Executive Statement

LANTA has released its draft budget for the next fiscal year which begins July 1, 2025. The draft budget includes assumptions that would include the largest service cut instituted by the transit authority in decades. The draft budget assumes a service cut of 20 percent and a fare increase of 25 percent on the fixed route bus system and 25 percent or more on the Shared Ride for Seniors paratransit service. These actions are being proposed to address an annual recurring unfunded deficit of approximately $8 million on the bus system and an additional $3 million for the Shared Ride for Seniors services starting in the coming fiscal year.

The last time transit funding was adjusted at the state level was with the passage of the transportation funding legislation Act 89 of 2013. Act 89 was dubbed the “decade of investment” and while the legislation did not adjust the amount of funding to transit in the operating assistance program, the bill did identify new funding for transit capital projects throughout the state. This freed up some level of operating funding for transit agencies to put towards growth in costs and service expansion but also allowed for significant new investments in the capital assets of the state’s transit systems. Since the passage of Act 89 of 2013, LANTA has been able to modernize its technology, replace old buses and paratransit vans and improve its operating and passenger facilities. Act 89 left in place the level of state sales tax revenue that is directed towards operating assistance for transit agencies. The last time that level was adjusted was part of Act 44 of 2007.

At the time Act 89 was enacted, there was already a gap between costs and the funding provided through the state program, which transit agencies made up for with a combination of federal transit funding, local grants, fares and other revenues. As costs have increased, driven primarily by wages and health benefits, they have outpaced the growth in funding, creating a growing gap over the years. That budget gap is exacerbated in areas like the Lehigh Valley that are experiencing growth.

“The Lehigh Valley continues to add population and jobs along with new land development or redevelopment, all resulting in more people going to more places at more times throughout the day” — Owen O’Neil, Executive Director

Since 2010, the Lehigh Valley grew by 50,000 people and grew by 7,000 people in 2024 alone. That is the equivalent of adding a small city to the region in just 15 years. Over that same period, employment in the valley grew by 65,000 jobs from 350,000 to 416,000; and the Lehigh Valley economy grew from a GDP of $32.7 billion to $55.7 billion, a 70% increase. Between 2000 and 2024, the Lehigh Valley Planning Commission reviewed over 9,800 development plans with 76% of the development occurring in the valley’s suburban or rural municipalities. A total of 48 million square feet of industrial and warehouse space has been approved in the valley just since 2015.

LANTA has attempted to address that regional growth with expanded service over the years. The amount of service provided by LANTA is roughly 25 percent more than in 2013 when Act 89 was passed. This has included significant increases in service levels to industrial park areas in the Breinigsville and Forks/Palmer Township areas. LANTA has also pursued the development of a higher frequency core bus route network with the implementation of the service elements of the Enhanced Bus Service plan, a Bus Rapid Transit (BRT) type service for the region.

LANTA would have faced this budget deficit earlier but for the past three years, the agency has been able to fill that budget gap with federal COVID relief funding which it received in fiscal year 2021. Those funds are now expended and the budget gap in the coming fiscal year and subsequent years is unfunded.

In his budget address in 2024, Governor Josh Shapiro proposed an increase in the allocation of statewide sales tax revenue dedicated to transit operating assistance from 4.4% of revenue to 6.15%. Last year, the Pennsylvania House of Representatives passed legislation which included the transit funding increase but the adjustment did not make it into the final budget deal. The Governor included the proposal again in his budget address this year and is advocating for its inclusion in the coming year’s state budget.

It is estimated that this change would result in an annual funding increase for LANTA of over $7 million. This funding increase would address the immediate funding gap on the fixed route bus system and could allow LANTA to avoid crippling service cuts. However, without a fix to the funding level and funding mechanism of the Shared Ride for Seniors program, LANTA would still require some adjustments to service levels to fixed route bus and Shared Ride for Seniors paratransit service. These reductions would be necessary to address the full budget gap from both bus and Shared Ride services and would ensure that the funding level would be sustainable over time.

Absent any new funding, LANTA will need to move forward with significant service reductions which will include the elimination of full routes and the curtailment of hours and service frequencies on all remaining routes. Evening and weekend service will see significant reductions. The availability of Shared Ride for Seniors paratransit service will need to be limited to only certain days of the week with restricted hours.

Specific plans have not yet been finalized, but LANTA would plan for these service cuts to be instituted in January 2026 or earlier. If it is necessary to implement service cuts, LANTA would hold public meetings later in the year to present the specific service reduction plans as well as the plan for fare increases.

The service reductions assumed in the fiscal year 2026 budget are only what is needed to balance the budget for the coming year. Without any new funding, further cuts would be needed in the following fiscal year to prevent recurring annual deficits going forward. This could require reductions of 40 percent or more from current levels.

“Service reductions are the last thing we want to do. At LANTA, we strive to expand people’s mobility options and their access to opportunity. In our most recent rider survey, 75% of LANTA riders indicated that they use LANTA service to get back and forth to work.” — Owen O’Neil, Executive Director

This level of service cuts will disrupt people’s lives and make it harder if not impossible to get to their jobs, medical appointments, grocery stores and all of their necessary trips. Companies will find it harder to attract and retain the employees they need to grow or even maintain their businesses here in the Lehigh Valley. Over the past several years, LANTA has been trying to develop the regional system into the type of comprehensive, full-service transit network that is reflective of the size and dynamic nature of the Lehigh Valley. These service cuts will represent an enormous step backward for the region.

Summary & Key Impacts

• 20% cut to fixed route bus service
• 25%+ fare increases on buses and paratransit
• Service reductions may begin January 2026

Funding History

Transit operating funding level hasn’t increased since Act 44 (2007). Act 89 (2013) focused on capital projects. Operating costs—especially labor and benefits—have steadily outpaced growth in funding.

Regional Growth

• +50,000 population increase since 2010
• +65,000 jobs added
• +70% GDP growth
• 48M sq. ft. of industrial space since 2015

LANTA responded by expanding service 25% since 2013, especially to industrial zones and transit corridors.

Legislative Proposal

Governor Shapiro proposed increasing transit’s share of sales tax from 4.4% to 6.15% in both the 2024 and 2025 budgets. This could provide LANTA an additional $7M annually—enough to close the fixed route funding gap.

Consequences of Inaction

• Elimination of entire routes
• Severe reduction in evening/weekend service
• Shared-Ride for Seniors limited to certain days/hours
• Further cuts in FY2027—up to 40% total service reduction

Links

• Draft Budget Document