SEPTA nears crisis over budget shortfall

State lawmakers are on the clock to fix Philadelphia's transportation system by plugging its massive budget gap.

Why it matters: SEPTA could begin proposing fare increases in early fall if talks fall apart to close a $187 million deficit by June 2025.

The big picture: SEPTA is facing potential cutbacks ahead of 2026, when a crush of tourists will descend on the city for the FIFA World Cup , MLB All-Star Game and the nation's 250th anniversary .

State of play: Talks between state lawmakers and SEPTA are expected to pick up in late September when the legislature reconvenes, SEPTA spokesperson Andrew Busch tells Axios.

• Busch says SEPTA's goal for the talks is "getting a permanent solution in place" to address the agency's long-term annual deficits.

By the numbers: Earlier this year, SEPTA projected a $240 million shortfall.

• But the transit agency reduced the deficit slightly after securing $53 million from state and local sources.
• Yes, but: That's far less than the $161 million that Gov. Josh Shapiro proposed would have staved off agency cuts for this budget year, which runs through June 2025.

Between the lines: SEPTA's deficit is fueled by the end of federal COVID relief funding along with a drop in ridership post-pandemic .

• As of last June, bus ridership has rebounded to 86% of pre-pandemic levels, while metro is lagging at 67% and Regional Rail at66%.

What they're saying: "That structural deficit is not going anywhere without additional help," Busch says.

Inside the room: Should funding remain flat, the transportation agency is considering fare increases, service cuts of up to 20% and hiring freezes for some positions, like administrative posts.

But Busch warned that cuts aren't long-term solutions, and potentially wouldn't close its annual budget deficit in the future.

What we're watching: State Rep. Ed Neilson (D-174), who heads the transportation committee in the House, tells Axios he plans on kick-starting a series of legislative hearings in the coming weeks to focus on more transit funding across Pennsylvania, including SEPTA.

• "This is a problem that has to get addressed," he says. "We really need to get this done."