Category Archives: NJ Transit

NJPP Monday Minute 8/9/10: Privatizing Transportation Minutia: An Ideological Distraction?


Task forces, study groups and commissions on privatization often result from an ideological belief that private companies have a monopoly on efficiency that government cannot match. New Jersey governors have given lip service to private sector efficiency, often saying its ability to provide services cannot be matched by the public sector. Despite the recent financial services debacle brought about largely by the private sector, Gov. Christie is following past leaders.

The New Jersey Privatization Task Force created by Gov. Christie by executive order on March 11, 2010 was instructed to do a comprehensive review in 81 days of opportunities for privatization within state government. The report identified $210 million in estimated annual savings from 40 services currently provided by public employees.

Transportation Recommendations
Nearly $98 million (approximately 47 percent) of the identified savings come from changes in the way the state manages transportation services. Some of its suggestions include having private companies do car registrations and inspections ($28 million); having the private sector manage or own NJ Transit’s 144 parking facilities (no $ estimate); contracting with more private carriers to operate NJ Transit bus routes (no $ estimate); hiring a private vendor to collect tolls on the turnpike and the Atlantic City Expressway (between $38.7 million and $46.2 million annually); adding to the rest stop services provided by the current private contractors on the NJ Turnpike (no estimate); and selling messaging and naming rights on the AC Expressway ($6 million to $8 million annually).

There is no way to know if the cost estimates of these recommendations reflect reality or if service would improve, but here are a few thoughts.

  • Private car inspections in Pennsylvania often have coincided with repairs – a catch 22 situation. An inherent conflict of interest exists if the same person inspects a car and does the necessary repairs. No reason exists to believe this would be different in New Jersey.
  • Managing 45,000 parking spaces in 144 parking facilities should be a cash cow for NJ Transit and would be a valuable contract for a private (and probably politically connected) operator. The Japanese rail system uses the valuable land and facilities it owns around the train stations to subsidize fares. NJ Transit could do likewise and the benefits should go to the public not a private company.
  • According to the report, NJ Transit contracts with private carriers to provide 67 (34 percent) of its 197 routes. Although the language in the report is confusing, it would appear that in FY 2010, NJ transit paid $46 million of its $601 million to these private carriers. Private carriers are likely to operate some of the most profitable bus routes. It’s unclear what it means that their budgets are 7.6 percent ($46 million/$601 million) of NJ Transit’s bus operations. Clearly those data need more scrutiny or a clearer explanation.
  • Manual toll collection on the New Jersey Turnpike and the Garden State Parkway now accounts for only 30 percent of tolls collected because of the E-ZPass electronic alternative. The South Jersey Transit Authority which operates the Atlantic City Expressway is now installing an all-electronic cashless toll system. The recommendation is to contract with a private vendor to collect manual tolls whose savings would come from cutting salaries and eliminating benefits.
  • Rest and service areas on the Turnpike and the Parkway are currently operated and maintained by a private vendor. The task force recommends that the vendor provide additional and higher quality services, probably a good idea because the private vendor might make more money and the service area would be more attractive. It’s not clear, however, how the state benefits unless that private vendor shares its profits with the state.
  • Finally the report recommends that the South Jersey Transportation Authority generate income by selling to private companies the advertizing space and naming rights on the 13 over head traffic signs it plans to erect along the 44-mile AC Expressway. A good enough idea but one which brings to mind a situation that came to light in May 2003 when two of Gov. McGreevey’s aides used their political connections to increase the value of a billboard company in which they had a financial interest. After arranging advertising contracts with a number of politically connected businesses, they each sold their interest in the billboard company for more than $2.2 million. This incident was investigated by then US attorney Christie and the billboard contracts were canceled by the McGreevey administration.

What Does NJ Really Need?

Whether the recommendations in the task force’s report are smart or even possible, they are a distraction from the real issues at hand.

New Jersey’s transportation needs are massive and the state’s future depends on intelligent management. Billions of dollars are needed and it should be clear to everyone that the itemized $98 million does not address any of the state’s transportation needs.

New Jersey Transit has just enacted the largest fare hike and service cuts in its history with fares for some riders increasing over 40 percent. It predicted it would lose riders, and this appears to be happening faster than predicted. This, at a time when no one wants to cut back on gas and oil consumption; when ozone alert days are more numerous than ever; and news reports show 100 days of oil pumping out of the ocean floor despoiling the environment.

New Jersey’s road, bridge and transit infrastructure is crumbling. The state needs a massive infusion of money to rebuild roads and bridges (not expand them) in order to help the economy and keep people moving. But neither the governor nor the legislature is willing to invest in the state’s infrastructure. None of them are willing to raise the gas tax; levy a sales tax on gas; or come up with any other meaningful way to fund the state’s future needs.

Identifying $98 million in savings and new revenue is meaningless. Whether privatization is good or bad is irrelevant right now. This report is a distraction from the real issues at hand – the future of the state and its real needs. Nothing in this report speaks to them.

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Filed under car inspection, Gov. Chris Christie, New Jersey Policy Perspective, NJ Transit, private sector, Privatization Task Force, transportation fund

NJPP Monday Minute 4/26/10:Healthcare, transit and EITC cuts hurt working families

Gov. Christie’s FY 2011 budget proposes $400 million in cuts to programs that provide critical support to low and moderate income families. When unemployment is close to 10 percent and nearly 450,000 people are without jobs, pulling the rug out from under working families is the last thing one would expect.

New Jersey has long recognized that struggling working families need support if they are to work in a state with one of the highest costs of living in the nation. In the long run, affordable health coverage, mass transit and the benefits of the Earned Income Tax Credit avoid more costly alternatives like welfare, homelessness and charity care at hospitals. These alternatives are bad for families, bad for business and ultimately bad for the economy.

Here are three examples of these bad choices.

FamilyCare – $100 million cut

New Jersey’s FamilyCare program provides affordable health coverage for kids and certain low income parents or guardians. It is for families who do not have employer insurance and cannot afford to pay the high cost of private health insurance which costs between $6,000 and $12,000 per parent. To save money, the state has made the following program changes:

  • FamilyCare coverage is no longer available to parents whose income is greater than $23,352 for a family of three. In FY 2011, approximately 39,000 parents will be denied coverage, regardless of their medical needs. NJPP’s research shows that when enrollment is closed to parents, fewer children are enrolled. Closing the door to so many parents makes no fiscal sense. In FY 2011, the state would save $24.6 million but lose about $46 million in federal matching funds.
  • Enrolled parents who lose coverage because they can’t pay the premiums (which will be raised) or who do not renew their coverage will no longer be able to reenroll in the program if their income exceeds $23,352.
  • About 11,700 legal immigrant parents in this country for less than five years lost their FamilyCare coverage based on an Executive Order issued by the governor that bypassed the Legislature. Under threat of a lawsuit, the Christie administration extended coverage for three months, after which parents will permanently lose their coverage, saving $30 million in the FY 2011 budget.

New Jersey Transit – $300 million cut

Getting to work is an essential part of having a job and in New Jersey about 10 percent of all workers use mass transit. At a time now when families can least afford to pay higher transit fares, the funding cuts have forced NJ Transit to increase fares by an average of 22 percent, affecting almost a million New Jerseyans who commute to work on buses and trains. This is the second highest NJ Transit fare increase in history (averaging a $1,000 annually for a train pass).

But according to Gov. Christie these fare increases are preferable to raising the cost for people who drive. For example, the daily round trip fare between New Brunswick and Trenton will increase to $17.00 per day from its current fare of $11.75. Driving will become a cheaper option than using mass transit – IF they can afford it. Either way this will be a huge hit for working people.

NJ Transit estimates it likely will lose another five percent of its riders on top of the four percent it lost last year. All of these decisions, of course, contribute to the downward spiral in transit revenue and add 4,800 pounds of pollution to the air for every commuter who decides to take a car to work.

The fare increase hurts everyone, but it will be hardest on lower income families, the elderly, people with disabilities and college students. Using mass transit will be a greater burden for them because many have no alternative to public transportation-another barrier to work and education, another barrier to independent living.

At the same time the governor slashes transit funding, he has steadfastly refused to consider a gas tax increase, saying it will harm the economy. But gas prices in New Jersey are low relative to most places in the country, largely because New Jersey has the nation’s third lowest gas tax which has not been increased since 1988. This is yet another example of the administration’s unbalanced approach to the budget. Cuts in transit service and fare increases amount to taxes on those who use those services. User fees are acceptable as long as people have alternatives and that’s exactly the problem-many people have no alternative but to use public transportation.

State EITC – $45 million cut

The Earned Income Tax Credit (EITC) is a federal and state credit for people who work but have low wages. Recognizing that New Jersey is an expensive place to live, the New Jersey credit is calculated at 25 percent of the federal EITC. About 485,000 households received this state credit last year. The governor’s budget would reduce that to 20 percent of the federal EITC. This would mean that a family of four with one parent working full time at the minimum wage ($15,000 a year) would lose $251 next year.

The state and federal EITCs are one of the most effective ways to encourage work, prevent families from becoming dependent on welfare and reduce the number of children in poverty. In fact, some of the welfare savings are still being used to fund the state EITC.

New Jersey’s economy is dependent on a diverse workforce, and it is in the state’s best interest to help make it easier for families to continue to work and contribute to an economic revival. Placing more burdens on low and moderate income workers during a recession is not the way to do it, but that is precisely what Gov. Christie’s budget will do.

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Filed under budget cuts, Gov. Chris Christie, Monday Minute, New Jersey Policy Perspective, NJ FamilyCare, NJ Transit