HARRISBURG, Pa. — On Friday, Governor Josh Shapiro announced his plan to allocate over $150 million in federal highway funds to provide a crucial financial boost to Philadelphia’s mass transit system. This decision aims to help avoid imminent service reductions and postpone fare hikes amid a crisis facing several transit agencies across the nation.
The announcement is particularly significant as many transit systems are grappling with serious financial challenges. With the expiration of federal COVID-19 aid, the Southeastern Pennsylvania Transportation Authority (SEPTA), along with other major transit operators, has been struggling to restore ridership levels following the pandemic’s dislocations.
Governor Shapiro, a Democrat, indicated that this $153 million infusion would assist SEPTA in maintaining its current services and deter drastic fare increases while he works toward a broader transportation funding agreement with state legislators. As the sixth-largest transit system in the United States, SEPTA faces a significant annual budget deficit estimated at $240 million.
In anticipation of this financial shortfall, SEPTA had announced plans to increase fares and implement what they described as difficult service reductions set to begin next summer. These potential cuts have raised concerns among local advocates and community leaders, who argue that such changes could have negative repercussions for the regional economy.
The service cuts, set to take effect on July 1, include plans to shorten or eliminate certain routes and to reduce the frequency of bus, trolley, subway, and Regional Rail operations. This restructuring is projected to yield approximately $92 million in savings in the first year alone.
Shapiro reassured that reallocating these highway funds would not compromise any ongoing road infrastructure projects. This strategy is permissible under federal regulations, and similar measures have been taken in the past by former Governor Ed Rendell in 2005 and 2010 to aid transit agencies; such funding shifts are also common in other states.
Earlier this year, SEPTA faced a loss of around $161 million after the Republican-controlled state Senate rejected Shapiro’s proposal for $283 million in new state transit aid. Instead, lawmakers opted for a one-time payment to the state transit trust fund, providing SEPTA with only $46 million.
Republican lawmakers have urged that any additional funding for transit should be accompanied by more substantial investment in highway projects benefiting the broader Pennsylvania area.
Earlier this month, SEPTA proposed an average fare increase of 21.5% starting on New Year’s Day, which would be compounded by another potential 7.5% interim increase. Should these proposals receive approval from SEPTA’s board, riders would face higher fares after the last fare hike in 2017. This increase is anticipated to generate an additional $23 million in the current fiscal year, climbing to $45 million per year starting in 2026.