Thu 11/11/2021 12:49 PM
Share this article:
Relevant Document:
Agenda/Meeting Documents

During a Wednesday, Nov. 10, meeting, New Jersey Transit, or NJT, board members raised concerns about the agreement announced this week by the governors of New Jersey, New York and Connecticut over how the states will divide some $14 billion in federal funding aimed at offsetting pandemic-related mass transit revenue losses, saying the deal appears to shortchange New Jersey by about $1 billion.

Under the agreement announced Tuesday, Nov. 9, New York will receive $10.85 billion, New Jersey $2.66 billion and Connecticut $474 million. In announcing the deal, Gov. Phil Murphy said that the agreement would enable the state to “ensure a reliable and safe commute as workers return to their offices,” and underlined the importance of the region’s mass transportation system to its economic recovery.

The funding was provided to the region through the Coronavirus Response and Relief Supplemental Appropriations Act, or CRRSAA, and the American Rescue Plan Act, or ARP. During the meeting, NJT President and CEO Kevin Corbett said the agreement “ensures this critical federal funding is now available to support the region’s public transit system,” which he called the “backbone” of the state economy.

Corbett said NJT’s use of CARES Act funding has shown that federal funding has enabled NJT “to maintain full service without having to lay off or furlough workers.” “As we continue to recover and ridership continues to grow, this funding will give us the ability to maintain and enhance current service levels,” he added. During the meeting, Corbett told the board that recent upticks in ridership and usage across NJT facilities represent “extraordinarily encouraging trends.”

Board member James D. Adams said he is glad that an agreement is reached with neighboring states on the funding but is “looking forward to the explanation of how we went from asking for $3.6 billion to $2.66 billion. I am sure there is a very good explanation,” he added.

Board member Bob Gordon shared Adams’ concerns, saying that under a suggested Federal Transit Administration funding formula the state would receive $3.6 billion and the settlement appears to be for $2.66 billion.

Officials from the administration of Gov. Phil Murphy has said the $1 billion gap would be made up with $363 million from Philadelphia-South New Jersey-Delaware region Covid-19 funding, $75 million from supplemental federal funds authorized for New York State and an application for an additional $400 million in supplemental federal Covid-19 transit grant funds, according to press reports. However, Gordon said he understood those funds would be available independent of the agreement with New York and Connecticut announced this week.

“So it seems to me we are still down a billion dollars; a billion dollars can electrify a lot of buses and finance important projects,” Gordon said. He added that he looked forward to “hearing whether we are in fact down a billion dollars and the plans for filling the gap.”

NJT Chairwoman Diane Gutierrez-Scaccetti, the New Jersey Department of Transportation commissioner, defended the agreement. “I understand how some of our board members feel we are still in a negative position, but we are not. We will achieve and have money available to us that will carry NJ Transit well into the future coming from the relief funds provided to us from Congress.”

The $14 billion in funding has been held up as the three states sought to come to an agreement on how to split the funding. While New Jersey and New York sought to rely on funding formulas used previously based on FTA guidance, New York has developed its own plan with additional funding to compensate for losses at New York’s Metropolitan Transportation Authority, or MTA.

Gutierrez-Scaccetti said it is “important to note that there was no formula provided for the ARP funds and that was part of our discussion. … I wish FTA would have provided a little more guidance on the ARP funds; it left it to an open discussion regionally, and this is a tough region for mass transit. There are many, many needs,” the chairwoman added.

Gutierrez-Scaccetti said New Jersey is nevertheless “in a good position coming out of the federal process,” and “the result was what we anticipated, and we will get every dollar that New Jersey deserved out of the process.”

During an Oct. 29 NJT Board Administration Subcommittee hearing, NJT officials presented financial highlights, including the status of Covid-19 funding, that showed the mass transit agency had completely drawn down its $1.423.6 billion CARES Act funding authorization and the $68.1 million in available CRRSA funds and had $215 million available under the ARP. The presentation said that an additional $1.4 billion in CRSAA funding and $2.1 billion in ARP funding would be available after reaching an agreement with New York and Connecticut on how to split the funding. The presentation also showed that NJT spent about $100 million in CRSAA and ARP funding during the current fiscal year.

At the Oct. 29 subcommittee hearing, officials did not directly respond to questions about how much money is at stake in the discussions with neighboring states, and Corbett said the entire assignment of funding would not be released by the federal government until the three states reached an agreement on how to divide the funding. He noted that the federal funding formula used in the past was a suggested formula and not a law.

Corbett acknowledged that there may be “extenuating circumstances” that justified New York’s seeking additional funding from that which it would have gotten under previously used formulas, but added it should not come at the expense of New Jersey or Connecticut.

During a Nov. 1 press conference, Gov. Phil Murphy vowed that his administration is “going to make sure we get our fair share” on behalf of commuters and the state budget.

Republican State Sens. Steven Oroho and Declan O’Scanlon criticized the deal, asserting that New York’s initial proposal, presented in in July, would have shifted $673 million in funding that would have gone to NJ Transit under the FTA formula to the MTA and that under the final deal, New Jersey appears to have given up $1 billion.

“Instead of refusing the premise of an outrageous proposal, the Murphy administration folded and agreed to give New York everything it wanted and more. NJ Transit farepayers and New Jersey taxpayers will suffer as a result,” Oroho said. O’Scanlon called it “mind-boggling that the negotiations went from New York asking for an extra $637 million to the Murphy administration giving them $1 billion.”
Share this article:
This article is an example of the content you may receive if you subscribe to a product of Reorg Research, Inc. or one of its affiliates (collectively, “Reorg”). The information contained herein should not be construed as legal, investment, accounting or other professional services advice on any subject. Reorg, its affiliates, officers, directors, partners and employees expressly disclaim all liability in respect to actions taken or not taken based on any or all the contents of this publication. Copyright © 2021 Reorg Research, Inc. All rights reserved.
Thank you for signing up
for Reorg on the Record!