NEWARK, N.J. - The head of NJ Transit is recommending a 10 percent fare increase, beginning June 1. The increase, the first since July 2005, would apply to both bus and rail fares.

It would close a budget deficit of about $60 million in the agency's proposed $1.5 billion budget, said outgoing NJ Transit executive director George D. Warrington.

Warrington, who made the recommendation to the agency's board of directors at its public meeting yesterday morning, said the increase was necessary to keep up with inflation as well as rising utility costs and insurance premiums.

He said NJ Transit had cut more than $75 million in costs over the last several years, "leaving very little left to squeeze without impacting service."

The agency would rather increase fares than cut service, he said.

"Given the ridership increases we are experiencing system-wide, we recommend against service reductions," he said.

Warrington said that he would present a more detailed schedule of proposed fares at a Feb. 14 NJ Transit board meeting, and that the agency would hold public hearings in February and March before the board votes on the plan.

A spokesman for Gov. Corzine said the governor recognized that the agency board had to make a difficult decision. "The governor is not pleased with this news, which appears to be necessary to maintain current service levels for NJ Transit customers," spokesman Anthony Coley said.

Warrington said a onetime fare increase would not address the need to adequately fund transit operations in the future.

A state increase in operating support for fiscal year 2007 prevented a fare increase then, NJ Transit spokesman Dan Stessel said.

NJ Transit received a boost of $22 million from the state, bringing the total state aid to $300.7 million. The agency isn't expecting an additional allocation for the 2008 fiscal year.

"Given the budget constraints and difficult choices the state is facing, we are assuming no growth in our level of state support," Warrington said.

"It's been a difficult budget year, and we're working through operating issues," added Kris Kolluri, state transportation commissioner. He said he would expect future fare increases as well.

"A reasonable policy of periodic fare increases, perhaps in alternating years, coupled with alternating-year increases in state appropriations in effect keeps the balance between what the rider pays and what the State of New Jersey pays in reasonable balance," he said.

Fares cover about 44 percent of operating expenses, and the rest is picked up mostly by the state, Stessel said.

System-wide, ridership is up 4.6 percent this fiscal year, the third year of record-high levels.

NJ Transit is the nation's largest statewide public transportation system, providing nearly 857,000 weekday trips on bus routes and light-rail and commuter-rail lines. The company has introduced new rail lines in recent years, including the Hudson-Bergen Light Rail and a new light rail in Newark, as well as new double-decker train cars.