NJT Response to OLS Questions
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Department of Transportation and Motor Vehicle Commission FY 2021-2022 Discussion Points NJ Transit 13. Farebox revenue remains heavily depressed since the onset of COVID-19. The FY 2022 Budget in Brief specifies that the pandemic caused NJ Transit train ridership to decline by 75 percent and bus ridership by 50 percent. • Questions: By mode, when are ridership and farebox revenue expected to fully recover from COVID-19? What is the projected revenue gap in FY 2022 and beyond that is attributable to COVID-19? Response: Annual farebox revenue is not expected to return to pre-pandemic norms of nearly $1,000m until at least after 2025, if not later. The projected farebox revenue gap during FY20-FY25 from the FY21 Budget is shown in column “vs. FY21 Budget” in the table below. NJ Transit Corporation Passenger Revenue by Modes ($ in millions) vs. FY21 vs. FY21 Rail Bus Lt. Rail NJT Budget Rail Bus Lt. Rail NJT Budget FY20 - Actual 426.6 294.8 17.6 738.9 (254.8) 73% 76% 75% 74% (26%) FY21 Budget 583.8 386.4 23.5 993.7 - 100% 100% 100% 100% - FY21 - Projected 109.3 144.5 8.3 262.1 (731.6) 19% 37% 35% 26% (74%) FY22 - GBM* 266.6 308.7 15.4 590.7 (403.0) 46% 80% 65% 59% (41%) FY23 - Prelim 398.4 346.2 18.0 762.7 (231.0) 68% 90% 77% 77% (23%) FY24 - Prelim 455.7 360.8 19.6 836.1 (157.5) 78% 93% 83% 84% (16%) FY25 - Prelim 501.9 366.5 20.8 889.2 (104.5) 86% 95% 88% 89% (11%) *Governor’s Budget Message Note: the FY21 Budget listed above was released in early 2020 and does not account for the substantial and significant impacts of the pandemic. NJ TRANSIT subsequently released a revised FY21 budget which was approved by the NJ TRANSIT Board of Directors in October 2020. The revised FY21 budget is not reflected in the Table above. 14. New Jersey Turnpike Authority public documents stated that the intended purpose of increased authority support for NJ Transit was to eliminate reliance on capital funds to support NJ Transit operating costs. The authority identified an ability to provide an additional $350 million in FY 2021 and an additional $525 million annually thereafter. The FY 2021 budget and now the FY 2022 Governor’s Budget both continue the necessity for NJ Transit capital-to-operating transfers, $461 million in FY 2021 and about $360 million in FY 2022, while not utilizing the full extent of funds committed to NJ Transit by the New Jersey Turnpike Authority. During an FY 2021 legislative budget hearing, the Commissioner of the Department of Transportation stated that the $350 million in FY 2021 was not included in the budget because the authority was holding it in escrow until needed by NJ Transit. The recommended authority support for FY 2022 is just $350 million, a 1 Department of Transportation and Motor Vehicle Commission FY 2021-2022 Discussion Points (Cont’d) $221 million increase, which is less than the amount identified as available pending the authority toll increase. • Questions: Why is this funding not being utilized to eliminate NJ Transit capital-to- operating transfers? What purpose is served by holding funding in escrow, when capital- to-operating transfers continue and NJ Transit operates under a five-year capital plan with significant unfunded needs? Response: The referenced funding from the New Jersey Turnpike Authority (NJTA) is subject to an agreement between the NJTA and the State Department of Treasury which is still pending. NJ TRANSIT’s FY22 Operating budget assumes a $98.8 million reduction in capital funding for preventative maintenance expenses (“capital transfer”). That will bring the capital transfer to a 15-year low. NJ TRANSIT incurs over $500 million in maintenance expenses per year and further capital funding reductions in the capital transfer would create a larger operating budget gap. NJ TRANSIT expects to continue to evaluate opportunities for further reductions to balance operating and capital needs. 15. NJ Transit received more than $2 billion in federal COVID-19 assistance under the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 and the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. The federal government will provide additional significant assistance to NJ Transit under the American Rescue Plan Act of 2021. • Questions: Please detail the amounts NJ Transit anticipates receiving under the American Rescue Plan Act of 2021 and indicate the purposes for which the funds would be used. By what date would the funds have to be expended? Response: The current estimate for NJ TRANSIT’s American Rescue Plan Act (ARPA) allocation is approximately $2B. Note that ARPA is a grant which can be used to reimburse eligible operating expenses. ARPA requires recipients to primarily dedicate funding to payroll expenses (labor and fringe). Other eligible operating expenses include, but are not limited to, propulsion (electricity for trains), revenue vehicle fuel, materials and supplies, contracted maintenance services, custodial and disinfection services, and purchased transportation services. The ARPA grant must be obligated by September 30, 2024 and disbursed by September 30, 2029. • Questions: Beyond filling gaps in farebox revenues, what other uses are planned for federal COVID-19 assistance received in calendar years 2020 and 2021? Please provide amounts to be received from each act, and each federal funding category, and the timing of planned expenditures of these funds. Response: NJ TRANSIT is eligible for grant funding through the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA), and ARPA. These grants do not replace farebox revenue per se and can only be used to reimburse eligible expenses. Eligible expenses include, but are not limited to, propulsion (electricity for trains), revenue vehicle fuel, materials and 2 Department of Transportation and Motor Vehicle Commission FY 2021-2022 Discussion Points (Cont’d) supplies, contracted maintenance services, custodial and disinfection services, and purchased transportation services. In addition to CARES, CRRSAA, and ARPA, NJ TRANSIT also received $30 million from the Coronavirus Relief Fund (CRF), allocated through the Department of Treasury. The CRF funds were used to support eligible payroll expenses. CARES Act CRRSAA* Beginning Balance $1,423,544,405 $1,189,700,000 Jan $0 $0 Feb $0 $0 Mar $0 $0 Apr $0 $0 May $199,996,000 $0 Jun $160,754,817 $0 2020 Jul $0 $0 Aug $124,999,000 $0 Sep $144,998,000 $0 Oct $49,999,000 $0 Nov $49,999,000 $0 Dec $94,999,000 $0 2020 Total $825,744,817 $0 Jan $79,999,000 $0 Feb $79,999,000 $0 Mar $79,999,000 $0 Apr $79,999,000 $0 May $79,999,000 $0 Jun $79,999,000 $0 2021 Jul $79,999,000 $0 Aug $37,806,588 $42,192,412 Sep $0 $79,999,000 Oct $0 $79,999,000 Nov $0 $79,999,000 Dec $0 $79,999,000 2021 Total $597,799,588 $362,188,412 Total Drawn $1,423,544,405 $362,188,412 Ending Balance $0 $827,511,588 *Estimated Beginning Balance 16. In December 2020, NJ Transit met the federal Positive Train Control deadline for its train system. • Questions: Please provide information about the total cost of Positive Train Control implementation. For each contract, please compare original contract amounts and the final amounts after contract amendments. Are there any further implementation costs expected for Positive Train Control? 3 Department of Transportation and Motor Vehicle Commission FY 2021-2022 Discussion Points (Cont’d) Response: In 2011, at the time NJ TRANSIT retained Parsons Transportation Group to implement Positive Train Control (PTC), NJ TRANSIT estimated the total capital costs of the project to be $225 million. In 2017, NJ TRANSIT amended the estimated total capital cost to implement PTC to be $320 million. In 2019, NJ TRANSIT amended the estimated capital cost to implement PTC to be $500 million. As of January 31, 2021, the current total amount that NJ TRANSIT has expended for PTC system implementation is approximately $433.6 million. The cost of implementing PTC has been entirely funded out of NJ TRANSIT's capital budget. NJ TRANSIT is developing the likely recurring annual cost of maintaining the PTC system. NJ TRANSIT is currently performing ongoing compliance work related to the PTC system certification. 17. The 2018 audit of NJ Transit completed by the North Highland Company found that procurement at NJ Transit was "ripe for reform and reinvention." The report noted delays in the procurement process caused by various issues within NJ Transit. Subsequent to the audit release, NJ Transit has implemented changes to its procurement process. • Questions: Please provide information about changes made to improve the procurement process. Please provide data showing how these changes have resulted in cost savings and faster vendor payments. What is the magnitude of annual operating cost savings realized in the last two years from procurement process changes? Response: NJ TRANSIT procurement was an almost completely paper-based process in 2017. Since 2018, the Procurement Department has initiated and implemented the following process improvements: • Released a procurement manual which received praise from both the FTA and FEMA • Established the Procurement Intake Unit, tasked with managing the posting of bid documents and assisting prospective vendors with how to bid on projects, to optimize the solicitation process • Created an Administrative Proceedings Division (APD) dedicated to the vetting and timely resolution of bid protests, requests for reconsideration, review of potential bidder conflicts and