A state funding plan to close SEPTA’s budget deficit is swimming into view — but very, very slowly, legislators and transit advocates say.
A complicated, contentious deal involving new gambling taxes is still being negotiated. Some lawmakers may not want to take a tough vote before the upcoming presidential and legislative elections, and after the election, the state House and Senate only have two more session days scheduled this year.
“I do not have any sense of legislation that’s being written, or any pending legislation,” said Anselm Sauter, who handles state affairs for the Chamber of Commerce of Greater Philadelphia. “It’s also not the first time that they’ve tried to do this. So it is extremely complex and very challenging to do it in the limited session days they have available.”
“A lot is riding on seeing some progress, this week and next week,” SEPTA spokesperson Andrew Busch said Wednesday.
Without a major, permanent funding boost, SEPTA says it will not only have to hike fares as much as 30%, but also schedule less frequent buses and trains, and possibly suspend some transit lines altogether.
“It’ll impact everyone across all modes,” Busch said. “That’s what we’re trying desperately to avoid — the ‘service cuts’ piece of it.”
Increasing fares and eliminating services would require months of public hearings first. So to be sure the resulting savings come in time to prevent the transit agency from running out of money, it would have to start its emergency planning soon.
For SEPTA workers, transit riders, and their employers, the lack of resolution could make for a scary Halloween — and Thanksgiving, Christmas, and beyond, through January and maybe February — until the legislature finally nails down a broad transportation funding agreement.
SEPTA is already planning some relatively modest fare increases that will go into effect in December. If a long-term funding boost isn’t confirmed quickly, “we would be having to turn around something, probably early next year, that would be a much more drastic plan,” Busch said.
Looking to ‘skill games’ for relief
The Republicans who hold a majority in the state Senate have for months declined to take up a funding proposal from Gov. Josh Shapiro. He wants to increase by $283 million the amount of annual sales-tax revenue allocated for mass transit statewide.
SEPTA and other transit authorities never fully recovered from big drops in ridership during the pandemic, and emergency federal aid has run out, leaving them with holes in their budgets. Shapiro’s proposal would provide SEPTA with an additional $161 million a year and, combined with money from other sources, help it narrow a $240 million annual deficit. SEPTA’s total operating budget is $1.69 billion.
But GOP leaders want to package that funding with additional money for roads, bridges, airports and other transportation infrastructure. Those are a higher priority in their districts, many of which have little transit.
They also say that, even though Pennsylvania’s government has a multi-billion dollar budget surplus, it’s spending tax revenues faster than they’re coming in and needs to balance any new outlays with new sources of cash.
They want to defray the higher transportation spending by regulating and taxing skill games, the legally iffy slot machine-like video games that have become an increasingly common sight in bars and convenience stores.
That means SEPTA’s fate and the broader debate over how to fund transit are now tied to an unrelated set of disputes within the Republican Party over how to structure those taxes.
Past efforts to legalize skill games have foundered on worries about encouraging gambling, concerns that they lead to crime, dueling tax rate proposals, and opposition from casino operators.
A waiting game as Republicans argue
Essentially, skill game regulation is the ask that at least some Republicans want in exchange for agreeing to more transit funding, according to Rep. Ben Waxman, who represents part of Philadelphia in the Democrat-led House.
But the GOP has yet to offer a bill, leaving Democrats and their transit-dependent constituents biting their nails and watching the clock run down on SEPTA’s doomsday preparations.
“The deal for transit is now caught up in the Senate’s inability to find a compromise, an inability to get their own members to support what allegedly we were going to trade,” Waxman said. “It is entirely up to the Senate now to act, and there’s just crickets from that side of the building. We’re in a really, really precarious place.”
“There’s a little bit of a division, as I understand it, in Republican circles as to which proposal to advance,” Sen. Sharif Street said. “They can’t agree within their own caucus how we should go about funding it. I am a little frustrated that I don’t sense a significant enough sense of urgency from the Republican Senate caucus.”
Electronic gaming terminals are controversial among Democrats, too. In March, Philly’s Democrat-led City Council voted to ban them from establishments that don’t have a large eating area and a casino or liquor license. The state Supreme Court is currently weighing whether they should be considered unlicensed gambling machines.
But in his state budget proposal earlier this year Shapiro proposed legalizing and taxing them, saying they would bring in $150 million this fiscal year and double that in the future, Spotlight PA reported. The governor recently reiterated his support for legalization, and Street said there’s enough support from Democrats to get a measure passed.
“Under the right set of circumstances, I could vote for legislation regulating skills games,” Street said. A package of bills that brings needed reforms to that industry while also generating revenue for transit and transportation “makes a lot of sense,” he said.
‘Desperately trying to avoid’ service cuts
Given the lack of action in the Senate, transit advocates say they’re alarmed by the real possibility that SEPTA will have to proceed with deep service cuts, for example by shutting down the Chestnut Hill West Regional Rail line, which historically has had low ridership.
Once a line is mothballed, it can be expensive and “extremely difficult” to restart it, said Busch, the SEPTA spokesperson.
“You’re talking about a lot of maintenance of vehicles and tracks and other infrastructure that you really have to keep up with every day, and know that you’re going to be able to fund,” he said. “We’re really desperately trying to avoid that.”
Some Chamber of Commerce members are concerned about a doomsday scenario in which SEPTA cuts off-peak service, as it did during the pandemic, which would make it difficult for many workers to get to their jobs, Sauter said.
“If it goes there, and that’s certainly an assumption that a lot of employers are taking, that may affect how they make their investments in Pennsylvania, that may affect their ability to access talent, and it may actually require that they make decisions about their business locations,” he said.
State Sen. Nikil Saval said ample and smoothly running mass transit will be essential in 2026, when Semisesquicentennial celebrations, the FIFA World Cup, the MLB All-Star Game and other events are expected to draw millions of visitors to Philadelphia.
“How is that celebration going to take place, on the scale that we want it to, if SEPTA’s lines have been cut and services reduced? That’s not acceptable,” he said. “If the leadership and the administration are unable to come to an agreement on [funding], the effects will be enormous.”
At the same time, Sauter and others said there’s good reason to expect that legislators and the governor will make a deal eventually, and that even if SEPTA starts planning deep service cuts, it will have time to cancel them before they take effect.
SEPTA budget battles often come with last-minute drama. In 2013 the transit agency announced plans to cut up to nine Regional Rail lines before Act 89 became law that November and ushered in a period of relatively financial stability. In 2007, similar to now, SEPTA floated a possible 31% fair hike and mass layoffs before the approval of Act 44 allowed billions in highway toll revenues to flow to transit.