PA: What's at stake for cash-strapped SEPTA in Gov. Shapiro's budget

Different year, same dilemma.

SEPTA and other state transit systems are bleeding financially, and for two years, Gov. Josh Shapiro and majority Senate Republicans have failed to reach a deal to get new state money for public transportation.

Shapiro, a Democrat, is expected on Tuesday to again highlight the need for a solution in his annual budget speech.

Solving it likely will require a megadeal that also pumps more dollars into roads, bridges, and other parts of the transportation network, according to lawmakers and lobbyists working on the issue.

The missing puzzle piece could come down to revenue from taxing skill games, the pseudo-slot machines proliferating in convenience stores across the state, currently unregulated. That possibility was raised last year after GOP senators rejected Shapiro's call to increase transit's share of the general sales tax.

Many transit advocates agree that things are heading toward a more-funding-for-all-transportation approach and note that the skill-games bills on the table would not generate enough.

They are pushing for a solution, including a campaign to send selfies holding a sign declaring why transit "moves" them. Transit for All PA! and its allies are holding budget address "watch parties" across the state Tuesday.

"Our message is that transit is critical for older folks, students, warehouse workers, people with handicaps all across the state," said Connor Descheemaker, statewide coalitions manager of Transit for All PA!

The stakes

SEPTA says it has whittled down its structural operating deficit to $213 million with austerity measures and is now writing its budget for fiscal year 2026.

The new budget would begin July 1. If Harrisburg does not come up with new funding, SEPTA officials have said, shortly afterward they would need to make across-the-board service cuts of up to 20% and raise fares by about 21%.

The projected deficit is $27 million below last year's $240 million.

"That's nothing to sneeze at by any means, but nobody is breathing a big sigh of relief," SEPTA's interim general manager, Scott Sauer, said in a recent interview.

So financial officials are factoring into the developing budget the possibility that no new money would come from Harrisburg. That would enable the agency to quickly organize required public hearings before cutting service or raising fare hikes — if needed.

Deep service cuts would mean buses, subways, trains, and trolleys run less frequently, possibly depressing SEPTA ridership, which has been climbing from the pandemic pits.

Last year, SEPTA budget-makers presented a plan that assumed help was on the way and had to scramble when no deal resulted.

What happened? A review

In his 2024 budget address, Shapiro proposed that the state pump $283 million into the Public Transportation Trust Fund over five years by increasing the share of state sales tax revenue allocated to the fund.

The idea was to create a more stable source of new transit money for the 42 systems serving Pennsylvania — bringing an extra $160 million yearly to SEPTA.

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

But Republicans who control the state Senate said they would support more mass transit funding only if other forms of transportation also got more in an overarching deal.

GOP leaders also expressed reluctance to tap the sales tax and floated using a new levy on skill games to raise the funds. That initiative never materialized amid internal disagreements and intense lobbying from casino interests.

Shapiro said he was happy to negotiate over those ideas.

When nothing came together, Shapiro moved $153 million in federal highway funds to help SEPTA postpone deep cuts and a 30% fare increase that would have gone into effect in January.

Senate Republicans

GOP leaders were miffed when Shapiro made the move, and they insist infrastructure for roads, bridges, and other transportation priorities be included.

Fees from legal skill games, made in Pennsylvania by Pace-O-Matic Inc. are still on the table. The industry and the legislature's fiscal office estimate the leading bill by Sen. Gene Yaw (R., Bradford) would generate $250 million in the first year.

Senate President Pro Tempore Kim Ward (R., Westmoreland) and Majority Leader Joe Pittman (R., Indiana) said in a memo to senators that a skill-games measure is a priority this year.

The governor also proposed taxing skill games last year, though with a higher tax rate.

As the state's largest transit system, SEPTA has often been a focus of the debate, drawing heavy criticism from Republicans for spending decisions and not emphasizing law and order on the system enough.

Shapiro shared some of the concerns. SEPTA has increased its police force and worked to reduce quality-of-life issues, and violent crime has fallen sharply.

Legislative Democrats broadly support new funding for mass transit, but have also said they need more money to fix roads in their districts.

What to watch for

How will Shapiro play the issue Tuesday and in the proposed budget document itself? He is likely to mention other transportation needs, and to bring up the sales tax proposal again as part of a solution.

Can Senate Republicans, who hold the balance of power in budget negotiations with the governor and the House, come up with a skill-games proposal that satisfies a broad coalition of lawmakers? Would some of it be dedicated to transportation?

Would transportation get enough from any new gaming revenue, since there will be stiff competition for it?

Will projections that state spending is set to outpace revenue by $4.5 billion, according to calculations from the Independent Fiscal Office, hurt the chances of a transportation bill?

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