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NJ Transit passengers board trains at Penn Station New York. Transit advocates warn that riders could face fare increases of 25 percent or more this year. (Larry Higgs | NJ Advance Media for NJ.com)

NJ Transit commuters should brace themselves for possible fare hikes of 25 percent or more in addition to service cuts, a transit advocate warns, as the agency struggles to close an $80 million budget gap.

And while NJ Transit officials insist a fare increase would be lower than 2010's fare hike and is on the table only as a "last resort," the last time the agency faced an $80 million budget gap, in 1981, it jacked fares by 50 percent over three years and introduced significant service cutbacks.

"It's a safe assumption it will be greater than 25 percent by the amount of revenue needed to fill the hole," said Veronica Vanterpool, Tri-State Transportation Campaign executive director. "The funding structure for NJ Transit is broken. What we need is a new funding structure."

Other factors that could affect a fare increase include the cost to settle expired contracts with 20 unions, which make up more than 9,000 of NJ Transit's 11,000 employees. Many of those contracts expired five and six years ago. However, any fare increase under consideration will include those contract costs, said Nancy Snyder, an NJ Transit spokeswoman.



"We recognize the 2010 fare adjustment was a serious burden on customers," Snyder said. "We would not repeat that level of adjustment, which was required because of years of refusing to make tough choices including retraining costs and adjusting fares to meet needs."

NJ Transit officials confirmed last week that they are considering a fare increase and service reductions to deal with the $80 million hole after Gov. Chris Christie proposed a fiscal year 2016 budget that reduces transportation funding by 8.4 percent.

That announcement was followed by the hiring of Christie spokesman Michael Drewniak as the agency's director of policy and strategic planning, a job created for him that pays $147,400. NJ Transit officials said that new position was funded from vacant unfilled positions.

Nearly 1,100 NJ Transit employees earned more than $100,000 last year, the Asbury Park Press reported this week.



The last fare increase, a 22 percent fare hike in 2010, brought in an extra $115 million. Eliminating off-peak and 10-trip bus ticket discounts, the equivalent of a 46 percent fare increase for non-peak riders, generated another $11.3 million. Another $13.9 million was saved through a 4 percent reduction in service.

Those increases took effect in May 2010 in an effort to close a then $300 million gap.



"If the prior increase yielded $115 million, it would still require an across-the-board fare increase of more than 15 percent to close a gap of $80 million," said David Peter Alan, Lackawanna Commuter Coalition president. That doesn't, however, factor in the cost to settle the expired employee contracts.

In addition to making service improvements, NJ Transit officials are "identifying more than $40 million in budget savings and reductions before considering any fare increase as a last resort," Snyder said.

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But that doesn't mean a fare hike is off the table.



"As we are developing options for the Governor's consideration to help us close a budget gap, we will be putting everything on the table, including fare and service adjustments," Snyder said.



The $80 million budget gap is due to increasing costs, which have been rising for the last five years and continue to rise, Snyder said. She cited health insurance, workers compensation, pension and other benefit costs which are up this year, in addition to expenses for transportation and other contracts.



If the budget gap explanation sounds familiar to long time commuters, that's because budget gaps were the official reasons for fare increases in 2002, to close a $200 million shortfall, and in 2010, to close a $300 million hole and cover increased operating expenses.

To ease the blow to riders, some advocates suggested NJ Transit could phase in a fare increase over several years. An annual 3 percent increase, phased in over three years was suggested by Les Wolff, a New Jersey Association of Railroad Passengers director.



"Remember, the PATH planned a $1 fare increase, but did it a quarter at a time," Alan said. PATH increased fares in 2011, but took the increase over three years to the current $2.75 per trip fare.

Larry Higgs may be reached at lhiggs@njadvancemedia.com. Follow him on Twitter @commutinglarry. Find NJ.com on Facebook.