Fares on suburban commuter routes could rise to $7 or more and service could be slashed 25 percent or more as the Port Authority tries to dig out of its latest financial hole.
The authority faces a $50.6 million deficit for the fiscal year that begins July 1 despite three years of financial reforms that have produced $52 million in annual savings, CEO Steve Bland said.
State aid, which makes up about half of the authority's income, has not increased in four years and is scheduled to decrease by $25 million, to about $159 million, in the coming year because of the failure of the Legislature's Act 44 transportation funding law.
Enacted in 2007, it relied heavily on generating new toll revenue from Interstate 80. That plan was nixed by the Federal Highway Administration this spring, leaving the state with a giant deficit in its highway, bridge and transit budgets.
With no growth in revenue, Port Authority faces rising salary, health care, pension and fuel expenses, all of which are largely beyond its short-term control.
Its drivers are among the nation's highest-paid at $24.74 an hour and are under contract through June 2012. The contract, hammered out in December 2008 after acrimonious negotiations, provided 11 percent in raises over four years. The authority's salary expenditures are expected to increase by $5 million in the coming year.
The contract saved the authority an estimated $93 million in retirement benefits over four years and raised employee contributions toward health care and pensions, producing what Mr. Bland called "one of the largest gains in the history of public transit" for the agency.
Still, employee benefit costs are projected to rise by $3 million in the coming year, pushed up by health care premiums. The authority expects to spend $70 million on health care, $32 million of that for retirees, who outnumber active employees.
"It's illegal for us to change that. We can't change that," Mr. Bland said.
Fuel costs are expected to jump by at least $6 million. The authority has been paying $1.98 per gallon, well below the current $3 retail price of diesel, but its long-term contract is expiring. It projects paying an average $2.62 in the coming year, spokesman Jim Ritchie said.
Driver pay has been an occasional sore subject among the authority's critics since a study revealed that it was the highest in the U.S. when the cost of living is factored in.
"Driving a bus in Pittsburgh is a heck of a lot tougher than in Beaver County or Westmoreland County, unless those drivers are being shot at and spit at," Mr. Bland said, referring to recent attacks on Port Authority operators.
Even if he could "wave a magic wand" and cut driver pay by a dollar an hour, the savings -- $3 million -- would do little to erase the looming deficit, he said.
"It's a good sound bite. It's just not reality," Mr. Bland said.
In 2007, the authority cut service by 15 percent and terminated 267 workers, followed by a fare increase on Jan. 1, 2008. Fares were raised again for this year.
The authority also renegotiated its contracts to provide rides to university students, doubling its income from that program, Mr. Bland said. The effect of those and other changes improved the agency's bottom line by $52 million per year, he said.
"No system in the state, out of 38 operators, has done more than Port Authority" to cut costs, he said.
In 2006, a commission appointed by Gov. Ed Rendell conceded that public transit agencies in Pennsylvania were underfunded, but also said they needed to get their finances in order in exchange for more state aid.
After auditing seven of the state's largest transit agencies, the governor's Transportation Funding and Reform Commission said $60 million in annual savings was possible statewide.
Port Authority officials believe they have done their part, with the agency nearly reaching the statewide goal by itself, only to be shortchanged by the state. Act 44 produced only half of the funding recommended by the governor's commission, and that is about to drop to 30 percent.
State funding to the Port Authority has held steady at about $184 million since the commission made its findings.
The authority has only one realistic way to avoid another round of service cuts, fare increases and layoffs that would exceed those of three years ago -- an infusion from the state Legislature.
Without it, riders can expect 30 or more routes to vanish, late-evening and weekend service elimination, a whopping fare increase for suburban riders and layoffs of hundreds of its 1,300 drivers.
Mr. Bland said the authority is reluctant to raise the $2 base fare for Zone 1 because that would hurt its lowest-income customers and affect routes that are the most cost-effective.
On some urban routes, the authority's cost per passenger is less than the $2 fare, he said. Meanwhile, on routes that serve outlying suburbs, the per-passenger cost is $7 or more and the fare just $2.75.
The authority is seriously considering premium pricing for service to places like Tarentum, Marshall and Moon, Mr. Bland said.
"You could be talking $6 or $7" for a one-way fare, he said.
Premium pricing also could extend to the Light Rail Transit system, where the per-passenger cost is $6.21.
That would be just a part of the solution to budget woes that, if unaddressed, would produce $440 million in cumulative deficits by 2015.
Mr. Bland said the agency would have to cut service hours by 20 percent to 25 percent or more -- far deeper than the 2007 cuts, which fully eliminated 29 routes.
The authority's ongoing service revisions already are consolidating service from 186 routes to 122. Mr. Bland estimated the number could drop to 70 to 90 routes without aid from the state.
Hundreds of employees would be laid off, he said.
Addressing another common complaint, Mr. Bland said no public transit agency operates at a profit.
When Pittsburgh had twice its current population, 40 percent more transit riders and a denser population base with less sprawl, "33 private operators went bankrupt," which led to creation of a public transportation authority, he said.
According to Federal Transit Administration data, the Port Authority covers about 23 percent of its expenses at the farebox.
Among similar-sized agencies, fares in Denver cover 21 percent of expenses; in Cleveland, 19 percent; and in Minneapolis, 32 percent.
Jon Schmitz: email@example.com or 412-263-1868. Visit "The Roundabout," the Post-Gazette's transportation blog, at post-gazette.com.