The Unnecessary SEPTA Doomsday Scenario

As Paul Nussbaum recently reported for the Philadelphia Inquirer, SEPTA, which provides commuter rail, subway, a few versions of light rail, and bus service for Philadelphia and its surrounding counties, has presented a doomsday scenario if the Commonwealth chooses not to provide substantial cash infusions for capital improvements over the next several years.

Some will suggest that transit is a drain on tax money that should operate more like a business (or that it should even be private business), despite not holding roads and highways to this same standard.  But let's looks at SEPTA's operating and capital circumstances.

Here's the amazing thing: based on data from the National Transit Database, SEPTA (2011) has the third highest operating recover ratio (revenues from fares per operating costs) of any commuter rail service in the country - 56.7% - all while while offering service remarkably cheaply the average ticket costs only $3.60... meaning each ticket's operating subsidy is only $2.70.  You don't get much lower than that, so suffice it to say that on the business-efficiency argument, SEPTA scores mighty high marks.  One would think that such high performance would ought to be rewarded, not forced into doomsday cuts.

That's the operating side.  But on the other capital side, SEPTA is basically funded by farebox returns and the general fund of the state, for which it is always competing with every other worthy and unworthy interest in government. How can you expect a capital intensive activity like transportation to operate "like a business," without having any real capacity for capital investment? The result is that the agency is doomed to fail through deferred maintenance.

Some more enlightened regions have come up with alternatives. New York's MTA uses bridge/tunnel tolls to to help pay for transit (which then mitigates congestion by giving people non-bridge/tunnel options). Denver and Los Angeles have what amount to special assessment districts that fund transit.  Even Houston, in that lone star land of fiscal conservatives, has 1% sales tax dedicated to transit.  There are many ways to skin this cat and give a transit agency borrowing capacity it needs to perform critical maintenance and service expansions.

At the moment, it's important for the legislature (pushed by the City and counties with potential service cuts) to pony for capital improvements.  But until Pennsylvania comes up with a means of providing SEPTA with capital funding that doesn't depend on the Commonwealths general fund budget, these doomsday scenarios will inch toward reality, and we can forget about any kind of future service expansions.