SEPTA approves budget, looks to Harrisburg for more aid

Posted: May 26, 2012

A financial storm is coming, and SEPTA’s umbrella just broke.

The SEPTA board Thursday dug deep into its rainy-day fund in adopting a $1.28 billion operating budget for the next 12 months. That left the transit agency without enough reserves to cover an anticipated $38 million deficit starting the middle of next year and much bigger deficits every year after that.

SEPTA officials say they’re still hopeful that Gov. Corbett and state lawmakers will ride to the rescue, with a long-awaited boost in state aid for transit and highways. Without that, the only recourse is likely to be service cuts and unscheduled fare hikes.

The budget approved Thursday, for the fiscal year that begins July 1, includes no such cuts or fare increases. The next fare increase is set to take effect in July, 2013 and is likely to be about 7 percent, based on current revenue projections.

The SEPTA board on Thursday also approved a $303 million capital budget, to pay for such things as new vehicles and major construction projects. That’s about $110 million less than SEPTA had for those expenses before the federal government rejected Pennsylvania’s plans to convert Interstate 80 to a toll road to raise transportation funds. And it’s about half of what SEPTA officials say they need to spend each year to upgrade the aging transit system and tackle major renovations such as the City Hall subway station.

To balance its operating budget, SEPTA plans to use $58 million from its "service stabilization fund" over the next 12 months. That’s in addition to $29 million taken from the rainy-day fund to balance the budget this year.

A final $27 million is slated to be taken from the fund for the budget that begins in July, 2013. Then the $130 million cushion that SEPTA officials had hoped would last 10 years when it was created in 2007 will be gone, used to pay primarily for rising costs of wages, health insurance and fuel.

SEPTA chief financial officer Richard Burnfield said he is "very concerned" about the looming budget shortfall, but he said, "I’m still optimistic that the governor and the administration and the legislative leadership in the next nine months will deal with this."

The state currently provides $616 million a year for SEPTA operations, while Philadelphia and the four suburban counties contribute $87 million, and the federal government provides $72 million. About $450 million comes from passengers.

State leaders have acknowledged for years a need for more funding for transit and highways. A commission created by Corbett urged last August that Pennsylvania increase motor vehicle registration and license fees and raise a component of the gasoline tax to produce $2.5 billion more a year for highways, bridges, and mass transit.

A group of Democratic state legislators, led by Sen. Mike Stack (D., Phila.), on Tuesday began circulating a legislative petition requesting Corbett to convene a special session of the legislature to deal with the transportation funding crisis.

"This year, we may have the budget wrapped up by mid-June. This is a golden opportunity to deal with transportation and mass transit," Stack said. "I don’t care if we have to work all summer...we just need to make the guys running the show come to the plate."

Corbett has opposed tax and fee increases, saying they would be too burdensome for Pennsylvania drivers. The governor said in his budget address in February that the transportation funding crisis was too big to deal with in the regular budget, and his budget for the fiscal year that starts July 1 proposes to cut transportation funding by about 9 percent: $5.86 billion, down from $6.43 billion this year.

"Transportation must be confronted as its own distinct and separate topic," Crobett said at the time, without saying what solutions he favored.

Without more state aid, SEPTA would have to consider service cuts and additional fare increases next year "as a last resort," Burnfield said.

Before the landmark transportation-funding Act 44 was adopted in 2007, such warnings were annual events, as Harrisburg leaders wrestled with transit funding as part of each year’s state budget. The funding formulas created by Act 44 brought a measure of stability, but the collapse in 2010 of the state plan to toll I-80 undermined the law’s long-term ability to pay for transportation.

"I lived through the years when it was a cliff-hanger every year, and it was no fun," Burnfield said. "It was horrible what the uncertainty did to our customers. That’s not how you build ridership."

Corbett spokeswoman Kelli Roberts said any funding solution "will need to be a mix of things," including revenue from the sale of the state-run liquor system, if that idea could make it through the legislature.

Corbett is meeting with legislative leaders but making no promises about a quick resolution to the issue, Roberts said.

"It’s a huge problem that we’re looking to address, but the governor has not signalled his support for a specific plan at this point in time," she said.

Contact Paul Nussbaum at 215-854-4587 or pnussbaum@phillynews.com

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