A hard look at NJ Transit
May 2024 — As states across the country search for new and alternative ways to fund transportation infrastructure projects and improvements, New Jersey is looking to the business community for a dedicated funding source through a proposed corporate transit fee. But business leaders have expressed concerns over driving businesses out of the state as a result.
The recently proposed 2.5% Corporate Transit Fee in Gov. Phil Murphy’s FY25 State Budget would target corporations with net taxable incomes exceeding $10 million to help fund NJ TRANSIT, the state-owned public transportation system serving New Jersey and parts of New York and Pennsylvania. The measure aims to address the agency’s long-standing issues of underfunding and operational inefficiencies and bolster ridership. Notably, the fee spares small and medium-sized businesses, with tax reductions for nearly 2,500 companies.
Those in opposition have noted the increased financial burdens and competitive disadvantages compared to states with lower taxes. The New Jersey Society of Certified Public Accountants (NJCPA) and the broader business community have argued that the tax will jeopardize jobs at the 600-plus affected companies and harm small businesses reliant on larger firms. The proposal, pending legislative approval, has prompted the NJCPA to urge its members to actively oppose the CTF by contacting legislators.
According to Statista, New Jersey ranks third in the United States for total federal funding allocated to public transit, receiving substantial support to enhance its transit infrastructure.
The state also ranks eighth nationally for its past efforts in improving equity and climate outcomes in transportation, as indicated by a recent NRDC and DGA scorecard report. This ranking reflects the state’s investments in public transit, support for electric vehicles, prioritization of active transportation infrastructure, integration of climate and equity considerations into planning, and implementation of procurement practices favoring lower-carbon materials. However, the report suggests ongoing innovation is needed to further advance these goals.
Last month, the NJ TRANSIT board also approved increased fares starting July 1, with revenue from the price hikes expected to exceed $106 million, as cited by New Jersey Monitor. The measure is likely in response to the budget shortfall projected to start in July 2025.
