SEPTA’S new GM Leslie Richards will consider 2020 fare increases with eye to ‘equity’

Equity is a “big priority” for new SEPTA general manager Leslie Richards. The former PennDOT secretary says her desire to remove barriers to using the service is one of the reasons she accepted the offer to run the $2 billion-plus transit agency. But as she settles into her new role, Richards’ commitment will be tested as the authority considers another fare increase at a time when nearly half of ridership makes less than $35,000, and operational needs continue to mount. The last fare increase was in 2017.

“We want to do more for our communities and we can’t without newly identified revenue,” said Richards. “It’s hard for us even just to deliver on a state of good repair with the current amount of money coming in.”

SEPTA is working overtime to identify new revenue streams, especially with the sunset of Act 89 approaching in 2022. The funding mechanism currently provides $450 million per year via the Pennsylvania Turnpike Commission for public transportation in the state. That number, however, is expected to plummet to $50 million in FY2023.

On Monday, the authority announced a five-year $3.3 million deal with Penn Medicine for the naming rights of University City Station. The deal includes new signage, maps, and interactive screens for the station that serves well over 6,000 riders daily. It’s the fourth station to receive a name change worth millions, coming after AT&T Station, NRG Station and Jefferson Station. The rebrands have earned SEPTA more than $17 million in additional revenue that goes toward the operating budget. Plus, SEPTA can still sell ad space at the stops, says spokesperson Andrew Busch. The additional revenue will be helpful to riders, Busch added, but not enough to remove the consideration of fare increases.

The authority ought to have a decision in the spring, which is right around when city agencies present their budget proposals for the coming fiscal year. It’s likely Richards will face a city council that is more sympathetic to transit riders.

Transfer fees

The new GM says the $1 transfer fee, a target for transit equity advocates, is also on the table.

A recent Pew study found Philly’s transfer fees negatively impact low-income riders more than other riders, including straphangers in other cities, concluding that when “expressed as a percentage of income, the fares that Philadelphia residents pay are higher than those in all of the comparison cities.” The finding pushed forward a local conversation about eliminating the fee, providing a talking point for policy change advocates, including City Councilperson Helen Gym and the city’s top transportation officials.

“I’m convinced that we will find an ability to reduce and potentially eliminate the transfer fee,” said Mike Carroll, deputy managing director of the city’s Office of Transportation, Infrastructure, and Sustainability and a SEPTA board member. “But it’s going to take work from the city and from SEPTA to really think through what the network looks like, and also what the true revenue implications are, in a comprehensive way.”

At that time, Richards’ predecessor Jeff Knueppel said eliminating the fee would leave the authority with a $12 million hole in its budget that could hurt service.

“We do understand it,” Knueppel said of the equity issues created by the transfer fee. “But it does create a situation for us, in that we want it to be neutral in terms of cost to SEPTA. Because if we lose income, we have to reduce service and we don’t want to do that.”

Now Knueppel is out and the makeup of Council has also changed. Council newcomers Jamie Gauthier and Kendra Brooks have said they, like Gym, support eliminating transfer fees. Incumbent councilmember Allan Domb and another newcomer Katherine Gilmore Richardson also support ditching the fees. While SEPTA, a state-chartered agency isn’t beholden to council on operating matters, the city legislative body does have power over the city’s contribution to the agency’s $1.49 billion operating budget. Philadelphia County contributes more than 99% of the local subsidies to city transit and 70% to regional rail.

Richards is sympathetic to concerns about the burden imposed by the fee but said she isn’t ready to make a decision quite yet. “SEPTA is a billion-dollar business, and we can’t make these decisions in a vacuum.”

“We will be thinking with our heads and with our hearts as we take a look at what the best way for SEPTA to help this entire region move forward,” she said.

Richards also said she is open to experimenting with new models that consider the needs of low-income riders. She said Philadelphia could eventually join a number of city transit agencies that use fare-capping system, where cash-strapped riders can pay single fares toward an unlimited pass.

Transit agencies with key card technology in St. Louis, Houston and Portland, Ore., for example, have some sort of capping mechanism. In Philadelphia, the fare-capping could only work after SEPTA has finished implementing the full Key card system.

“I’m not saying that decision has been made yet,” Richards said. “But… a Key card payment system allows you to take a look at all that data, and how it may or may not be a good thing for this transit agency.”

SEPTA Key

Richards, a Montgomery County resident served on SEPTA’s board in the early stages of SEPTA Key. She returned to the agency this year eager to improve the system, which has been plagued with problems since its introduction in 2016.

“I don’t even know if we’ll ever reach full implementation because we’re going to be able to have flexibility and change things,” said Richards. SEPTA issued her a Key and she plans to test the fare purchasing process to understand the rider experience.

The executive experimentation comes at a pivotal moment. SEPTA is in the midst of rolling out the tap-to-exit function at its five Center City Regional Rail stations. Jefferson Station was the first to be outfitted with the streamlined payment system in early January, and authority officials say over 30,000 riders have used it so far.

Suburban Station is next to receive the system on February 5, then three more will follow after. The technological advancement is a step toward rolling out Travel Wallet on Regional Rail, where riders can pay per trip.

SEPTA is also gearing up for smartphone payment capabilities, already used in New York City, but first the authority has to upgrade their card readers to meet current banking security standards, a more than $4 million fix.

WHYY is one of over 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push towards economic justice. Follow us at @BrokeInPhilly.