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On Wednesday, New Jersey Transit officials outlined a preliminary $1.4 billion fiscal-year 2006 budget, which includes a fare increase to help cover the cost of new and expanded services, inflation, fuel and security.

About 90 percent of the FY2006 operating budget will cover service costs; 10 percent, administrative costs.

"We’ve cut $50 million of expenses over the last couple of years and we are working hard to identify more efficiencies," said NJ Transit Executive Director George Warrington in a prepared statement.

The agency plans to increase rail and bus fares an average of 13 percent, but eliminate transfer fares for monthly pass holders who make light-rail or bus connections.

One-way Newark City Subway and River LINE fares would increase from $1.10 to $1.25, and Hudson-Bergen light-rail fares would rise from $1.50 to $1.75.

The fare hikes will help NJ Transit make up a projected $60 million budget deficit. The agency plans to hold public hearings on the fare increase in February.