Fifth of a Series: SEPTA Hopes for Good News

I noted in my previous report that New Jersey Transit (NJT) will get a reprieve, on account of a new tax on the largest businesses in the State. That tax will not benefit the agency this year, but only for the following four. After that, NJT could again have an unsettled future. Its neighbor is the Southeastern Pennsylvania Transportation Authority (SEPTA), the agency that serves Philadelphia and its suburbs in Pennsylvania. The two agencies connect in many places, including their trains at Trenton. In addition, NJT buses from various South Jersey points bring riders to Center City, where many connect with SEPTA’s buses, regional trains, and light rail lines.

The temporary nature of the COVID-19 relief money that Congress had voted to give transit providers for operations during the height of the pandemic is now making itself felt to transit managers and riders, and to the elected officials in the state capitals and elsewhere who help pay the operating expenses for the transit in their states. In SEPTA’s case, that agency first noted a problem for the 2023-24 fiscal year that recently ended, as the money started to run out. As I reported in this series, New York’s MTA put a package together that should keep that agency going, while next year, when the COVID-19 money runs out, and for the next three years after that, there should be enough money to keep running most or all of NJ Transit, but the recent dilemma will return in less than five years, unless state government steps in permanently.

Head Start on Trouble

As the SEPTA Board approved the agency’s budget for the fiscal year that ended recently, a news release issued on June 23, 2023 warned: “Fiscal Cliff Rapidly Approaching as Federal COVID Funds Run Out; State Assistance Needed to Avoid Significant Service Cuts & Large Fare Increases” and “This will be the last budget year before SEPTA hits a fiscal cliff that would result in significant service cuts and large fare increases.” The agency released a 147-page operating budget proposal, which called for $1.33 billion in operating subsidies (at 63) and a 126-page capital budget proposal with projections through FY2035.

While the agency touted efficiency measures and careful spending, the June 22 release warned: “The $1.69 billion FY 2024 Operating Budget uses SEPTA’s final installment of federal COVID relief funding that has helped to avoid service cuts and fare increases associated with pandemic-induced revenue losses. The federal COVID relief funding is forecast to be exhausted in April 2024, and SEPTA will face recurring structural deficits exceeding $240 million starting in Fiscal Year 2025. Without additional state funding for SEPTA’s everyday operating expenses, SEPTA will have to fill the budget gap by cutting service and raising fares for customers.”

Moving Forward to 2024

According to a Feb. 6, 2024 report by Cory Sharber on WHYY, Philadelphia’s NPR station, Gov. Josh Shapiro expressed concern about transit funding in general and money for SEPTA specifically as budget season began. He called for $161 million in additional State investment for SEPTA and $282.8 million for transit across the state. Sharber reported: “Shapiro has been facing calls from local communities and federal lawmakers to increase SEPTA’s funding as it faces a $240 million shortfall. If the transit agency can’t secure that funding, Leslie Richards, SEPTA’s CEO and President, has said service could be cut by 20% and fares increased by as much as 30% this fall.” He quoted Shapiro as saying: “Based on our discussions with SEPTA, if you adopt my proposal, they will not cut service or raise fares, and they’ll have a concrete plan for a cleaner, safer public transit system that creates economic opportunity in southeastern Pennsylvania.” Nonetheless, Sharber also mentioned that “SEPTA will have to step up on some things the governor finds lacking.” Those included cleanliness and safety problems.

The prospects were not looking good at that time. Heydan Mitman reported for the NBC station in the city on January 11: “Officials had the chance to provide additional funding to SEPTA in last year’s budget. There was an initiative that would have provided an additional $190 million to SEPTA that would have increased SEPTA’s share of state sales tax revenue from its current level of 4.4% to 6.4%. But they didn’t do it.” According to the report, SEPTA warned that fare increases could be implemented as soon as September, with service cuts being phased in, starting at that time.

SEPTA was undeterred. Despite the financial threat and in anticipation of that hoped-for level of funding from Harrisburg, SEPTA announced its FY2025 budget on June 27, with links to operating and capital budgets. The total budget approved by the Board was $2.6 billion; $1.74 billion for the operating side and $924 million for the capital side. However, the agency warned: “The Authority is projecting a $240 million deficit this year due to the exhaustion of federal COVID relief funding, and SEPTA’s budget assumes passage of Governor Shapiro’s statewide transit funding proposal. If fully enacted, the plan—Pennsylvania’s first transit operating increase in more than a decade—would invest an additional $283 million annually to support vital transit service across the Commonwealth, including $161 million for SEPTA.” At that time, the legislature had not approved a budget for the governor to sign.

Legislature Falls Far Short

This year’s state budget was signed into law on July 11. Concerning funding for SEPTA during the coming year, Marco Cerino’s headline in the July 19 edition of the Philadelphia Tribune seemed to say it all: “Pa. Budget hands SEPTA a loss. How will they make up for it?” Cerino began his report by saying: “Despite the General Assembly taking 11 extra days to pass the new budget for Pennsylvania this month, SEPTA received just $51 million of the promised $160 million to fill its looming budget shortfall.” Cerino reported that the legislature was not willing to reallocate some sales tax revenue toward transit, so the measure did not make it to Shapiro’s desk. Cerino quoted House Speaker JoAnna McClinton saying in a statement: “House Democrats fought for additional SEPTA funding as part of the state budget and were able to make a modest step toward providing SEPTA with the needed funds by securing $51 million. We remain committed to addressing this issue that impacts countless communities across the commonwealth.” At this writing, it appears that the agency will not have the money to hire the cleaners, police and other security staff who could address the concerns about safety and cleanliness that Shapiro and riders raised. 

Gilllian McGoldrick reported on the winners and losers in the state’s budget for the Philadelphia Inquirer on July 15. One set of losers are the state’s low-wage workers, as their minimum wage remains at the longtime Federal figure of $7.25 per hour. Regarding SEPTA, she reported: “Public transportation will get a one-time $80.5 million infusion of state money for operating expenses, but transit systems are left hoping that lawmakers will pick the issue back up in the fall to offer more. SEPTA, which is struggling financially, will get only about $53 million as a temporary holdover payment.”

It’s Politics, Again

While most Northeastern states vote consistently for Democrats, Pennsylvania is a “purple” state. Gov. Shapiro (according to The New York Times, on Vice President Kamala Harris’ short list as a running mate for President) is a Democrat, and that party narrowly controls the Assembly by a margin of 102 to 100, with one vacancy. Republicans are stronger in the Senate, leading 28 to 22. Historically, Republicans oppose transit funding, while Democrats support it, a reasonable expectation, since most transit serves cities, where Democrats dominate, and it is scarce or nonexistent in less-populated Republican strongholds.  Philadelphia and Pittsburgh are the only places in the state that have local rail transit, and the bus systems in smaller cities and towns in the state are limited in size.

In her report for the Inquirer, McGoldrick said: “Republican leaders originally said they were open to setting aside funds for mass transit—as long as it included more funds for roads and bridges. But that idea was removed from the table just days before the deal was finalized, said Rep. Morgan Cephas (D-Philadelphia), who chairs Philly’s delegation to Harrisburg and helped get some money for the budget deal.” She also quoted Cephas as saying: “One of the things we’ve been adamant about, particularly myself as the Philadelphia delegation chair, is that we’re not leaving Harrisburg unless we get some type of down payment to start the conversation to ensure that mass transit is made whole and that there is sustainable funding.”

Regardless of Cephas’s intentions and those of other Philadelphians, it’s a long path from “some type of down payment to start the conversation” to enough money in the bank to keep service going at current levels, not to mention money for improvements. The next opportunity could come in September, about when the interim payment that the legislature authorized runs out.

The Delaware Valley Association of Railroad Passengers (DVARP), which advocates for better rail service on SEPTA, issued a website alert that said: “PA budget gap leaves transit agencies short. SEPTA is listed as a loser in the deal and may have to cut services.” DVARP also cited an article by McGoldrick and Thomas Fitzgerald in the July 12 edition of the Inquirer that reported the $240 million shortfall and quoted Shapiro as calling the appropriation a “temporary solution.” The story also reported that the Transit for All Pa! Coalition said that many transit agencies in the state still face “catastrophic service cuts and fare increases.” I reached out to SEPTA and DVARP, but neither returned my requests for comment.

Will SEPTA riders be forced to endure a fare increase along with service cuts this fall? At this point, it appears likely, but not completely certain. At the last minute, New Jersey’s elected officials decided to keep NJ Transit going, but it’s a reprieve, not a permanent change. Will Pennsylvania’s elected officials give the transit that serves Philadelphia and its Pennsylvania suburbs a reprieve, too?

More will be known in September. In the meantime, I will report on the financial situation faced by WMATA in the next article in this series.

David Peter Alan is one of North America’s most experienced transit users and advocates, having ridden every rail transit line in the U.S., and most Canadian systems. He has also ridden the entire Amtrak and VIA Rail network. His advocacy on the national scene focuses on the Rail Users’ Network (RUN), where he has been a Board member since 2005. Locally in New Jersey, he served as Chair of the Lackawanna Coalition for 21 years and remains a member. He is also a member of NJ Transit’s Senior Citizens and Disabled Residents Transportation Advisory Committee (SCDRTAC). When not writing or traveling, he practices law in the fields of Intellectual Property (Patents, Trademarks and Copyright) and business law. Opinions expressed here are his own.