The New Jersey Transit Authority yesterday approved a $1.29 billion fiscal 2009 capital plan and a $1.7 billion operating budget for the same year.

While the capital program is equal in size to last year's plan, the authority's operating budget will increase overall by $100 million compared to its fiscal 2008 budget, which ended June 30.

To keep the agency's infrastructure up to speed, officials will spend $1.29 billion for capital maintenance, rail improvements, and system expansions. Roughly 67% of the capital plan focuses on state-of-good-repair projects, N.J. Transit executive director Richard Sarles said at the agency's monthly board meeting.

One of the big-ticket expansion items would be $137 million for the new $7.6 billion passenger rail tunnel that will run through the Hudson River, connecting Newark to Manhattan's Pennsylvania Station. Construction on the project will begin in 2009 and officials anticipate completing the tunnel, called the Access to the Region's Core, or ARC tunnel, in 2017.

In addition, the authority's light-rail extension in Hudson and Bergen counties will receive $15 million.

The $1.29 billion of capital funds will come from $625 million of bonds issued through the state's Transportation Trust Fund Authority. The TTFA is gearing up for a $1.4 billion to $1.5 billion deal set to price in August or September, state transportation commissioner Kris Kolluri said. Additional support will come from federal transit and highway funds.

The board also approved a plan to remarket $360 million of light-rail bonds that the New Jersey Economic Development Authority sold in 2003 on behalf of N.J. Transit to refund the auction-rate securities into fixed-rate debt or convert the securities into variable-rate mode. The EDA has already approved the transaction.

Kolluriand Sarles said that rising fuel costs are a concern for the authority. Officials anticipate fuel and power costs to reach $137.3 million this year, yet that amount could increase depending on fuel prices. The budget incorporates a 6.5% increase in diesel fuel prices.

"We're watching commodity prices as closely as any working family does in New Jersey," Kolluri said. "They look at their fuel prices and the electricity prices and adjust their business model accordingly and we have to as well."

The $1.7 billion fiscal budget does not include any new fare increases, but does incorporate $60 million of increased support from the state's coffers and a 20% cut within New Jersey Transit's administrative operations, generating roughly $40 million in savings. Yet the agency may need to adjust revenues or expenditures during the year to accommodate rising fuel prices.

"The volatility of diesel fuel may require additional business actions in the upcoming fiscal year," Sarles told the board.

The spike in energy costs has pushed motorists onto New Jersey buses and trains. Throughout the system, ridership increased by 4.6% in April and May compared to the same time frame last year, according to Joe Dee, a N.J. Transit spokesman. January through March brought in a 3.8% increase in ridership over the first three months of last year, Dee added.

The $1.7 billion operating budget consists of $780.2 million of anticipated revenue, $358.2 million of funds allocated from the state's operating budget, $475.7 million of state and federal reimbursements, and another $90.4 million of commercial revenue.

NJ Transit is the country's largest statewide public transportation system, with 240 bus routes, three light rail lines, and 11 commuter rail lines providing 865,000 weekday trips. The authority links major points in New Jersey, New York, and Philadelphia.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.