Off The Rails

1964: SEPTA Created

After a history plagued with decades of infighting and contentious labor relationships, the private firms that would become SEPTA were first organized under the voluntary Southeastern Pennsylvania Transportation Compact (SEPACT) in 1961, which would be superseded by SEPTA in 1964.

SEPTA exists because the companies it took over were failing individually; simply consolidating the networks did not immediately solve the problems they were facing.

Governed by representatives from the five counties it serves, built from the infrastructure of over a dozen different operators, and staffed with workers represented by fourteen unions, SEPTA has always been duct-taped together.

1970s: Ever more responsibilities

While SEPTA continued to expand and take on responsibilities, neither federal nor state funding could keep up with costs. At first, the feds provided capital assistance to help ease the transition to state and local control of mass transit. By the early 1970s, though, systems were starting to run operating deficits and fares were relatively high on a historical basis.

That trend and the 1973 oil crisis prompted Congress to provide operating assistance to transit agencies; federal spending on that aid doubled between 1975 and 1980. Eventually a cap was put on operating funds for transit agencies in large cities — and it was canceled altogether in 1998.

Federal funding for transit agency infrastructure work is generally awarded in two forms: formula funding, which grants funds based on network metrics like size and ridership; and grant funding, where a transit agency must petition for funds to be used toward specific infrastructure projects.

The issue with grant funding is that federal programs require local governments to match a share of funds disbursed, as much as 80% — but Pennsylvania state law prevents the counties SEPTA serves from levying taxes or fees for transit.

As a result, SEPTA is disadvantaged in applying for federal grants, compared to peers with local taxing authority, like the MBTA (Boston) and CTA (Chicago).

And for the last 25 years, federal funds have only been available for capital expenses: infrastructure, vehicles, and the like. They can’t be used for operational expenses, i.e. paying people.

In 1980, a new state law decreed that 38% of SEPTA’s revenue must come from fares, which makes it easy to trigger funding gaps if ridership drops for any reason. SEPTA was drawing 41% of its revenue from fares just before the pandemic.

1983: Thirteen Regional Rail unions on strike

SEPTA has had the most transit strikes of any operator in the nation — at least 11 over its 61-year history. The frequency of strikes is emblematic of unresolved organizational issues, largely inherited from the companies SEPTA absorbed, and austerity.

For instance, when SEPTA absorbed the networks that would become the regional rail system in 1983, union workers had a single target for organized action to get wage increases and benefit improvements they had been denied for years.

In 1983, 13 of SEPTA’s 14 unions went on strike for over three months.

The unions secured a hard-won wage increase, and they would need to fight time and time again over the decades. However, resolving the labor disputes did not increase the revenue SEPTA needed to make good on those agreements.

1991: The state steps in

The state dedicated new funding for transit from car-related taxes, as well as the property tax on utilities called PURTA — the Public Utility Realty Tax Act.

This additional funding came with additional oversight: As Harrisburg wanted some influence in how the money would be spent, it added four state-appointed representatives to SEPTA’s board.

While beneficial, the revenue raised by PURTA dwindled in following years as electricity generation was deregulated. This was a familiar pattern. Whether from electric utilities or turnpike tolls, new subsidies would come in for a few years, expire, then require a new round of legislation. Each time, SEPTA’s funding future was uncertain.

A brief detour...

2007: Properly funded, for once

Gov. Ed Rendell signed Pennsylvania Act 44, which used a portion of tolls from the Pennsylvania Turnpike, with tolls to be added on I-80 to subsidize transportation in the state. The law earmarked $450 million a year, which was split between transit and highways. This stabilized SEPTA’s operating budget, but a federal veto of the I-80 tolls would cut into its capital budget.

Two years later, President Barack Obama’s American Recovery and Reinvestment Act made $191 million more available to SEPTA.

With the funding, and leadership more unified than earlier in its history, SEPTA immediately made over 30 major improvements to the system, including renovating the Spring Garden and Girard Stations, building a centralized control center, and laying the groundwork for the SEPTA Key card to replace tokens and tickets.

2012: Best transit in North America?

To the surprise of cynical Philadelphians, SEPTA was voted Outstanding Large Transit Agency in North America by the American Public Transportation Association (APTA).

The following year, Act 89 passed, updating Act 44 by dedicating the entire $450 million turnpike contributions to public transit.

2020: COVID-19 Pandemic

The pandemic docked ridership to historic lows. It dropped over 90% in the opening months of 2020 and has yet to fully recover — as of 2024, daily ridership is still only 70% of what it was in 2019. SEPTA’s revenue dropped $449.3 million in the first 15 months of the COVID-19 pandemic. Emergency federal funding enabled the system to continue functioning.

2022: Federal aid hits as previous acts expire

Two years into the pandemic, Pennsylvania Turnpike funding dropped to $50 million for transit systems statewide. That further pinched SEPTA. The federal government provided billions in pandemic relief funds to the nation's reeling transit agencies, including $1.7 billion overall for SEPTA.

The aid, unlike most federal money, could be used for ordinary operational expenses, which meant SEPTA could use it to keep people employed.

The temporary pandemic program has since expired, and the last funds it provided run out at the end of this month.

Money from the 2021 Infrastructure Investment and Jobs Act also began flowing. It helped SEPTA maintain its trains, track, and stations — and to push ahead with improvements, like ordering new, modernized trolleys to replace models more than 40 years old, as well as new Market-Frankford Line cars.

So far, SEPTA has received $524 million from the infrastructure law.

A more reliable source of funding for operational expenses would, among other things, help SEPTA retain talent. Salaries for Regional Rail locomotive engineers, for example, remain lowest among comparable employers, making it hard for SEPTA to keep them from leaving for Amtrak or other commuter railroads.

2024: Shapiro’s Proposal

Gov. Josh Shapiro is proposing $282.8 million in new state funding for public transit in his upcoming budget, financed by the sales tax.

After a similar proposal failed amid Republican opposition in 2023, a cash-strapped SEPTA has been preparing for deep service cuts and a fare increase — just in case.