NJ TRANSIT LAYS OUT PRELIMINARY FY08 BUDGET

Demand for new services projected to set another record

January 23, 2007
NJT-07-004
Contact: Dan Stessel 973 491-7078

NEWARK, NJ ¿ NJ TRANSIT today approved the latest in a series of enhancements to Newark Penn Station, amending a contract for work that will provide greater ease of access to the city¿s transportation hub for customers and residents in the downtown Market Street area.

"The enhancements to Newark Penn Station will enable the facility to keep up with both our growing ridership and the ongoing development in the City of Newark," said Transportation Commissioner and NJ TRANSIT Board Chairman Kris Kolluri. "The end result will mean improved access for customers transferring between trains and a better connection to the downtown for area residents, employees and visitors."

The Board of Directors amended its contract with Clough Harbour & Associates, LLP of Parsippany to expand the scope of work planned for the extension and rehabilitation of Newark Penn Station¿s Track 5 platform. The final design services will now include enhancements to the station stairways at Market Street, demolition of the former heating plant building and foundation design on the Track 5 platform for a future pedestrian overpass.

"This project represents a strategic improvement for the City of Newark and our developing downtown," said Newark Mayor Cory Booker. "The improved access from Market Street to the station will stitch together two vibrant areas of the city, linking the Ironbound section to the center core district¿including the Gateway Complex and new arena."

"More than just an expansion of a platform, this project is about creating better ease of access from our station building to Newark¿s developing downtown, particularly in the Market Street area," said NJ TRANSIT Executive Director George D. Warrington. "Customers will also benefit from new lighting, an improved c

January 23, 2007
NJT-07-008
Contact: Penny Bassett Hackett 973 491-7078

NEWARK, NJ ¿ Citing system wide service growth driven by increasing ridership demand, inflation, and other key cost drivers, NJ TRANSIT Executive Director George D. Warrington today projected an estimated $60 million operating need in FY08 that requires the agency¿s Board of Directors to consider an average fare increase of about ten percent.

"Despite our actions to contain costs, basic inflation alone adds $45 million of expense every year before we begin to pay for substantially expanded rail, light rail and bus services," Warrington said.

During the Corporation¿s regular monthly Board meeting, Warrington presented a number of revenue and expense assumptions underpinning a preliminary FY08 operating budget. Among those assumptions: that fuel prices will stabilize at current levels; utility costs will continue to escalate; and other growth will be contained to new service and new equipment maintenance only. In fact, NJ TRANSIT expects to keep core service expenses constrained to three percent growth, with new and expanded service growth and above-inflationary cost increases contained to an additional 1.5 percent.

NJ TRANSIT is currently in its third year of record setting-ridership demand, with nearly five percent growth system wide this fiscal year to date. The trend is expected to continue at a slightly more moderate pace next year, consistent with regional economic forecasts for continued job growth, with ridership approaching 900,000 passenger trips daily for the first time in the Corporation¿s history.

NJ TRANSIT said its cost projections include 40,000 more hours of bus service added this year to meet demand and growing costs for private bus carrier contracts. The Corporation also expects to operate 600,000 more car miles for expanommunication system and enhanced safety and security measures."

In June 2005, the Board authorized a contract for final design to extend and rehabilitate the platform along Track 5 in Newark Penn Station for a project that will restore the station platform, improve the appearance and functionality of customer queuing areas, and extend the platform to provide greater capacity for longer Raritan Valley Line trains.

With the added enhancements to the Market Street area of Newark Penn Station, the station upgrades will also include new lighting, signage, communication systems and architectural treatments to make the area more attractive and inviting for customers. In addition, design plans will be developed to demolish and remove the former station heating plant at the southern end of the station along Track 5.

The stairways from Market Street to the station platforms are used by customers transferring between trains during the peak periods, by commuters parking near the station, and by area employees and residents.

The amended contract authorizes an additional $1.1 million for design services, for a total contract authorization of approximately $4.6 million.

Completion of final design is slated for summer 2007. Construction is expected to be completed by the end of 2008.

NJ TRANSIT is the nation's largest statewide public transportation system providing nearly 857,000 weekday trips on 240 bus routes, three light rail lines and 11 commuter rail lines. It is the third largest transit system in the country with 162 rail stations, 60 light rail stations and more than 18,000 bus stops linking major points in New Jersey, New York and Philadelphia. ded rail service to accommodate more riders, as well as support new yard and maintenance facilities and personnel to service 30,000 additional seats on 120 new multilevel rail cars that will be delivered by the end of FY08. Rail service growth, fleet expansion, and manpower and materials to maintain new equipment, account for more than $14 million of cost growth, while bus and light rail service growth is projected to add $3 million next fiscal year.

Light rail increases are generated by 11 new daily trips on the River LINE to accommodate the more than 17 percent ridership growth projected for this year, the first full year of Newark Light Rail service, and additional contract costs to operate the Hudson-Bergen Light Rail system.

Warrington said the agency has worked hard to hold down cost growth to near inflationary levels despite the addition of new services, by cutting $20 million in expenses in FY07 through benefit savings, and headcount and administrative expense reductions, as well as by generating commercial revenues from leveraged leases, advertising, and the sale of excess property.

But Chief Financial Officer Charles Wedel warned that while the Corporation will continue to aggressively pursue non-fare revenue opportunities, leveraged lease transactions and one-time sales of property added nearly $20 million in commercial revenues this year that will be non-recurring in FY08.

"The economics of this business, experienced by transit agencies across the country, are that passenger revenues cover less than 50 cents of every dollar of cost to provide transportation as a matter of public policy. While record-setting ridership brings in more fare revenue, it does not keep pace with the cost for new services that are added to meet demand," said Wedel.

The preliminary FY08 budget forecast assumes that the State will provide NJ TRANSIT the same level of operating support it is receiving this year ¿ including the $22 million increase Governor Corzine provided in the budget for FY07. The Corporation also assumes a continued freeze on the level of capital funds transferred to cover operating expenses at FY05 levels for the fourth consecutive year.

Warrington said that he expects to provide the Board members with a specific proposal of fare adjustments at their February meeting. Public hearings and information sessions will be held between February 28 and March 8 in Paterson, Trenton, Camden, Hoboken, Newark, Somerville, Summit, Manalapan, Atlantic City, Hackensack, Toms River, New Brunswick, and NYC. Any fare change would take effect June 1, about two years after the last fare adjustment.