State Legislature begins dealing with massive transit funding shortfall

With less than two weeks to go before the state Legislature is supposed to adopt the state’s annual budget, there’s starting to be some movement on funding for mass transit, where agencies across the state say there will be major cutbacks if they don’t get more money.

On Tuesday, the state House approved a bill sponsored by Rep. Ed Neilson, D-Philadelphia, that would approve Gov. Josh Shapiro’s request to increase the share of state sales tax used for the transit subsidy. But his proposal, which will move to the Senate for consideration, also would set up a bipartisan commission to develop a long-term funding plan for all elements of transportation — roads, bridges, transit, airports and railroads — by the end of the year.

In the Senate, state Sen. Lindsey Williams, D-West View, introduced a package that mirrors the proposal from advocacy group Transit for All PA that would generate more than $500 million a year for transit. That proposal would increase fees on car rentals and leases and charge an excise tax for using ride-hailing services such as Uber and Lyft.

Transit agencies say they are facing service cuts, fare increases and layoffs because the state hasn’t increased its subsidy for more than 12 years. They have gotten by the past few years using emergency federal money allocated during the pandemic, when ridership declined sharply because people were told to limit social contact, but now that money is running out.

Williams said that rather than the bills being in competition with each other, she considers them complementary and part of the process of finding a consensus among legislators for sustainable funding.

“I would hope the leaders would look at these ideas and talk about them and see what can happen,” Williams said. “I think it’s about putting a bunch of options out there and seeing what you can get.”

Williams’ bill, which also has been introduced by Democrats in the House, would raise the state’s car rental fee from $2 to $6.50, increase the car lease fee from 3% to 5%, and charge a 6% excise tax on hailed rides.

Neilson said he prefers his bill — which would increase the share of state sales tax devoted to transit from 4.4% to 6.15% — because it would not require an additional tax or fee. Since the sales tax traditionally has increased about 2% a year, he said, that pot of money would keep growing where higher fees could drive customers away from car rentals, leases and ride-hailing services.

Another 0.25% of sales tax revenue would be earmarked to pay interest on up to $5 billion a year that could be borrowed as additional funding for roads and bridges, which many Senate Republicans from rural districts say would help sell the package to their constituents. Rural legislators have balked at more transit money because about 87% goes to Pittsburgh Regional Transit in Allegheny County and Southeastern Pennsylvania Transportation Authority in the five counties around Philadelphia.

The Pennsylvania Department of Transportation has said it is about $9 billion short of the money it needs annually to care for the state’s massive system of roads and bridges.

Neilson added the requirement for a committee to review and make a recommendation on a full transportation bill to mirror Act 89, the last funding bill passed in 2013.

And as an incentive, Neilson said, the bill automatically adds another 1.75% of sales tax revenue next year for transit if the committee doesn’t meet the deadline for approving a full funding package.

“It makes us do something,” Neilson said. “We need serious money, and we need to know where it’s going to come from. These issues need to be addressed.”

Neilson stressed transit service is a driving force in the state’s two biggest economic generators, Pittsburgh and Philadelphia. Transit agencies take more than a million people to work every day, provide thousands of jobs to workers who pay taxes and buy goods, and purchase billions of products and services across the state every year.

“This is not a bailout,” he said. “It’s an investment in people.”

Pittsburgh Regional Transit has said that without more money it is facing a deficit of $117 million this year alone and is expected to adopt a budget next week that would cut service 35% (including eliminating bus routes completely), lay off 38% of the workforce and increase the base fare 25 cents to $3. The agency has projected a 10-year budget with no funding increase and the cuts up front so it can provide reduced-but-reliable service for as long as possible.

Since the Neilson bill is talking about five years of funding, board members during a finance committee meeting Wednesday asked staff to project what service would look like under that scenario. Williams, who was named to the PRT board recently, said members also asked what would happen if the Shapiro proposal that would provide about $42 million for PRT was approved.

PRT spokesman Adam Brandolph said the agency is encouraged the Legislature is trying to deal with transit funding, but the final solution has yet to be worked out. Typically, state House and Senate leaders meet behind closed doors with representatives from the governor’s office in the last few days before a budget is passed to settle on the final details of the spending package.

That is expected to be particularly difficult this year due to substantial cuts in federal Medicaid funds that support the state’s most vulnerable residents.

“I think there was really good intent [through the House bill] to start the discussion in the Senate,” Brandolph said. “But it can go an infinite number of ways from here.”