Shapiro administration approval of SEPTA funding transfer gives agency two years of wiggle room

by John Cole, Pennsylvania Capital-Star
September 8, 2025

As Pennsylvania’s budget stalemate entered another week, Gov. Josh Shapiro announced a measure that will provide a two-year funding solution for the largest mass-transit agency in the state.

On Monday, Shapiro directed state Department of Transportation (PennDOT) Secretary Mike Carroll to approve the Southeast Transportation Authority’s (SEPTA) request to use $394 million of their capital dollars from the Public Transportation Trust Fund (PTTF) for operating expenses.

The decision comes three days after SEPTA leadership sent a letter to Carroll requesting the move, since lawmakers have not been able to come to a long-term funding solution since the June 30th budget deadline passed.

“This plan will preserve service for about 800,000 Pennsylvanians for the next two years,” Shapiro told reporters at an unrelated event in Philadelphia on Monday.

Mass transit agencies across the commonwealth, including SEPTA and Pittsburgh Regional Transit (PRT), have sounded the alarm over the past year about the impact of not having a long-term solution on services in urban, suburban, and rural areas.

While Shapiro and House Democrats sought a long-term funding solution that would bring new, recurring revenue for the state’s mass transit agencies, Republicans in the Senate majority rejected their proposals.

SEPTA instituted service cuts a few weeks ago and fare increases were set to go into effect, as well.

As a result of the transfer at the request of SEPTA, the service cuts will be rescinded on Sunday, Sept. 14. However, the 21.5% system-wide fare increase will also be reinstated on that same day.

“This is not the long-term funding solution we need to address our $213 million budget deficit,” said SEPTA General Manager Scott A. Sauer. “But over the last two weeks, we have seen the devastating effects of the service cuts on our customers. Our riders deserve better, and they deserve stability.”

Shapiro said the decision was made in part because “folks were struggling to get to work and wondering how they were going to get to their destination, get their families where they needed to go.”

The governor highlighted the 63% increase in Philadelphia schools of late arrivals and 50% of schools having higher absenteeism rates since the start of the school year, when these service cuts went into effect.

“I must tell you that that really tugged at me in my conversations with (Philadelphia school) Superintendent (Tony) Watlington. It was just clear to me that is not something we can allow to continue,” Shapiro said. “And of course, we are looking at not just the daily needs of this great community, but starting next year, millions of people will be descending upon the city of Philadelphia and our entire commonwealth as we celebrate the 250th birth of this nation, and we needed to get this done.”

The Associated Press reported on Monday afternoon that PRT is “likely” to provide a similar request as SEPTA to avoid service reduction and fare increases. 

Shapiro says he expects a final budget “will not include recurring funding for mass transit”

The topic of mass transit funding has dominated discussion over a state budget, which has still not passed the General Assembly.

House Democrats have been advocating for a long-term funding package for mass transit agencies by sending an additional 1.75% of the state’s total sales tax revenue their way.

Republicans in the Senate have largely balked at this request, citing other priorities and fiscal concerns in the budget. Instead the GOP-led Senate approved a proposal along party lines that would allow those transportation entities to transfer a limited amount of those capital funds to operations, while also requiring fare increases indexed to inflation in 2026, 2027 and every other year thereafter (leaving open the possibility to seek a waiver).

That measure was rejected by Democrats who said those funds were intended for long-term capital and maintenance projects, and preferred to fund the state’s transit authorities by increasing the share of sales tax diverted to them.

Shapiro told reporters on Monday that his action was not mirroring the GOP proposal previously approved by the Senate.

“It is clearly two different packages,” Shapiro said. “The Senate proposal, which was flawed and was dead on arrival in the House and would not have gotten my signature, would have required mass transit systems to utilize their current capital funding in order to fill the gap, and there would be no revenue source for the future.”

“They would have taken money from existing projects away, and importantly, they would have taken half of the Transit Trust Fund money and sent it to road and bridge repair,” he added.

Shapiro said that while he understands the importance for repairing roads and bridges, he would not support using money that was set aside for mass transit to fund road and bridge projects.

Republicans, including those who have voted for mass transit funding, have previously criticized Shapiro for flexing federal highway funding towards SEPTA to prevent immediate service cuts and fare increases. Senate Majority Leader Joe Pittman (R-Indiana) framed the proposal to send mass transit funds to road and bridge repair as something of a reprisal during debate last month.

“We are now allowing SEPTA to use $394 million of future capital dollars that have not yet been earmarked for particular projects in order to operate their system over the next two years,” Shapiro said.

The action also requires SEPTA to report-in periodically to PennDOT on changes that they are making to create a more efficient transit system.

When discussing the current state of budget negotiations, Shapiro said that the issue of mass transit was a reason Senate Republicans gave for not passing a final budget.

“The issue that they had been highlighting as a reason to not get it done is now off the table,” Shapiro said. “It is time to close this out.”

Senate Appropriations Chairman Scott Martin (R-Lancaster) told reporters in Harrisburg that having the “SEPTA issue off the table is one component that was kind of intertwined with this, but there’s still other major issues that we have to discuss.”

“One of the biggest being the fact that we have this massive structural deficit and what are we going to do to rein this in as best as possible,” Martin said. “So I would say from that perspective, we’re not where I can say that I’m ready to ascertain who’s voting for what.”

Shapiro said he spent time over the weekend with the leaders in budget negotiations, including Senate Minority Leader Jay Costa. While Republicans hold a multiple seat majority in the Senate, Shapiro said the final budget would need some Democratic votes.

“It has become abundantly clear that Leader Costa is going to need to put up votes in order for any budget to pass in the Senate,” Shapiro said.

Martin told NBC10 on Aug. 28 that a long-term solution for SEPTA was “not going to happen” for the current budget.

Shapiro said that he’s pleased that the agency will be able to continue to run for two years as a result of the transferring of funds, and that he’d continue to fight for recurring revenue for all mass transit agencies in the state.

“What I expect now is a final budget deal that will not include recurring funding for mass transit,” Shapiro said in response to a question from the Capital-Star. “The Senate Republicans have made clear they will not do that.”

“So…I expect a commonwealth budget deal that will include all the other important initiatives, from funding our schools to funding our cops, to funding our veterans, mental health and much more,” he added.

Rep. Ed Neilson (D-Philadelphia), who chairs the House Transportation Committee, credited Shapiro for approving the transfer of funding for SEPTA to provide lawmakers two years to come up with a long-term solution, although he emphasized that other transit agencies across the state will not benefit from this latest action.

Neilson also did not say that a long-term transportation funding solution was off the table.

“There’s not one thing off the table, including transit funding, including, let me be clear, until that budget goes to that second floor for the governor to sign. There’s not one thing off the table,” he said.

Ian Karbal contributed to this report.

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Pennsylvania Capital-Star is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Pennsylvania Capital-Star maintains editorial independence. Contact Editor Tim Lambert for questions: info@penncapital-star.com.