‘No funding security in the future’: Why we may have to wait longer for SEPTA upgrades

A SEPTA employee  walks between two El cars lifted for repairs at the 69th Street SEPTA repair shop. (Kimberly Paynter/WHYY)

A SEPTA employee walks between two El cars lifted for repairs at the 69th Street SEPTA repair shop. (Kimberly Paynter/WHYY)

Planned improvements to SEPTA Key and other transit infrastructure could be put on hold due to an expected delay in state funding.

The Pennsylvania Turnpike Commission and PennDOT notified SEPTA that a $112.5 million payment due in July will come late due to funding losses caused by the coronavirus pandemic, said SEPTA spokesperson Andrew Busch. This means SEPTA will have to start the next fiscal year without the agency’s $44.5 million share —  money needed for SEPTA’s capital budget.

“SEPTA is now in the process of reviewing its capital budget to look at possibly delaying some projects,” said Busch. He said the agency would have more clarity on plans to delay projects or shift funding by May 20, the scheduled date of a virtual public hearing on the agency’s capital budget.

The delayed Turnpike Commission revenue makes up about 7% of SEPTA’s $640 million proposed capital budget for the fiscal year that begins in July. The capital budget includes nearly $200 million for vehicle acquisition, including long-awaited double-decker rail cars, new buses and other fleet upgrades. Improvements to the beleaguered electronic Key payment system,  planned station upgrades, railroad fixes and real-time communication technology also fall into the capital budget.

The delayed payment may be a sign of things to come for the agency, which is preparing for a bleak financial future. The authority expects to lose $150 million at the farebox by the end of June and at least that same amount in the next fiscal year.

SEPTA received $643 million in federal aid to ease COVID-19’s financial blow to its operating budget through this year and the coming year. But if ridership and funding do not return, SEPTA will have to make hard decisions about service reductions and job cuts.

“It’s worrisome,” said SEPTA General Manager Leslie Richards. “There is no funding security in the future and we’re not really sure what that is going to look like.”

While it’s hard to plan with such uncertainty, SEPTA is moving forward with passing new capital and operating budgets. The authority plans to host virtual hearings for its operating budget on May 26 and 27.

“SEPTA has had a balanced budget and we’re proud of it. We plan on this year being no different,” said Richards. “We’ll hear what our customers and the public want to share with us. And then we’ll make the best decisions of how SEPTA should move forward in a very responsible way in terms of our finances.”

SEPTA recently implemented cost saving measures that included a 10% pay cut for Richards and the executive team, a hiring freeze, and elimination of overtime.

Transit service to resume, ‘perfect’ it won’t be.

The authority last week announced a plan to restore most of its transit service on May 17. Though trains and buses will be running on regular weekday and weekend schedules, nonessential trips continue to be discouraged. SEPTA is dealing with significant staffing issues as operators become sick with the virus or stay home to avoid infection.

“This service is not going to be perfect, but it is what we can do right now to serve essential workers and obviously prepare for the expected increase in service needs in the coming weeks,” Richards said last week.

Governor Tom Wolf state and Pennsylvania Health Secretary Rachel Levine extended stay-at-home orders for 43 counties including Philadelphia and its surrounding counties until June 4.

Meanwhile, SEPTA estimates transit ridership is down by 70% to 80%. Regional Rail ridership has dropped more than 90%.

Jennie Granger, deputy secretary for multimodal transportation at PennDOT, said the department is now collecting information to see how much money they will have to spend on transit over the next fiscal year. Those funds could help offset losses at the farebox and other revenue reductions.

“We do anticipate there will be some losses,” Granger said. ”And we don’t know the full magnitude or range of funding losses associated with transit at this time.”

But the state government is “really committed to working with the transit agencies” to help weather the crisis brought by the pandemic, she said.

“We’re not just the funding stream,” said Granger, who worked closely with Richards at PennDot before Richards left her post as PennDOT Secretary last year to join SEPTA. “We want to make sure if we can help them in any way shape or form, we do that.”

The state funds public transportation through a mix of streams including bonds from the Turnpike Commission, state sales and use taxes, vehicle lease tax, vehicle rental fees, and motor vehicle fines. The pandemic has already reduced these revenue streams, sending ripple impacts to SEPTA, Granger said.

State funding, after all, makes up the majority of SEPTA’s operating and capital budget. In FY2020, SEPTA received $717.9 million in operating subsidies and $352.81 million in capital subsidies.

Smaller contributions from the counties served by SEPTA bolster that state support. But 80% of SEPTA’s local subsidy comes from Philadelphia, which is now facing a nearly $650 million shortfall, five times that of the Great Recession. Mayor Jim Kenney proposes $370 million in budget cuts where SEPTA takes a hit to the tune of about $1.75 million, dropping from $86.4 million to $84.6 million.

The American Public Transportation Association, of which SEPTA is a member, recently urged Congress to provide an $23.8 billion in additional funding relief to public transportation agencies.

“These additional funds are critical to continue serving essential workers and make sure that we can help get our country back to work and to other activities that are so important for our economic recovery,” said APTA President and CEO Paul P. Skoutelas.

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