Transit agencies throughout the nation are working hard to make it through the next few years. The reason is that the COVID-19 relief money, enacted as a one-shot measure to keep transit going during the worst of the pandemic, will soon run out. That could happen to NJ Transit as soon as next year, when the 2025–26 fiscal year begins. Coalition Chairperson Sally Jane Gellert reported in this issue that help for the agency is intertwined with politics, which cannot reasonably be disputed. Still, it marks the first time that the legislature and the governor have provided dedicated funding for NJT in the
agency’s history, even though that funding is temporary; what will happen five years from now is anybody’s guess.
The Corporate Transit Fee will apply only to businesses that have earned income of $10 million or more per year; estimated at about 600 companies, most of which are large corporations headquartered outside New Jersey. The additional levy will be 2.5%, the same rate as the former “Corporate Business Tax”, which was added in the wake of the Trump Administration’s tax cuts in 2017. That tax expired on Dec. 31, 2023. Gov. Murphy has drawn criticism for allowing that tax to sunset and then proposing the current levy less than two months later, but there is a difference. The former, now-expired tax affected all businesses that made $1 million income per year.
The new tax is estimated to bring in about $800 million per year, which if it does not actually pay for NJT’s current level of service, should at least come close to that goal. Rider advocates had hoped that the agency would receive this year’s revenue, which is based on corporate profits realized since the first of the year, and that dedicating that money to transit would have eliminated the need for the fare increase that just recently went into effect (on July 1). The final bills, S-3513 and A-4704 (supplied to us by NJ Transit), indicate that this year’s proceeds will be deposited into the General Fund.
Beginning next July and for the following 4 years, NJT will have a legislatively-mandated stable source of funds; an improvement for which rider advocates and government-reform groups have been calling for decadeThere is reason for concern in the long run, though. Because the new “transit fee” is not permanent, it could expire in 2029, leaving NJT and its riders in the same position they were in before the current deal was reached. Business groups objected strongly to the new tax and, in the turbulent world of Trenton politics, there is no way to tell what will happen that far in the future. For the moment, New Jersey’s transit riders (and visitors to the State) will keep the transit they have, or most of it. After the coming four-year reprieve, we will all have to revisit the situation that recently caused so much anxiety
among the state’s riders.
For more details, check out the author’s report on the subject that was posted on July 3 on the Railway Age website, https://www.railwayage.com
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