NJ Transit should operate PATH rail system, New York commission report says

A New York commission has recommended the Port Authority of New York and New Jersey (PANYNJ) turn over operation of the Port Authority Trans-Hudson (PATH ) commuter-rail system to New Jersey Transit, a move that would free up funds for the authority to invest in infrastructure projects.

In a report released last week, the Citizens Budget Commission noted that PATH's growing operating deficits have become a substantial burden on PANYNJ finances. Although the railroad was never expected to be self sufficient, its annual deficit increased from $294 million to $383 million between 2004 and 2013, and is projected to reach $387 million in 2014, according to the report.

In 2013, the deficit represented 62 percent of total expenses. The deficit is offset by PANYNJ allocating revenue from other activities, notably its bridge and tunnel tolls. And the situation is only projected to get worse.

"Although revenues are projected to grow somewhat more rapidly than expenditures due to a 2014 fare increase and to ridership gains, the deficit will still increase and reach a projected $487 million in 2018," the report stated. "Offsetting this loss with bridge and tunnel toll revenue will be a major drain on PANYNJ's overall finances."

The railroad's financing structure is unique among U.S. transit systems in that it relies on only two revenue sources: passenger fares and a cross-subsidy from bridge and tunnel tolls paid by motorists. A more widely used model would involve a third revenue source: a tax subsidy. PANYNJ has no history of receiving tax subsidies.

The commission recommends transferring PATH to NJ Transit, which is supported by state taxes and federal grants and is accountable to state residents. The agency also collects fares and could manage PATH fare revenues while receiving a guaranteed toll cross-subsidy in accord with a formula agreed to by PANYNJ.

"In addition, NJ Transit trains and buses account for about six of every 10 commuters from New Jersey to the Manhattan [central business district], compared to less than three of 10 by PATH train and one of 10 by other PANYNJ service. Combining NJ Transit and PATH operations would place under unified management the fleets serving the large majority of commuters, permitting greater coordination and improved planning for these services," the report recommended.

To read the full report, click here.