," Saturday and Sunday off-peak usage in the fourth quarter grew 15% on Saturday and 10.6% on Sunday versus the same time period in 2003. As a comparison, overall rail ridership rose 7.1% in the same quarter.

It is interesting to note that NJT's current fare structure is quite well balanced. Monthly ticketholders represent 50% of all riders and contribute 47% of all revenue; weekly users represent 3% of all riders and contribute 3% of revenue and off-peak passengers represent 21% of all riders and contribute 20% of all revenue.

Off-peak ridership often is discretionary and just as often can find alternate means of transportation. But this is precisely the passenger segment that NJT should be trying to grow, not to stifle. The off-peak ridership can be accommodated at very little cost since these trains often are less than fully loaded, and every new passenger that boards is "found money" for NJT. Too steep an increase in off-peak fares promotes a net reduction in net overall revenue, as prospective riders desert NJT's bus and rail system.

NJ-ARP notes the Northeast Corridor and the Morris & Essex lines are heavily patronized during weekends and special events. But NJT still has numerous weekend trains running with excess capacity, and that is a marketing opportunity that should not be ignored. Raising fares by almost a third does not benefit the off-peak riding public, and will suppress revenue generation as ridership gains evaporate.

NJ-ARP, therefore, urges that the existing off-peak 25% round trip fare discount from two regular one-way tickets be maintained.

NJT needs to re-examine the "change in terminal fee." The proposed change is especially onerous for riders on NJT's Morris & Essex lines who have Hoboken as a destination, but decide to travel to New York Penn Station as an alternative. Under NJT's proposal, passengers who have already paid for a Hoboken ticket would be required to pay a full fare from Newark Broad Street to New York's Penn Station, thereby paying twice for the Newark-to-Hoboken segment. This is unfair.

NJ-ARP supports the Lackawanna Coalition's proposal to standardize all Hoboken Division fares based on Newark rather than on Hoboken, as is now done. (Note that Newark Division fares are calculated this way currently with every one-way ticket to New York Penn Station charged a flat $2.75 more than the Newark fare from each station respectively.) Every Hoboken ticket type would be calculated at a predetermined amount greater than the Newark fare from each station. This would have the result of establishing a flat $2.00 one-way fare between M&E Newark Broad Street and Hoboken, with the off-peak round trip at $3.00 (1.50 X $2.00) and the monthly ticket at $56.00 (28 base fares X $2.00).

Between the M&E Newark Broad Street and New York Penn Station, and between Newark Penn Station and New York Penn Station, the one-way fare would be established at a flat $4.00 one-way, $6.00 for the off-peak round trip, and $112.00 for the monthly ticket.

With this structure, step-up fares would disappear entirely except for those M&E users with a Hoboken ticket desiring to travel directly to New York Penn Station. With all fares between M&E Newark Broad Street and Hoboken ($2.00) and M&E Newark Broad Street and New York Penn Station ($4.00) now standardized, the step-up would always be the difference or a flat $2.00 ($4.00 - $2.00).

For users of the Main/Bergen lines, NJ-ARP suggests that fares be standardized on Secaucus Junction and be considered part of the Newark hub. While this station is not a destination, but rather a transfer point, tickets would be priced accordingly, with a flat $2.00 one-way fare to Hoboken and $4.00 to New York Penn Station. Riders whose destination is either Newark Penn Station or M&E Newark Broad Street would pay only the Secaucus Junction fare -- there would be no additional fare since it would be considered part of the Newark hub.

Confusion on the parts of the passengers would be eliminated and time consuming transactions by on-board train personnel reduced permitting them to function more efficiently in their dealings with riders. Ticket machines could be easily reprogrammed for this change and ticket agents' duties simplified.

Additional revenues collected from this structure change could be used to preserve the existing off-peak 25% round trip fare discount.

Finally, NJT cites a $13 million increase in security and policing costs in the aftermath of the 9/11 terrorist attack with the total budget now at $28 million for fiscal year 2006. At present, this expense is borne by the riders. However, funding New Jersey's State Police is considered a state responsibility with monies appropriated from the general budget. Protection of the state's mass transit users is equally as important as the protection of the state's motorists.

NJ-ARP therefore believes that the ever rising cost of NJT's security umbrella should more appropriately be considered a state function and its funding assumed by the state. Such an assumption would go far toward reducing the need for this fare increase and moderate those anticipated in the future.

NJ-ARP strongly urges NJT management to reassess its current fare proposal, and devise a stable, secure and substantial permanent funding mechanism to moderate NJT's annual operational funding shortfall.