U.S. Public Transit Riders Face Bumpy Road of Fare Hikes, Service Cuts

New Jersey Transit head James Weinstein last week announced steep fare increases, record layoffs and service cuts as he tries to put the agency's fiscal house in order. Public transit chiefs around the country are fighting similar losing battles to make ends meet.

Weinstein, a veteran transportation executive who was a former New Jersey transportation commissioner and chairman of the NJ Transit Board of Directors from 1998 to 2002, assumed the leadership of the third-largest mass transit system in the U.S. in January at an annual salary of $261,324. At the same time, newly appointed Governor Chris Christie vowed to reduce spending to help New Jersey avoid a financial calamity. Christie has blasted NJ Transit as a hotbed of patronage, a claim some experts say is an exaggeration.

New Jersey Transit is taking considerable heat in the media for its fiscal problems, though Weinstein and other state officials have warned that a 25% fare increase was coming. The transit service, which operates between New York and Philadelphia, has a deficit of about $300 million that needs to be plugged. While many transit agencies are in a similar predicament, New Jersey Transit's problems are magnified because it lacks a dedicated government funding source, which officials have argued for years is needed.

"Twenty five percent is off the charts," says Ross Capon, executive director of the advocacy group the National Association of Rail Passengers, in an interview. "We are seeing modest increases in other places."

Beleaguered Budgets

A survey done last year by the American Public Transportation Association found more than 80% of public transit systems have seen flat or decreased funding from local, regional and state sources. Among transit systems facing worsening finances, nine out of 10 transit systems (89%) were forced to raise fares or cut service. That trend shows no sign of slowing.

Base fares on the Washington Metropolitan Area Public Transportation Authority rose a dime, or about 7%, on bus and rail lines at the end of last month. Metro expects to raise fares again in July when the new fiscal year starts and possibly cut service to close a $189 million budget deficit. "The budget situation is really bad this year," Metro spokeswoman Angela Davis said in an interview.

San Francisco's Bay Area Rapid Transportation District, which raised fares by 6% in July, is considering another increase to close a $14 million budget shortfall, according to the San Francisco Examiner. New York's Metropolitan Transportation Authority head Jay Walder recently told reporters that the system's financial condition was so "dire" that bus and subway fares may have to be raised a year earlier then planned.

Officials in Charlotte are raising fares to avoid service cuts, and fare hikes loom in Philadelphia that will be "nowhere near the size" of New Jersey Transit's proposed hikes, according to spokesman Richard Maloney of the Southeastern Pennsylvania Transportation Authority (SEPTA).

Doing Their Best

New Jersey Transit officials say they are trying to make the best of a bad situation. The agency argues that with the proposed increase, fares will be 3% lower than they were in fiscal 1991, based on inflation-adjusted dollars. Since fiscal 2009, rail ridership to New York City is down 3%. Though Weinstein's pay is dwarfed by those given to CEOs in the private sector, it includes some generous benefits, including 25 sick and 25 vacation days, the unused portion of which can be cashed out upon retirement, plus $7,100 in annual contributions toward private life insurance. Oh, and a vehicle provided by the agency.

While Weinstein and other top executives are taking a 5% pay cut, he at least is eligible for bonuses of as much as $10,000 this year, according to minutes of the system's board posted online.

The incentive compensation is for "performance measures, which include safety, customer service (and) financial performance," the minutes say. Oftentimes, private sector CEOs receive bonuses based on their ability to control costs and meet sales and profit targets, so it's likely that Weinstein's compensation package is similarly structured.

"I look forward to hearing the feedback personally from our customers at the public hearings, because we need to understand the on-the-ground impacts for folks, not just how this works on paper," said Weinstein in a press release.

Regardless, he will earn every nickle of his pay.