On May 5, 2025, New Jersey Department of Transportation (NJDOT) Commissioner Francis K. O’Connor, NJ Transit President and CEO Kris Kolluri, and Motor Vehicle Commission (MVC) Acting Chief Administrator Latrecia Littles-Floyd outlined their departments’ proposed FY 2026 budgets before the legislature. Their testimonies highlighted the state’s transportation funding needs, infrastructure priorities, and operational challenges heading into the next fiscal year.
New Jersey Department of Transportation
Capital Program: NJDOT’s FY 2026 Capital Program provides $1.725 billion for state and local bridges, which is an increase of more than $300 million from the previous year. NJDOT prioritizes bridge projects using many factors, including bridge condition, traffic volume, crash rates, regional needs, and funding availability. There are 15 new capital bridge projects and 18 maintenance projects scheduled to be awarded this year.
Electric Vehicles (EVs): Federal funding provided by the National Electric Vehicle Infrastructure Formula Program is at risk of discontinuation. This funding would have provided approximately $104 million to NJDOT to build out the public EV charging network.
Local Aid: NJDOT has awarded more than $3.4 billion in local aid funding, through both state and federal grant programs, for transportation projects that improve our communities without burdening local taxpayers. For FY 2025, the department awarded $17.4 million in funding for Safe Streets to Transit, Bikeways, and Transit Village programs.
New Jersey Transit
Fare Hikes and Corporate Transit Fee: Following a 15% fare increase in FY 2025, NJ Transit plans to implement an additional 3% increase in FY 2026. In total, NJ Transit anticipates that its fare box revenue will increase by $79.7 million, totaling $980.0 million. President Kolluri also highlighted the governor’s proposed Corporate Transit Fee as a key revenue source, projected to generate $815 million in FY 2026. This funding, derived from a 2.5% tax on the business income of New Jersey corporations with more than $10 million net income, is positioned to replace expiring federal COVID-19 relief and prevent significant service disruptions.
Federal Funding: The agency’s proposed FY 2026 budget includes $334 million in federal funds for preventive maintenance—roughly 10.6% of its $3.16 billion operating revenue. While no reductions have occurred to date, the agency remains attentive to potential federal cost-containment options and warned of significant service reductions and drastic cost cutting if the federal government reduces its funding.
Looming Strike: While the agency and train engineers negotiated a contract earlier this year, union members rejected the offer when it was put to a vote last month. The two sides remain at odds over the level of wage hikes, and a strike could happen as early as May 16 if an agreement is not reached.
Capital Projects and Gateway Program: President Kolluri described infrastructure investments with the Gateway Program comprising two major projects that are on time and on schedule: the Portal North Bridge Replacement Project and the Hudson Tunnel Project. There is currently $11.3 billion in commitment from the federal government. The Hudson Tunnel Project builds a new two-track tunnel under the Hudson River between New Jersey and New York City.
World Cup: Investments such as the Secaucus Meadowlands Transitway Project will be instrumental in enhancing transit capacity to and from MetLife Stadium for the FIFA 2026 World Cup.
Motor Vehicle Commission
Acting Chief Administrator Trish Littles-Floyd discussed the MVC’s continued modernization efforts, including the rollout of the Electronic Lien and Title system. While the project is on schedule and within budget, challenges such as stakeholder coordination and integration complexity remain top of mind.
The MVC is proposing a new weight-based registration fee for SUVs and pickup trucks (noncommercial use) to address the disproportionate roadway wear and public health impacts. This would require legislative action.
Additional efforts include enhanced fraud prevention through updated temporary tags and security paper tracking, as well as the creation of a new School Bus Reinspection Team to streamline oversight of newly acquired or out-of-state vehicles.
The FY 2026 transportation proposals reflect a commitment to safety, efficiency, and reliability. As federal support becomes less certain, agencies are emphasizing long-term investments and cross-agency coordination.
Please contact a member of the McCarter Government Affairs team with any questions or to learn more about the budget proposals.