Pennsylvania Transit Agencies Face Deficit Death Spiral at the Expense of Taxpayers

Pennsylvania’s two largest transit systems, SEPTA (Philadelphia region) and PRT (Pittsburgh region), are facing severe fiscal crises due to post-pandemic ridership declines, overreliance on government subsidies, and lack of structural reform.  

While temporary state and federal infusions have postponed further service cuts, both agencies are now confronting major budget deficits in FY 2026. 

Despite receiving billions in taxpayer subsidies, Pennsylvania’s transit systems remain on the brink of collapse. SEPTA’s total FY 2025 budget is $2.6 billion, including a $1.74 billion operating budget and a $924 million capital plan. It still projects a $240 million structural deficit in FY 2026. PRT is facing its own $100 million shortfall, even after deep service cuts and a 38% reduction in staff. 

Both agencies rely overwhelmingly on taxpayer support – which has done nothing to encourage a more stable financial situation at either agency.  

SEPTA’s Farebox recovery ratio covers only 35% of operating costs; the rest is covered by federal, state, and local funds. Since 2020, 85% of PRT annual operating revenue has been subsidy dependent.  

Rather than reform, the state has doubled down on subsidies. In late 2024, Governor Josh Shapiro redirected over $150 million in federal highway dollars to cancel planned fare hikes and service cuts. His FY 2026 budget proposes a 1.75% increase in statewide transit aid, totaling nearly $300 million for agencies like SEPTA and PRT.  

While these short-term budget plugs keep the agencies running, neither system has a plan to become self-sustaining. Massive capital projects are being deferred or abandoned, while basic operations remain dependent on annual political negotiations. Labor contracts have been restructured under union pressure, not cost efficiency. SEPTA, for example, authorized a 5% raise in 2024 for its unionized workers, even as it deferred $2 billion in capital projects. 

The issue of transit agency spending is a primary concern for lawmakers as they negotiate a new state budget.  

Public transit is a necessity for many riders who rely on it, but the government agencies that mismanage the system cannot demand a blank check from taxpayers. Without structural changes, transit in Pennsylvania will continue to be a financial black hole. Ridership has significantly decreased post-Covid, but PRT still provides over 33 million rides annually, and SEPTA serves tens of thousands of riders each day. Fare hikes and service cuts can discourage further ridership, fueling a “transit death spiral” that makes the problem worse.  

Any attempt to paper over the problems with these agencies with even more government spending is throwing money into a black hole. SEPTA and PRT need structural reform to avoid an inevitable decline.  

The governor’s budget included a new spending binge that will drive the cost of government higher, outpacing revenues. A big part of this spending is aimed at having all Pennsylvania taxpayers further cover the failures of local transit agencies.  

State House GOP leader Jesse Topper announced a plan to allow a public-private partnership to help SEPTA address its fiscal shortfall, a move he said would lessen financial strains on the system. Increasing farebox recovery rates through auditing inefficiencies and performance-based funding formulas tackles the problem through better spending as opposed to throwing more taxpayer money into the agencies.  

Pennsylvania taxpayers should not be forced to prop up failing agencies without meaningful reform. Transit systems must modernize, control costs, and deliver measurable results. Without these changes, taxpayers will keep paying more for systems that deliver less, and riders will continue to be left behind.