Gov. Josh Shapiro said Friday that he will divert more than $150 million in federal highway funding to provide a one-time injection of cash into Philadelphia’s mass transit system to help it avoid near-term service cutbacks and delay fare increases.
Shapiro’s announcement comes as many transit agencies are in a severe financial crunch.
Federal COVID-19 relief for transit agencies is phasing out and the Southeastern Pennsylvania Transportation Authority and other major transit agencies around the country are struggling to regain ridership after the pandemic.
Shapiro, a Democrat, said the $153 million can help SEPTA maintain services and avoid steeper fare increases until he can come to an agreement on a wider transportation funding deal with state lawmakers.
The nation’s sixth-largest mass transit system, SEPTA is facing an annual structural budget deficit of $240 million.
In addition to raising fares, SEPTA has said it would carry out what it called painful service cutbacks next summer, cutbacks that the region’s boosters and representatives say would be damaging to the local economy.
The service cuts were planned to take effect July 1 and would include eliminating and shortening routes, and reducing the frequency of bus, trolley, subway, and Regional Rail service. The cuts would save an estimated $92 million in the first year.
Shapiro said shifting the federal highway funding won’t jeopardize or stop any ongoing highway projects.
Diverting highway funds is allowable under federal law. Former Gov. Ed Rendell did it in 2005 and 2010 to help transit agencies, while shifting the money is routine in some other states.
SEPTA lost out on about $161 million when the Republican-controlled state Senate didn’t go along with Shapiro’s proposal for $283 million in new state aid to public transit. Instead, lawmakers approved a one-time payment to the state trust fund for transit systems, of which SEPTA got $46 million.
Republican lawmakers have said that Shapiro must come up new money to pay for more transit aid and that extra transit aid must come packaged with more money for highway projects that will benefit the rest of Pennsylvania.
SEPTA earlier this month proposed an across-the-board 21.5% fare increase that would start New Year’s Day, along with service cuts to take effect next summer.
If approved by SEPTA’s board, riders would pay the increase on top of a proposed separate interim average fare increase of 7.5%.
SEPTA last raised fares in 2017, and the proposed increase would be expected to bring in an additional $23 million for this fiscal year and $45 million per year starting in 2026.