LEGISLATIVE FISCAL ESTIMATE

SENATE, No. 2489

STATE OF NEW JERSEY

217th LEGISLATURE

 

DATED: DECEMBER 7, 2016

 

 

SUMMARY

 

Synopsis:

Includes all disabled veterans in NJ Transit discount program for senior citizens and persons with disabilities.

Type of Impact:

Possible cost increase.

Agencies Affected:

New Jersey Transit Corporation (NJ Transit)

Office of Legislative Services Estimate

 

Fiscal Impact

Year 1 

Year 2 

Year 3 

 

State Cost                                            Indeterminate –See comments below.

 

 

 

 

Indeterminate – See comments below

State Revenue                                     Indeterminate—See comments below.

Indeterminate – See comments below

 

·         The Office of Legislative Services (OLS) lacks sufficient information to determine the fiscal impact of the bill.  It is unclear how many disabled veterans currently use NJ Transit.  It is also unclear how many disabled veterans will use NJ Transit in the future, as the number of disabled veterans who will emerge from future wars and military operations is unforeseeable. 

·         It is difficult to determine the financial condition of NJ Transit in future years and the constraints that a reduced fare for all disabled veterans will place on NJ Transit’s budget. Therefore, the bill’s fiscal impact on NJ Transit is indeterminate.  NJ Transit is not a for-profit corporation, and any limitation on its ability to collect fare revenue cannot be accommodated through a reduction in profits.  A decrease in fare revenue as result of the reduced fares to all disabled veterans is expected to require either an increase in State General Fund support, an increase in non-fare revenue, or a decrease in internal costs or reduced service levels in order to balance NJ Transit’s budget.

 

 

BILL DESCRIPTION

 

      Senate Bill No. 2489 of 2016 includes all disabled veterans in the NJ Transit discount programs for senior citizens and persons with disabilities.  Under current law, the NJ Transit provides reduced fares for senior citizens over the age of 62 and persons with disabilities.  A disabled veteran is only eligible for the program if the United States Department of Veterans Affairs has determined that the veteran has a disability rating of 70 percent or greater.  This bill provides that all disabled veterans are to be eligible for the reduced fare program.

      For the purposes of the bill, a disabled veteran is any veteran who is eligible to be compensated for a service-connected disability from war service by the United States Department of Veterans Affairs or who receives or is entitled to receive equivalent compensation for a service-connected disability which arises out of military or naval service and who has submitted sufficient evidence of the record of disability incurred in the line of duty to the Adjutant General of the New Jersey Department of Military and Veterans' Affairs.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS lacks sufficient information to determine the fiscal impact of the inclusion of all disabled veterans in the NJ Transit discount fare program.  It is unclear how many disabled veterans currently use NJ Transit.  It is also unclear how many disabled veterans will use NJ Transit in the future, as the number of disabled veterans who will emerge from future wars and military operations is unforeseeable. 

      It is difficult to determine the financial condition of NJ Transit in future years and the constraints that a reduced fare for all disabled veterans will place on NJ Transit’s budget. Although the bill’s fiscal impact on NJ Transit is indeterminate, NJ Transit is not a for-profit corporation, and any limitation on its ability to collect fare revenue cannot be accommodated through a reduction in profits.  It is likely that a decrease in fare revenue as result of the reduced fares to all disabled veterans may require either an increase in State General Fund support, an increase in non-fare revenue, or a decrease in internal costs or reduced service levels in order to balance NJ Transit’s budget.

      Although it is not possible to know the future impact of this bill, it is likely that the bill will eventually result in lost revenue for NJ Transit.  To the extent that the reduction in revenue cannot be made up for with increases in non-fare revenue, it is expected to require additional State costs in the form of an increased operating subsidy, a decrease in State costs through internal operating efficiencies, or a decrease in service.  The amount of revenue that NJ Transit receives from activities other than fares (parking, advertising, business leases at stations, etc.) is approximately 10 percent of the amount of revenue generated by fares.  Other major sources of revenue for NJ Transit include subsidies provided to it from various federal and State sources through the budget process which are not within the power of NJ Transit to increase. 

 

ection:

Authorities, Utilities, Transportation and Communications

Analyst:

Richard Diaconu

Senior Research Analyst

Approved:

Frank W. Haines III

Legislative Budget and Finance Officer

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).