February 15, 2007
PHILADELPHIA, PA — By now, everyone who depends upon SEPTA is aware of the escalating financial crisis that has been threatening the transit operations of this authority for several years.
We have been encouraged by the serious attention that has been devoted to our plight by Governor Rendell and the leadership of the state legislature. The Pennsylvania Transportation Funding and Reform Commission, established by the Governor, conducted a thorough study of SEPTA.
Acting on Commission recommendations, the Governor has proposed enacting a 6.17% percent tax on oil company gross profits that could generate $760 million dollars for public transit statewide.
While we are appreciative and encouraged by these recommendations, SEPTA is facing a stark reality and one critical question: Can the proposed tax, or any other possible solution, be enacted in time to prevent major transit service disruptions, massive fare hikes and employee layoffs?
In a projection provided to the SEPTA Board, we are forecasting a budgeted shortfall for FY 2008 of $129.6 million dollars. As required by law, SEPTA staff has prepared necessary options for the Board to approve a balanced budget to go into effect on July 1, 2007.
One option is an 11% fare increase that would generate $29 million dollars, and assumes that a shortfall of approximately $100 million would be closed by a subsidy of some sort.
It should be noted that the Transportation Commission has specifically recommended periodic fare hikes based upon the cost of living. SEPTA has not raised fares since 2001, during which time the CPI has increased 16%.
The second option makes the required assumption of the possibility of no additional state subsidy to address a shortfall of $129-million.
This option includes a 31% fare hike, a 20% across the board service reduction and elimination of approximately 1,000 jobs. This would result in a ridership loss of about 20% -- or 40-million rides per year.
The impact of such massive fare hikes and service cuts would undermine the viability of public transportation in the region.
While such an option would seem unthinkable, we have no other viable alternatives to consider.
We must remain hopeful that a solution to this long budgetary nightmare will be found.
