Because both the transit workers union and SEPTA have been arguing back and forth over the state of SEPTA’s finances, we thought it would be good to take a step back and explain how the authority is funded.
Like every transit agency, revenues that SEPTA gets from the fare box — the money SEPTA gets from riders buying their TrailPasses or forking over their $2 to the bus driver — don’t cover operational costs.
Put simply, public transit is a public utility, much like water or gas, and a combination of federal, state and local subsidies helps SEPTA make ends meet.
As you can see from the pie chart above, the largest chunk of SEPTA’s total operating funding (48 percent) comes from the state. Next comes revenue from the fare box (37 percent) and money from Southeastern Pennsylvania counties (7 percent).
Federal subsidies make up a paltry 3 percent of SEPTA’s operating revenue because federal transit dollars are mostly restricted to agencies’ capital budgets. The feds will help pay for capital improvements, like station maintenance or buying new regional rail cars, but older and more developed systems like SEPTA are largely ineligible for operating subsidies. It’s unclear if this will change when the federal transit bill is reauthorized by Congress in the next couple of months.
So, how's SEPTA doing? The Transport Workers Union has been claiming that SEPTA is flush with cash, seeing increased ridership and large infusions of federal stimulus money, while the authority is bemoaning problems with state funding and decreased ridership.
In a way, both sides are right, and both sides are wrong.
SEPTA is undoubtedly in better financial shape than it was in 2005, when it negotiated its last contract with the union.
A lot of that has to do with Act 44, a state law that Gov. Rendell signed in 2007 that was meant to provide a steady source of funding for transportation throughout the state. Previously, the authority had to go to Harrisburg each year, hat in hand, begging for money, which lawmakers were often unwilling to provide. This led to chronic budget shortfalls and the constant threat of service contraction and deferred maintenance. In fact, in 2005, it faced a $96 million hole.
Things definitely aren’t that bad today. As of right now, planned service improvements are going forward, and there's enough money to bring the system up to a state of good repair.
At the same time, the outlook isn't completely rosy.
Ridership is down 5 percent this fiscal year because of the recession, offsetting increases SEPTA saw when gas prices spiked last summer. Revenues are therefore down about $5 million.
In addition, Act 44, which relies on sales tax revenue, is expected to reap SEPTA less cash than previously, as people hold back on purchases. And the act’s future depends on the state’s efforts to toll Interstate 80. Bonds from those tolls are supposed to secure much of the increased state funding SEPTA has been expecting going forward.
The state needs to get permission from the feds to toll the road. Its first request was rejected by the Bush administration; it just submitted another proposal.
Review city services on our sister site, City Howl.
This is a very good treatment. Septa is not Goldman Sachs. The taxpayers and the riders have rights too, and we should have the right to expect that Septa hire and fire at-will if negotiations are over, with a contract offered in good faith and refused. There is no way you can have the TWU back at work and expect them to work with management after everything that has happened. The whole TWU has a completely unrealistic impression of their role and requirements in this public company. They have to be let go, and new people hired. Fresh blood.— CleanupPhilly- Rendell has to step in and do a Reagan with the Air Traffic Controllers Union. Hire people willing to work for the reasonable terms offered. Taxpayers and riders can't afford exorbitant demands. If Rendell wants to continue a career in politics, he has to be strong.— CleanupPhilly
- So, wait a second. If public transit is considered a public utility - something that is necessary for the city and its citizens to survive - then why isn't it treated the same as water, electric or gas? I have no clue if those things involve union labor, but the outcry if any of them should be stopped while the unions have their little tantrum, just would not be tolerated. So why is a strike by Septa tolerated? Why are they even ALLOWED to strike? Plenty of other transit systems in America realize the urgency of them and don't allow unions to hold their cities hostage. So why hasn't Philly gotten with the program on this?— southphillyitaliana
- I, like everyone else in the city, have been commenting on these boards ever since the strike began and I would say 99.9% of commenters favor firing the drivers and starting over, since they are now at-will employees. They have no contract so it stands to reason they should have no jobs waiting for them at the end of this. Septa HAS to be reading these boards - so why aren't they giving the people what they want? I am positive there would be a massive round of applause if Septa announced that 234 is welcome to strike for the rest of their lives and now there are over 5000 positions available. Now THAT would be the best way Septa could win back riders - by showing they have the BALLS to fight fire with fire instead of negotiating with thugs. But I guess that would make too much sense.— southphillyitaliana
That is not going to happen! (Rendell has to step in and do a Reagan with the Air Traffic Controllers Union. Hire people willing to work for the reasonable terms offered. Taxpayers and riders can't afford exorbitant demands. If Rendell wants to continue a career in politics, he has to be strong.) ha that's a laugh he'll never do that boy you guy don't know hat the city works. And yes southphillyitailiana "water, electric or gas?" they do have a union. like or not Philly is a labor friendly town- Oh and anther thing, for all you people who don't know the real reason for the strike it's to keep Septa from subcontracting work out not how much the drivers make. the drivers are just one division. I mean the REAL MONEY Electrical, Construction and Information Technology. protecting those jobs. You people kill me. Because your employer treats like dirt you're surprised that other people won't take it. "I work extra hours at my job for nothing extra why don they" Well you are stupid. At the end of the day the TWU will get what it wants cause the members ARE VOTING DEMOCRATS (Yes we are) lol
- I agree wholeheartedly. I depend upon SEPTA, it's my main mode of transportation. My child needs it to get to school. Yet despite this I would support tearing the union down, and hire new. Even if it takes 3 months go get back up to speed. (I'd give the existing workers a chance to apply for positions, and even perhaps give them some seniority back as well to speed up the recovery.) Willy has not YET explained why Nutter is a "little Caesar", and other than talking about a fully funded pension (which I don't believe exists in the public sector ANYWHERE), he also has not explained why he feels they deserve what they are holding out for. He continues to put Ads on TV saying SEPTA is Unfair, and he's fighting for worker "rights". but offers NO specifics. The arrogance he displays towards the riders apparently filters down to his workers, as indicated by those the descriptions given by some posters. I support killing this union.— turkytom
- To NeoconKiller, Right on! I applaude you 100%!Everything you said is so very true. When the conservatives ay that they should deal with like everyone else,they're completly wrong! Us liberals are just willing to sit back and go along with this agenda. We are much smarter to stand and change things for the better. Everyone should be backing Mr Brown and the TWU. Now that true patriotism. Not just waving a flag ora magnet ribbon on a gas guzzling SUV.— Jamie Liberal
- Neocon... if that's the case (outsourcing), why isn't Willy saying that? All I've heard him say is that he now admits the 3:00AM walkout was not such a great idea, and he seems to indicate his actions were rash, because he took things personally. Not very professional sounding to me. "TWU will get what it wants cause the members ARE VOTING DEMOCRATS (Yes we are) lol" You can get what you want because you got Politicians in your pocket, (not because they can afford it, or you deserve it), and you sound happy and proud of it. Sounds like the Union Mentality I learned to loath in Detroit. It did that city a lot of good.... didn't it?— turkytom
- Jamie, you as well! "We are much smarter to stand and change things for the better." When the only thing I've heard talk about is money, just what exactly are you changing for the better besides your wallet? And Change for only YOU? At the expense of everyone else? Prevailing Wage is dropping, but you want increases in your pay. Over half SEPTA's budget is subsidy, yet Willy says they are "flush with cash". So it's true patriotism to extort money out of an agency that does not have the cash, in an economy where others are taking cuts, and expecting everyone else to pay for your inflated salaries?? Uh... I'd ask you to listen again to Kennedy's "Think Not what you can do" speech, I don't think what you support would be called "true patriotism" at all.— turkytom
- Neoconkiller -Sadly people like me are go-getters and we work for for-profit organizations because we have pride in earning our keep! Septa and many unions want to have someone give it ALL to them because they know they can't earn it on their own. Unions are for people who aren't individuals and need a group to rally around. People like me, we have confidence in our ability and decide to earn it on our own merit!— MMillercold421
Comment removed.- This union, and unions in general are there to protect the weak lazy workforce. There was certainly a time when unions were needed, but that time past long ago. Noone is losing their lives because of crazy, slaving bosses. Our governor should step in and give them one day to decide...go back to work or be out of work. I am sure with todays economic conditions, there would be people standing in like to work their asses of for Septa!!— yescadog
- Comment removed.
- @southphillyitaliana, I wish you were right, but Philly has many powerful unions and if drastic measure like this were taken all of organized labor would be rioting in the streets and drowning out any applause. Unions may no longer make up the majority of the workforce but they are loud, visible, and politically connected.— BarryG
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