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In early 2005, the Port Authority of Allegheny County was just days away from implementing its third fare increase and service reduction in four years to help make up a multi-million-dollar budget deficit caused by insufficient state funding. Pennsylvania Gov. Edward Rendell came through in the knick of time, allocating federal transportation funds to state transit agencies for the remainder of FY2005, all of FY2006 and first-half FY2007. The move bought the state legislature some time to approve a long-term, dedicated funding source for public transit agencies.

Unfortunately, the legislature didn’t come through. The port authority had no choice but to follow through with an aggressive cost-reduction strategy to make up a projected $80 million budget deficit in FY2008, which begins July 1.

Action Plan
On June 17, the port authority will reduce service 15 percent and, subsequently, eliminate 374 positions. The plan includes laying off 267 employees — 113 represented workers serving in non-operating positions and 16 non-represented employees.

The authority also will reduce costs by making pension changes, increasing employees’ health care contributions, freezing wages and eliminating deferred compensation for senior staff, and implementing one-year wage freezes for all other non-represented employees.

And without additional state funds, the authority will have to cut service another 10 percent and lay off even more workers in September, says port authority spokesperson Bob Grove.

“Suffice it to say, these are really difficult times for us right now,” he says. “We’re laying off people that have really done a terrific job for us — they’ve done nothing wrong, it’s just the reality of the situation.”

The authority also has proposed raising fares on Jan. 1, 2008. The agency would either eliminate the current zone-based fare structure and charge all passengers a flat $2 fare, or maintain the zone structure and increase the base fare from $1.75 to $2.50.

“These are the only steps left to take; the only things we have direct control over are fares and service levels,” says Grove.

The port authority’s fare increase and cost reduction plans are consistent with recommendations made by the nine-member Pennsylvania Transportation Funding and Reform Commission, which was created by Rendell in 2005 to examine ways state transportation agencies could improve efficiency and effectiveness.

Filtering into Philadelphia
The Southeastern Pennsylvania Transportation Authority (SEPTA) is feeling the effects of inadequate state funding, as well. The agency has projected a $150 million FY2008 budget deficit.

To help reduce it, SEPTA has proposed two budget plans — one that assumes additional state subsidies will be available and one that doesn’t. Under Budget Plan A, the agency would raise fares 11 percent to generate an additional $29 million in revenue and seek $100 million in state subsidies.

Under Budget Plan B, SEPTA would hike fares 31 percent to generate an additional $69 million in revenue and implement a 20 percent across-the-board service reduction to save $60 million in expenses. The plan also calls for eliminating about 1,000 jobs.

The legislature does have a couple of dedicated funding options on the table. In March, Sen. Sean Logan proposed a bill that would remove the $75 million cap from the dedicated transit funding bill, under which 1.22 percent of the state sales tax is dedicated to transit. Meanwhile, Rendell has recommended charging a 6 percent oil company gross profits tax.

“The state as a whole is more cognicent of the [funding] problem than they’ve ever been,” says Grove. “That’s a good step, but we have to transition that into creating legislation that brings funds not only to us and SEPTA, but every transit agency in the state.”