SEPTA would get $165 million in Josh Shapiro’s state budget proposal, staving off service cuts

SEPTA estimates it would initially receive about $165 million in new state money for operating expenses through Gov. Josh Shapiro’s proposal to increase by 1.75% the share of sales-tax revenue allocated to public transit.

That would provide breathing room to avoid service cuts, the regional transit agency said.

“We’d get a good solution for our near-term future,” Scott Sauer, SEPTA’s interim general manager, said in an interview, adding that Shapiro made a good case for transit as an investment in his budget address on Tuesday.

Overall, the increased sales tax share would add $292.5 million annually for mass transit across the state, the Shapiro administration says, an amount estimated to grow to $330 million by the 2029-30 fiscal year.

“We’re going to still sharpen our pencils on our budget and keep looking for efficiencies,” Sauer said. SEPTA reduced its projected deficit to $213 million by trimming $27 million in costs.

The proposed state budget also includes $750 million in additional PennDot funding over five years, earmarked for repairs to highways and bridges. The revenue would come from the Motor License Fund.

In his budget address, the governor made a political pitch aimed at building bipartisan support by tying more transit money to more for highways and bridges.

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He recalled a visit last fall to a repaired bridge over Rife Run in Manheim, Lancaster County. Residents said they got to and from work much faster without detours.

“Just like we repair and maintain the bridges in those rural and suburban communities, we also owe it to Pennsylvanians in Pittsburgh and Lancaster and yes, Philadelphia, who rely on mass transit,” Shapiro said.

“While we’re at it, let’s deliver more funding for our roads and bridges, especially in our rural communities,” he said. “It shouldn’t be either/or; it should be both/and.”

SEPTA officials say that if they don’t get more state dollars from Harrisburg by June 30, they’ll have to cut service by about 20% and raise fares by a similar percentage in the fall. The agency’s budget, which would schedule those moves, is due June 30, as is the state’s.

Shapiro advocated increasing transit’s share of sales tax revenue by the same 1.75% in last year’s budget, but it did not happen.

That proposal passed the state House with wide support from Democrats.

But Republicans who control the state Senate expressed reluctance to tap the sales tax, instead floating a proposal using a new levy on skill games to raise at least some new funds for transit. That idea never materialized amid internal disagreements and intense lobbying from casino interests.

Using the sales tax for more transit funding makes the most sense for several reasons, a senior Shapiro administration official said Tuesday.

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“In part, because the system already exists, so you’re adding to a program,” the senior official told reporters in a budget briefing. “Secondly, costs rise over time, and sales tax [revenue] will grow over time naturally. So you want to align that, rather than [it] just being a flat amount or setting aside.”

Currently 4.4% of sales tax revenue goes to public transit systems statewide, divvied up by a formula based on ridership. Raising that share would not increase the tax rate itself.

“He [Shapiro] already went and robbed $152 million for future funds coming from the federal government to pay for just one mass transit agency,” said President Pro Tempore Kim Ward (R., Westmoreland).

She was referring to Shapiro’s decision last November to flex already committed federal highway money to SEPTA as a temporary fix to stop planned service cuts.

“So mass transit is extremely important for many, many people in Pennsylvania, but I would bet that most of Pennsylvanians drive to work,” Ward said.

Transit agencies also receive state funding from a variety of special revenue funds. SEPTA and others say they need a bump as they try to regain riders from pandemic losses and because inflation has ballooned their costs.

Last year, Senate GOP leaders also said they would support more mass transit funding only if other forms of transportation got more in an overarching deal.

Shapiro said he would welcome that, and he made it more explicit on Tuesday.

Municipal officials and state lawmakers of both parties have said that it’s time to pump more money into highways and bridges, particularly by increasing what PennDot contributes to repairing local infrastructure.

SEPTA budget planners calculate Shapiro’s proposed increase would ensure its fiscal stability for about five years, if enacted.