SEPTA service cuts would cost hundreds of millions in property value, revenue losses, study shows

The public transit trainwreck that could hit the commonwealth this year became more apparent on Wednesday, with an economic study on SEPTA’s proposed cuts estimating a property value loss of $19.9 million for regional households, as well as major losses in productivity and earnings. 

The Chamber of Commerce for Greater Philadelphia hosted a webinar on Wednesday afternoon with SEPTA Interim General Manager Scott Sauer and Econsult Solutions Inc., which released an economic impact analysis based on the transit system’s service cut proposal.  

During the webinar, Sauer detailed SEPTA’s financial situation – and its support compared to similar systems – before Ethan Conner Ross, executive vice president and principal at Econsult Solutions Inc., unveiled potential economic impacts from ESI’s latest study. 

“We’re now facing a $213 million structural budget gap,” Sauer said Wednesday, noting the shortfall stems from higher costs and reduced ridership, along with the end of federal pandemic-era relief funds. 

Sauer noted that prior to the pandemic, SEPTA had among the highest farebox recovery rates in the nation, with 36% of its operating costs covered through fares. He added that while recovery rates, now about 21% of operating costs, are not what they were before the pandemic, SEPTA’s self-generated revenue and overall efficiency are still among the best in the nation, even as leadership makes other cuts where possible. 

“We’ve added about $30 million in savings through austerity,” Sauer said. “These were things like pay freezes for management employees, contractor and consultant reductions, travel restrictions – anything we could find that could help save money, we were looking for.”

Sauer noted that the proposed budget, which assumes no additional investment from the city or state this year, would take effect in August. Riders would first see bus route service cuts and the ending of all special services, such as express lines to the sports complex. There would be a 21.5% fare increase in September, followed by cuts to an additional 25% of routes, a 9 p.m. curfew, and the loss of five regional rails in January 2026. 

“We have already been, historically and continue to be, almost the most efficient in our business,” Sauer said. “We are doing more with less, more than anyone else, and that is evident by simply the fact that we are still running the oldest rail fleet in the country.”

He said SEPTA’s per-passenger costs for the heavy rail are 47% below the national average, while costs per passenger for bus and commuter rail operations are 18% and 33% below the national average, respectively.

He added that ahead of major events in 2026, hiring freezes and service cuts would “turn the faucet” off for the agency. 

“There will be no 2026 for SEPTA. We wouldn’t have any plans because we won’t have employees to execute any plans,” Sauer said, noting the agency could be 600 to 800 employees short should the proposed cuts occur. 

Conner-Ross said the downstream effects of SEPTA cuts on the Southeast region go beyond transportation and traffic to losses in property value and local tax revenues due to the broader economic implications of having a severely reduced regional transit system. 

“What’s important to note here is a value lost to all homeowners in proximity (to the regional rail), whether or not they want to ride regional rail. Their communities and their houses are less attractive to potential buyers and they’re all going to suffer that drop in their main asset,” Conner-Ross said. “Commercial and office centers are clearly going to be negatively impacted by a loss of service as well, and that’s really a tax-base risk for the municipalities and the school districts that rely on that revenue.”

Conner-Ross described the cuts as a “major competitive disadvantage for our region.” The study estimated that the average homeowner along the Paoli Thorndale line would see their property value drop by $56,800, while those along the Cynwyd line would lose an average of $47,400 per household. 

“Job growth would fall and the region gets less attractive as a place to live and do business,” he added. The potential loss of about 76,700 regional jobs and $6 billion in wages could result in a $674 million loss in annual state and local tax revenue and a $207 million loss in local school district revenues. 

With public transit systems across the state facing potential service cuts and price hikes, this budget cycle has become a make-or-break moment for system leadership, lawmakers holding the pursestrings and the Pennsylvanians reliant on those systems. 

In his budget plan, Gov. Josh Shapiro proposed a 1.75% increase in funding for transit systems statewide, which would bring in a total of nearly $300 million for systems statewide, including an additional $161 million for SEPTA. 

While Senate Republican leader Joe Pittman has stated that he recognizes the need for transit funding, and the GOP has said they could get on board – assuming that transit funding includes allocations to repair roads and bridges – they emphasized that the commonwealth’s fiscal future is the most important concern. 

“We have a structural budget deficit which must be addressed," Pittman said in a statement last month. “It is critical for our mass transit systems to demonstrate they are running as efficiently as possible, and that riders and local governments who benefit from their services are paying their fair share."

Sauer also argued that local and state support for SEPTA “pales in comparison” to the investments made in Boston’s and Washington D.C.’s public transit systems, among others. “Our budget is a shadow of what big, urban mass transit agencies are across the country.”

Noting the impact that sports and entertainment have on Philadelphia, Conner-Ross noted that an imposed curfew would impact 19,000 Center City workers alone, and that more than 170 nighttime events take place annually at the sports complex in South Philadelphia. 

With House Democrats and Senate Republicans each holding a slim majority in their respective chambers, a bipartisan deal is needed to get public transit funding on track. More car accidents, emissions and vehicle and road operation costs, on top of increased transit costs with higher SEPTA fares, would create a $267 million total annual social cost to regional residents. 

Chamber CEO Chellie Cameron pleaded with regional business leaders to speak up about the importance of public transportation. 

“The more voices we have at the table, the stronger the message is,” Cameron said. “When we talk to elected officials, they say they’re not hearing from the business community. It’s so critical that you, as employees or business owners or leaders, speak up and make sure the (potential) impact is heard.”