New Jersey Transit last week announced plans to raise rail and bus fares 25% to generate $140 million of new revenue and help plug a $300 million gap.

The agency plans to implement the fare hikes on May 1. The plan also includes service reductions, including 32 fewer commuter trains and the elimination of 50 bus routes. Officials plan to cut five weekday trains on the Northeast corridor, the system’s busiest commuter line.

The actions will help offset a $33 million cut in state aid for the current fiscal year, which ends June 30, and begin to address a projected $300 million deficit in fiscal 2011. NJ Transit also said it will reduce its workforce by 200 and impose a spending freeze, among other measures, to help generate $30 million of savings.

The changes include reducing NJ Transit’s 401K retirement contributions by one-third and cutting executive salaries by 5%. The agency imposed a fare boost of 9% in 2007.

“These are extremely painful steps, but unavoidable ones. We must close our serious budget shortfall, and we at NJ Transit must do our part by making this the leanest, most efficient agency possible, without compromising safety,” executive director James Weinstein said.

NJ Transit is the third-largest mass-transit system in the U.S, serving nearly 900,000 weekday trips among its 12 commuter-rail lines, three light-rail lines, and 240 bus routes.

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