Transit agencies push for more state funding to avoid drastic cuts

Transit agencies and development agencies made the pitch Tuesday for dedicated transit funding in Pennsylvania, but one Republican legislative leader said that could be a hard sell to legislators in rural communities.

During a state House Transportation Committee hearing in Philadelphia, leaders of the state’s largest transit agencies stressed the need to support and expand transit services to continue economic development. Development leaders, especially in the Philadelphia area, said transit is vital for residents to get to work, entertainment and necessities such as food and medical treatment.

The Legislature is looking at several bills to increase funding for transit, which has been relying on increased federal grants during the COVID-19 pandemic that were designed to keep systems running when ridership dropped substantially. Some ridership has returned, but many agencies remain substantially below pre-pandemic ridership, and the extra funds will run out in the next few years.

Among the possibilities is a proposal to increase the share of the state sales tax that goes to the Pennsylvania Public Transportation Trust Fund from 4.4% to 6.4%. That would generate an additional $295 million for the fund without increasing taxes. Another possibility is legislation that would allow local communities to levy their own taxes dedicated to transit.

Without the increase, the Southeastern Pennsylvania Transportation Authority around Philadelphia will face substantial cuts beginning next year, CEO Leslie Richards told the committee. Pittsburgh Regional Transit CEO Katharine Eagan Kelleman said her agency is “in the same ocean, just maybe on different boats” with the crisis in this area looming in 2026 or 2027.

If the share of the sales tax for transit was increased as proposed, it would add about $190 million a year for SEPTA, $66 million for PRT and $39 million for other agencies statewide.

Without it, SEPTA would face a shortfall of $240 million next year that would result in service reductions, Richards said.

“We are on the brink” of entering a “death spiral” without additional funding, Richards said. “We passed our last budget without making any cuts. We will not be able to do that again.”

As she has in the past, Richards stressed the importance of SEPTA to the state economy, noting that 41 of the state’s 667 counties benefit from SEPTA spending annually. She estimated the Philadelphia region would lose $134.3 million in income, sales and business taxes; $112 million in property taxes; and $8.4 million in real estate transfer taxes annually if it has to follow through with service cuts.

There also would be another $171 million a year what she called “social costs,” $60.3 million in traffic accidents; $16.6 million in increased air pollution as a result of more people using private vehicles; $39.1 million in costs to drivers for operating private vehicles; and $55.1 million as a result of a 30% increase in fares.

Those costs would be substantially more than the $240 million a year requested for the transit trust, she said.

“This is real money” the region would lose, she said. “You don’t have to be an economist to understand [ increasing the trust fund] is a good deal.”

Kelleman and Richards noted that the loss of passenger revenue has hit all transit agencies, but cities such as Chicago, New York City and Boston have taken steps to increase local funding. Pennsylvania agencies are missing out on billions in federal stimulus funds for capital projects because those require a 50% match in local funds that Pennsylvania agencies don’t have, they said.

“While our costs have gone up, our funding has not,” Kelleman said. “It’s not an option for us to go back to anemic service. We are ready to meet these challenges, but we need the funding.”

Paul Levy, president and CEO of Philadelphia’s Center City District, said the area has recovered well from the pandemic and is attracting more new businesses than before 2019. SEPTA service is key to that continuing, he said.

“If we do not get the requested funding for SEPTA, we start losing jobs,” he said. “We see SEPTA as essential to the future of Center City.”

State Rep. Kerry Benninghoff, R-Centre County and the minority chairman of the committee, said he understands the importance of transit in metropolitan areas and realizes some form exists in all counties. But he said legislators from rural areas may have a hard time supporting huge increases for agencies that only serve a small number of their residents.

Benninghoff also questioned the fares the agencies charge. Richards said about 20% of SEPTA revenue comes from fares now, compared to 37% before the pandemic, and Kelleman said PRT gets 12% from the farebox, compared to 20% before COVID-19 reduced ridership.

“These issues are at the forefront of the minds of many of the rural members,” Benninghoff said. “We still have to get a majority of members to vote in favor.”