NJ Transit’s board of directors has approved the submission of a $3.2 billion budget for fiscal year 2026, reflecting a 5 percent increase from the previous year. The spending plan, which now awaits gubernatorial approval, incorporates a 3 percent fare hike mandated under a policy enacted in 2023.
Despite the increase in expenditures, NJ Transit aims to maintain current service levels while addressing rising labor costs. The approval comes a day after the agency reached a tentative contract agreement with its locomotive engineers’ union.
To manage costs, NJ Transit President and CEO Kris Kolluri outlined efficiency measures, including $58 million in reductions through a 4 percent cut in overtime and the elimination of at least 100 administrative positions via attrition. The budget also leverages $40 million in new revenue sources, such as property sales.
State assistance to the agency is set to decline by 40 percent to $87 million, making NJ Transit increasingly reliant on alternative funding sources. The budget incorporates $815.5 million from the corporate transit fee which is a 2.5 percent tax on the business income of New Jersey corporations with more than $10 million net income. This funding will help offset the depletion of nearly $760 million in federal COVID relief funds.
Absent a renewal, the surtax is due to expire at the start of 2029. Business groups have railed against the fee, noting it leaves New Jersey with the highest state corporate tax rate in the nation for high-earning firms.
Kolluri reaffirmed NJ Transit’s commitment to enhancing the rider experience, despite cumulative fare hikes totaling 18 percent since last summer. The budget supports long-term investments in infrastructure, including the replacement of 1,000 buses and 250 rail cars, aimed at improving reliability and reducing mechanical issues.
The fiscal year begins on July 1.
