NEWARK — NJ Transit may increase fares on buses and trains as early as May to help absorb a $33 million funding cut from the state and help plug a projected fiscal 2011 deficit of nearly $300 million.

The mass transit agency is currently evaluating administrative savings, and service reductions before calculating expected fare increases.

NJ Transit executive director James Weinstein said yesterday during the agency's monthly board meeting that it is still working on how much a potential fare hike will be. Local news reports indicate officials are looking at a fare increase ranging from 20% to 30% of existing fares. Weinstein declined to say whether that range was accurate.

"There will be a fare hike," Weinstein told reporters after the meeting. "What are the dimensions of that fare hike remain to be seen because it's going to be a function of what we can do on the cost side of the equation."

In 2007, the system implemented a 9% fare increase.

The agency will release a more detailed proposal to balance this year's budget and close the fiscal 2011 deficit of $300 million in the next two to three weeks. Public hearings on the anticipated service changes and fare increase are set for late March. Mass transit riders may begin paying more on buses and trains beginning in May.

"I think we're talking about doing it before the end of this fiscal year," Weinstein said. "It could be as early as May."

Both the state's and NJ Transit's current fiscal year will end June 30.

Last month, officials projected a fiscal 2011 deficit of more than $200 million, as $150 million of one-time revenues from the American Recovery and Reinvestment Act and federal highway funds will end. Yesterday Weinstein said that shortfall has grown to nearly $300 million due to cost escalations in fuel and other operating needs.

In addition, ridership on the system is down by 4% over the prior year. The agency anticipates making service reductions to reflect that downturn.

"If ridership is down 4%, then there may be some adjustments that can be made in the schedules and in the service in that range," Weinstein said. "It seems to me that there's a correlation between ridership and service, especially in challenging economic times."

Speculation grew last week that mass transit fares could increase after Gov. Chris Christie announced his plan to cut the state's aid to NJ Transit by $33 million by June 30. In a special address before the Legislature, the governor said NJ Transit needs to find operating savings, including changes to labor contracts, along with implementing potential fare hikes and-or service reductions. The governor must balance the state's current fiscal 2010 budget, which has a $2.2 billion deficit.

The $33 million cut is a reduction of 11% from NJ Transit's $296 million of fiscal 2010 state aid.

Critics of service cuts and fare hikes point to the state's 10.5-cent gas tax, which has remained unchanged for 22 years.

"We're consistently referring to transit funding as subsidy, whereas when we talk about roads, they are viewed as a right," Tri-State Transportation Campaign advocate Zoe Baldwin said after yesterday's meeting. "And we need to understand that mobility is one of the reasons people choose New Jersey. Our ability to get around by our great road network and by our transit system — that is a huge boon to both our economy and to people who live here. But if we isolate those and look at them as separate, you're going to lose ridership on transit. You're going to increase people driving and you're going to increase congestion."

Weinstein pointed out that tolls on the New Jersey Turnpike increased last year and are set to increase again next year, with the additional revenue helping to fund a new mass transit tunnel that will run from Newark to midtown Manhattan.

Yesterday's meeting was the first board meeting for both Weinstein, who became the agency's new executive director earlier this month, and acting state transportation commissioner James Simpson.

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