Funding Shortfalls Threaten Chicago, Philadelphia Transit Agencies
Fare Hikes, Service Cutbacks Likely for SEPTA and METRA if State Legislators Fail to Act
The transit agencies that serve two of the six largest U.S. cities face massive budget shortfalls for FY2026. Unless they can close the gaps through cost cutting and additional state funding they could be forced to impose stiff fare hikes and sharply curtail service. So far, state legislatures in Pennsylvania and Illinois have yet to act on requests.
The cuts would fall hardest on people in transit-dependent communities where few own cars and there is no affordable alternative transportation. Also, small businesses could lose employees and customers. Thousands of transit workers could be laid off, as well.
Earlier this month, SEPTA (Southeastern Pennsylvania Transportation Authority) released an austerity plan it would be forced to carry out if it cannot close a $213 million budget gap. Greater Philadelphia passengers could face a 21.5 percent fare hikes along with major service cuts to regional rail, subway, light rail, and bus routes.
The three agencies that comprise Illinois’ Regional Transportation Authority (RTA) – the Chicago Transit Authority (CTA), METRA (commuter rail), and PACE suburban bus lines – are looking at a $770 million combined shortfall. In March, RTA Executive Director Leann Redden, warned of a “doomsday scenario” with massive service reduction if the legislature fails to act in time.
“I’ve been through all of this, and what I know hasn’t been adequately addressed is the fact that the funding that’s been provided for public transit has never, ever aligned with the governance that was put in place.” - CTA President Dorval Carter
“This isn’t just a transit crisis—it’s a regional emergency,” Ms. Redden said. “If the General Assembly does not act this spring, hundreds of thousands of Illinoisians are going to wake up in 2026 without a way to get to work, school, or medical appointments.”
Next year, the CARES Act, which provided federal aid to keep transit agencies around the country solvent during the COVID pandemic, expires. Those grants made up for lost farebox revenue resulting from the severe drop in riders caused by the health crisis. Although passenger counts are trending up as workers return to the office, they have yet to reach pre-pandemic levels. Thus, farebox revenue remains down.
In addition, both SEPTA and METRA have to contend with higher prices for the goods and services they purchase. SEPTA has another issue: added costs to address the increase in crime, disorder, and vagrancy the pandemic brought about.
The agency was able to reduce its budget shortfall from $240 million to $213 million by implementing a hiring freeze and other cost-cutting measures. However, it contends “there is nothing left to cut but service.”
SEPTA plans to make the cuts in two waves. The first, in August 2025, calls for eliminating 32 bus routes, shortening 16 more, and reducing service on the remaining 88. The agency would stop running special buses for concerts, sports, and other major events. The price of a single transit fare would rise from $2.50 to $2.90; the monthly TransPass, which now costs $96, would jump to $116.
Next January 24 more bus routes would be eliminated along with the Broad Street subway’s B3 spur between Fairmount and 8th and Market Streets. In addition, five Regional Rail lines would be suspended: Cynwyd, Chestnut Hill West, Paoli/Thorndale, Trenton, and Wilmington/Newark. Since all of these use Amtrak’s Northeast Corridor the move could save SEPTA $60 million annually in trackage rights fees.
Also, the T1 and G line trolley routes would be replaced with buses; the G’s restored PCC cars would be mothballed. Finally, the system would shut down at 9 p.m.
In Chicagoland, RTA’s three agencies would also make major service reductions.
CTA would: suspend service fully or partially on four of its eight rail lines; close or reduce service to more than 50 rail stations; eliminate up to 74 of its 127 bus routes and reduce service frequency 25 percent.
METRA would cut out early morning and late night run and reduce service frequency to hourly on weekdays and every two hours on weekends. In addition, the METRA Electric Blue Island branch could be suspended.
PACE would: eliminate weekend service; stop running at 8 pm on weeknights, increase headways to 30 to 60 minutes on routes that now have more frequencies and reduce weekend ADA paratransit service by 66 percent.
According to RTA one in five city workers could lose access to transit and nearly 3,000 transit jobs would be eliminated. “This is a choice. We can choose to protect jobs, mobility and economic growth, or we can let our transit system collapse,” Ms. Redden said.
In Philadelphia, cuts in transit service could stall Center City’s (Pennsylvanian for downtown) comeback as a center for commerce, culture, and connection, according to Prema Katari Gupta, Philadelphia Center Development Corp. executive director. In an op-ed published in the Philadelphia Inquirer, she noted 42 percent of the city’s jobs are located there. and transit is the only affordable way lower-income residents can reach them
Philadelphians are calling on Pennsylvania’s Governor and General Assembly to fully fund SEPTA and transit agencies across the state to avoid rate hikes and service reductions. Transit funding comprises 13 percent of the state’s transportation budget. The state spends less per capita on transit than any other state in the Northeast.
Three times the Pennsylvania House of Representatives, where Democrats are the majority, passed legislation proposed by Gov. Josh Shapiro that would increase transit funding throughout the state. However, the State Senate, which Republicans control, failed to take up the measure.
While he acknowledges SEPTA financial problems, State Senate Majority Leader Sen. Joe Pittman contends the state first needs to close a $4.5 billion budget gap. He wants SEPTA to reduce the size of its request and he objects to placing the burden for SEPTA’s losses “entirely on Pennsylvania taxpayers, most of whom do not live in the service region and do not realize any benefit from SEPTA.”
“We pay for roads and bridges here in places that I’ll never go and never ride on them,” countered SEPTA Board Chair Ken Lawrence. “We’re all in this together.” Although only 32 percent of Pennsylvania’s population lives in SEPTA’s service area the region generates 41 percent of the state’s economic output.
Some Illinois legislators wants to consolidate Greater Chicago’s three operating entities – CTA, METRA, and PACE – into a single agency before considering a bailout. Gov. J.B. Pritzker supports the proposal to create a Metropolitan Mobility Authority to replace them. The three transit systems, which now operate independently, are opposed. Instead they want funding levels on a par with other major metropolitan areas.
“I’ve heard all of this before. I’ve been through governance reforms. I’ve been through funding reforms,” CTA President Dorval Carter stated in testimony at a Senate Transportation Committee hearing last July. “I’ve been through all of this, and what I know hasn’t been adequately addressed is the fact that the funding that’s been provided for public transit has never, ever aligned with the governance that was put in place.”
The budget for FY 2026 proposed by Governor Pritzker includes no new funding for transit. The legislature has until June 30 to pass a budget, but an agreement on transit spending and how to finance it must be reached beforehand.
Budget shortfalls are nothing new for transit agencies. Working together, state legislatures, governors, and the authorities usually come up with a solution that includes a combination of cost cutting, fare hikes, one-off financing gimmicks, and increased state aid.
For some time, transit systems have known the money from the CARES Act would run out. Planning should have begun two – three years ago. To his credit, Governor Shapiro tried to address the situation but was thwarted by the opposition party. But politics is a business where people often do not resolve issues until the last minute.
One way or another trains and buses will keep running. How many, how often, and at what cost are questions yet to be answered.
"SEPTA has another issue: added costs to address the increase in crime, disorder, and vagrancy the pandemic brought about."
No, the crime, disorder, and vagrancy was brought about by Philadelphia's radical pro-crime DA, Larry Krasner.