Gov. Josh Shapiro, recalling last year’s quick rebuild of the collapsed I-95 bridge, arrived in Philadelphia on Friday to announce he would redirect $153 million in federal highway funds to SEPTA, averting a major toll augment scheduled for Jan. 1.
The money provides a fiscal cushion for the sixth-largest mass transit system in the U.S. after the Pennsylvania Legislature failed to adopt Shapiro’s proposal for a long-term augment in public transit subsidies.
“I want to step up and create a bridge with the time and space so that the House and Senate can work together to work together on the issue of mass transit funding,” Shapiro said at a news conference at the Frankford Transportation Center attended by Mayor Cherelle L. Parker and a number of elected and appointed officials of the Philadelphia region.
Earlier this month, SEPTA decided to implement a 29% across-the-board fare augment, followed by deep service cuts next summer, as the agency grapples with what officials call an “unprecedented” post-pandemic financial crisis. . It faces a recurring deficit of $240 million a year.
While Shapiro’s efforts halted the 21.5% fare augment expected on January 1, passengers will still face a 7.5% augment on December 1. Shapiro said the federal cash injection would limit service cuts, but did not provide further details.
SEPTA, weighed down by high inflation, the end of federal pandemic aid and fewer ridership due to remote work, says it needs fresh (and predictable) state funding to maintain operations and retool service for the changing needs of today’s riders. Other transit agencies in Pennsylvania and across the country face similar fiscal challenges.
Months, not years of stability
Since the 1980s, states have used a move pioneered by Shapiro, known as “flexing,” to lend a hand transit agencies by taking money earmarked for highway projects.
During a similar period of transit risk in 2005 Democratic Gov. Ed Rendell redirected $412 million in federal highway funds to keep buses and trains running in southeastern Pennsylvania and Pittsburgh for two years. SEPTA’s then-$49.2 million deficit – roughly equal to today’s inflation-adjusted gap – was immediately eliminated.
SEPTA welcomed the momentary support as a respite from the “death spiral” of skyrocketing fare increases and drastic service cuts, but acknowledged it still needs to have a constant source of fresh funding for state transit agencies.
Flex is a momentary solution, but it will give SEPTA the lend a hand it needs through June 30, said Erik Johanson, senior director of budgets and innovation at the agency. “We are not looking for special financing,” he said, although he is grateful. “It buys you months, not years.”
Robbing Peter to pay Paul?
Senate Majority Leader Joe Pittman (D-Ind.) and the caucus’ chief budget negotiator said in an interview before Shapiro’s announcement that he “appreciates the governor’s need to take care of his own political backyard,” but that using federal funds earmarked for road infrastructure projects elsewhere does not will lend a hand Republicans and Democrats find a long-term solution.
“Bending these dollars, No. 1, sends a signal that the governor cares more about transit than infrastructure, and No. 2 doesn’t seem interested in sitting down and thinking about how we can work together to find real solutions to these problems,” Pittman added. “Robbing Peter to pay Paul is not the solution.”
State Senate Republicans blocked Shapiro’s proposal to raise $1.5 billion over five years for transit operations by allocating more sales tax revenue to the Public Transportation Trust Fund. SEPTA, as the largest system, would receive about $161 million annually under this plan.
The state House, which has a Democratic majority, has passed bills providing the money three times, but they have stalled in the Senate, in part because of internal disagreements among Republicans who control the chamber over how to pay it.
First, GOP senators wanted fresh transit funding to be tied to fresh road and bridge funding as part of an overarching deal. Shapiro agreed to work on this approach.
Senate Republicans say the sales tax alone is not enough to offset transit funding problems, and the state has something to worry about because costs continue to outpace state revenues. Pittman began to gain popularity by using arcade games – the slot machine-like ones that appeared in convenience stores, bars and corner bodegas – as a revenue source. Democrats have not proposed any other alternative plan — skill games or otherwise — to find fresh sources of revenue, Pittman added.
But the state Senate Republican caucus is divided over what tax rate to charge on skill games, whose owners and producers want to pay less, and land-based casinos, which are highly taxed and want upstart competitors to pay more.
Shapiro said he is open to the possibility of using arcade games as a revenue source. “But the Senate didn’t do it,” the governor said Friday. “I’m not here today to point fingers because I’m just stating the facts.”
SEPTA’s financial collapse is a “crisis of its own making,” Senate President Pro Tempore Kim Ward, the chamber’s top Republican, said of Shapiro, arguing it was a result of his own priorities during state budget deliberations.
“Gub. “Shapiro and House Democrats chose education over mass transit by approving the largest-ever budget increase for a traditional education system that continues to throw Philadelphia children into failing schools,” Ward said. A state court ordered both Democrats and Republicans to equitably invest more money in different districts after ruling the long-running system unconstitutional.
Finding money
SEPTA’s $153 million will come from seven different interstate infrastructure projects across the state, state Transportation Secretary Mike Carroll said: on I-79 in Mercer County; I-80 in Columbia County; I-95 in Philadelphia; on I-83 in York County; two I-80 projects in Jefferson County and another on I-70 in Washington County.
Changing funds from those projects to SEPTA must be approved by the Delaware Valley Regional Planning Commission, the federally designated metropolitan planning organization that sets the state’s transportation improvement plan, Johanson said.
Then the Federal Highway Administration and the Federal Transit Agency must agree, and the money is transferred to the FTA and transferred in the form of a preventive maintenance grant, which allows federal money to be spent on local operating expenses, he said.
“Projects will only be delayed, not canceled,” Carroll said, adding that a bid for the work has not yet been announced.
However, in Pennsylvania and other states with gigantic urban centers in rural areas and enormous needs for both road and bridge repairs and public transportation, there were often difficulties in financing transportation, which was usually not enough to keep everyone cheerful.
Rendell faced political blowback from Republican lawmakers when he exercised the flex option in 2005 and again in 2010, when he redirected a smaller amount of highway money to the struggling Pittsburgh Transit Authority. This move seemed to pit rural drivers against urban transport users. At some point, laws were introduced prohibiting such transfers.
Shapiro reminded several hundred people at the bus depot that his administration had negotiated with both parties in additional state funding totaling $330.5 million for roads and bridges.
Naomi Wildflower, a social worker from Kensington, testified Thursday about the city council’s resolution in support of the malleable arrangement, which was passed. Her family doesn’t have a car.
“Even though I rarely use state highways, a huge portion of my tax dollars go to them,” she said. “Therefore, I am asking Governor Shapiro to use highway flex funds to support the hundreds of thousands of Pennsylvanians who rely on SEPTA, even as many more Pennsylvanians do not use it at all.”
