State legislature moves toward expanding transit funding, a change SEPTA needs to avoid ‘fiscal cliff’

The Pennsylvania House pushed through a tax bill late Tuesday night that would increase the share of the state sales tax dedicated to public transit. The change, buried amid 89 pages of legalese, could save SEPTA from having to slash services or raise fares early next year.

Passing the Republican-controlled Senate is the next hurdle for the package written by House Democrats, but GOP leaders signaled they were open to the legislation, which contains a number of tax credits for economic development and corporate tax cuts favored by their party.

“At the end, you just don’t know how it’s all going to play out, but we’re definitely encouraged to see the language finally in the bill,” said SEPTA CEO Leslie S. Richards. “If we don’t get this funding, we’re going to have really tough decisions to make.”

Under HB 1219, the state’s Public Transportation Trust Fund would receive 6.4% of the money generated by the sales tax, up from 4.4%, generating an additional $295 million annually for public transit operations across the state. The sales tax itself would not increase.

The bill’s House passage comes as SEPTA projects a $240 million annual deficit starting in July 2024 as the last of federal pandemic aid for transit systems runs out. The agency would get an additional $190 million a year under the sales-tax bill.

“I applaud the House Democrats’ recognition that there are ways to use our revenue surplus other than on increased spending,” Senate Majority Leader Joe Pittman (R., Indiana) said. “What the House passed is certainly a historic shift in tax policy, which is very intriguing.” He praised the House Democrats for moving from “performative to substantive action.”

The tax bill also included some Democratic priorities, including establishing a state earned-income tax credit that would help the working poor and an increase in the state child-care tax credit.

SEPTA board chairman Pasquale “Pat” Deon and SEPTA’s leadership, along with transit advocates, have been lobbying hard in Harrisburg for about 18 months to expand the pool of stable state funding for transit. An earlier law that gave transit systems millions annually from the Pennsylvania Turnpike has expired.

Leaders of the GOP-controlled Senate have told Deon, a Bucks County Republican, that they don’t have a problem with the sales tax provision for transit funding, and House Democrats, with a powerful Philly delegation, are also on board, Deon said.

“It’s going to stay in while they negotiate the other issues,” he said. “We don’t seem to be an issue. But we need to make sure that these guys follow up on their other commitments and promises to keep us in the bill.”

In lobbying for help, SEPTA stressed the economic importance of transit to the region and state, and reminded lawmakers that the transit system was instrumental in convincing FIFA to play 2026 World Cup games in Philadelphia. Lawmakers “don’t want to be embarrassed” on the world stage, Deon said.

SEPTA has some strong allies in Harrisburg. Gov. Josh Shapiro, a Democrat, was a Montgomery County commissioner and represented the county in the state House before he was elected last year. House Speaker Joanna McClinton (D., Phila.), House Majority Leader Matthew Bradford (D., Montco), and Appropriations Chair Jordan Harris (D., Phila.) have been “carrying the water,” Deon said.

Richards credited Deon’s deep relationships with Senate Republicans for smoothing the way.

“Joe [Pittman] and I have been friends for a long time and I think he finally got tired of hearing me,” Deon said of the Senate majority leader.