NEWARK, N.J. – The N.J. Transit Board of Directors on April 21 approved an FY 2006 fare plan that delivers lower than expected fare increases for many commuters, as a result of $12.6 million in additional internal management efficiencies and revenue enhancements.
Under the plan, which will take effect July 1, commuter rail and interstate bus fares will increase an average of 9.9 percent – down 25 percent from the original proposal. This level of increase is consistent with inflation, which already totals 9 percent since April 2002 – the last last fare increase – and is widely expected to exceed 10 percent by July.
“We’ve reduced the fare requirement more than 20 percent by aggressively cutting overhead costs without impacting service to our customers,” said New Jersey Transportation Commissioner and N.J. Transit Board Chairman Jack Lettiere. “This is a fiscally prudent plan that reflects Governor Codey’s direction to tighten our belts.”
The internal efficiencies include more than $8 million in management cost cutting actions, combined with more than $4 million in new revenues, enabling the Corporation to reduce an FY 2006 budget gap projection of $60.6 million to $48 million, before the fare increase.
Building on roughly $50 million in cost savings over the past three years, N.J. Transit Executive Director George D. Warrington detailed further cost-cutting actions, including a freeze on senior management salaries, abolishing 25 management positions, reducing overtime by 2 percent, and continuing management controls on travel and third-party service contracts.
Warrington also said he was forecasting a 12 percent increase in commercial revenue including aggressive advertising sales, which have shot up by more than 30 percent since N.J. Transit contracted with Titan Outdoor in June 2004 to sell its equipment and facility outdoor space to local, regional, and national advertisers.
In addition, the Corporation is optimistic that it will be able to generate $3.2 million in revenue by executing one more cross-border leveraged lease transaction, which is permitted under a grandfather provision in the new federal ban on such financial transactions.
These internal efficiencies and revenue enhancements enabled the Corporation to roll back its original fare proposal in response to specific customer feedback.
