N.J. Transit Stages Record Raid on Capital Account to Pay Bills

(Bloomberg) -- New Jersey Transit is using a record $505 million earmarked for maintenance and other capital improvements to plug a hole in its operating budget through mid-2018, continuing the years-long practice of raiding that fund to pay for day-to-day expenses.

Even though the commuter rail system has been dogged by delays and crowding, the agency increasingly has drawn from an account intended for upkeep and upgrades. Of the total $7.6 billion tapped by Democratic and Republican administrations since 1990, two-term Republican Governor Chris Christie has shifted $3.4 billion, or 45 percent.

New Jersey lawmakers conducting public hearings into the railroad’s safety and operations have criticized the use of those funds, saying it shows that the agency needs a more generous and guaranteed state subsidy. Christie, who is term-limited and will leave office in January, has twice raised fares and repeatedly dipped into the capital fund to close budget deficits. This year’s figure was 26 percent higher than last year and 9 percent bigger than the previous record.

Nancy Snyder, a New Jersey Transit spokeswoman, said that even after the transfer, more than $500 million will be spent on repairs and maintenance to trains, buses and light-rail cars. The latest capital-to-operating shift “is still under the historical average of approximately 23 percent of our operating budget,” Snyder said in an email.

The transfer comes as New Jersey Transit commuters, most with jobs in New York City, navigate eight weeks of maintenance at Manhattan’s Pennsylvania Station. Work being done by the station’s owner, Amtrak, has caused Midtown direct trains to be canceled on the Morris-Essex route, which serves about 35,000 riders every weekday. Though the first week has run relatively smoothly, thanks to supplemental buses and ferries, New York Governor Andrew Cuomo has told riders to expect “the summer of hell.”

In September, New Jersey Transit had its first fatality in two decades when a train crashed into a barrier in Hoboken, killing a woman on the platform and injuring more than 100 passengers. In April, as Christie was faulting Amtrak’s maintenance of Pennsylvania Station in the wake of two derailments, federal records showed New Jersey Transit had 67 outstanding violation citations, some documenting serious equipment defects.

To contact the reporter on this story: Elise Young in Trenton at eyoung30@bloomberg.net.

To contact the editors responsible for this story: Flynn McRoberts at fmcroberts1@bloomberg.net, William Selway, Stacie Sherman