BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1339| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 1339 Author: Yee (D) Amended: As introduced Vote: 21 SENATE TRANSPORTATION & HOUSING COMMITTEE : 5-1, 4/10/12 AYES: DeSaulnier, Kehoe, Lowenthal, Pavley, Rubio NOES: Gaines NO VOTE RECORDED: Harman, Simitian, Wyland SENATE ENVIRONMENTAL QUALITY COMMITTEE : 5-1, 4/30/12 AYES: Strickland, Blakeslee, Hancock, Kehoe, Lowenthal NOES: Simitian NO VOTE RECORDED: Pavley SUBJECT : Commute benefit policies SOURCE : Bay Area Air Quality Management District DIGEST : This bill authorizes, until January 1, 2017, a pilot program in the San Francisco Bay Area that allows the Metropolitan Transportation Commission (MTC) and the Bay Area Air Quality Management District (BAAQMD) to adopt jointly an ordinance requiring certain employers to offer their employees specified commute benefits. ANALYSIS : Existing law creates the MTC, which serves as the metropolitan planning organization and the regional transportation planning agency for the nine-county San Francisco Bay Area. While specific responsibilities may CONTINUED SB 1339 Page 2 vary somewhat across regions, these types of planning organizations generally are responsible for transportation planning and allocating funds from certain state and federal highway and transit programs. MTC consists of 14 commissioners appointed directly by local elected officials from across the region and two members appointed by regional agencies (Association of Bay Area Governments and the Bay Conservation and Development Commission). Existing law also creates the BAAQMD to regulate stationary sources of air pollution in the nine-county bay area region. Air quality management districts are responsible for achieving and maintaining state and federal ambient air quality standards within their jurisdiction. Existing law broadly authorizes air districts to adopt and enforce rules and regulations to achieve these standards, including adopting rules to reduce or mitigate emissions from indirect and areawide sources of air pollution and to encourage the reduction of the number or length of vehicle trips. A 22-member board composed of locally elected officials from each of the nine Bay Area counties governs the air district. BAAQMD's jurisdiction is similar to MTC's except that it does not include northern Sonoma or eastern Solano counties. This bill: 1. Allows BAAQMD and MTC to jointly adopt a commute benefit ordinance for their common jurisdiction that requires employers to offer one of the following options: A. A pretax option consistent with federal law allowing covered employees to exclude from taxable wages certain employee transit pass, vanpool, or bicycle commuting costs. B. An employer-paid benefit whereby the covered employer offers a subsidy to offset the transit or vanpool commuting costs. In 2013 the subsidy must be equal to either the monthly cost of commuting or $75, whichever is lower, and annually thereafter the subsidy must be adjusted as consistent with the California Consumer Price Index. CONTINUED SB 1339 Page 3 C. Transportation furnished by the covered employer at no or low cost to the covered employee in a vanpool, bus, or multipassenger vehicle operated by or for the employer. 2. Allows an employer offering an alternative commuter benefit not identified above to seek approval of the alternative benefit from BAAQMD or MTC, if the alternative benefit provides at least the same benefit in terms of reducing single-occupant vehicle trips as any of the options above. 3. Provides that an employer participating in, or represented by a transportation management association that provides the employer's covered employees a benefit that meets the requirements above, is deemed in compliance and requires BAAQMD and MTC to communicate directly with the transportation management association, rather than the participating employers, to determine compliance. 4. Requires that the commute benefit ordinance provide covered employers with at least six months to comply after adoption of the ordinance. 5. Requires a commute benefit ordinance to specify how the implementing agencies will inform covered employers, how compliance will be demonstrated, the procedures for proposing and criteria used to evaluate an alternative commuter benefit, and any consequences for noncompliance. 6. Requires BAAQMD and MTC, if they implement an ordinance on or before July 1, 2016, to report to the Legislature and sets various requirements for that report. 7. Defines "covered employer" to mean any employer for which an average of 50 or more employees perform work for compensation on a full-time basis within the area where a commute benefit ordinance is adopted. 8. Defines "covered employee" to mean an employee who performed at least an average of 20 hours of work per week within the pervious calendar month within the area CONTINUED SB 1339 Page 4 where the ordinance is adopted. 9. Provides that the statutory or regulatory authority of BAAQMD and MTC is not limited or restricted. 10.Provides the above provisions sunset and are repealed January 1, 2017. Comments Commute benefit program outcomes . The ordinance proposed in this bill provides three options from which businesses can choose to achieve compliance, one of which is a pre-tax option whereby an employer allows an employee to opt to have the employer deduct from his or her gross income the cost incurred to pay for alternative commuting options, such as the costs of a transit pass, vanpool service, or bicycle commuting. This pre-tax program effectively discounts these alternative commuting costs by 30 to 40% for employees. In addition to reducing costs for employees who choose to participate, such a program reduces the payroll tax that an employer pays on employees' wages by approximately nine percent. According to the sponsor, in cities that have ordinances similar to the one this bill proposes, most employers choose to comply by establishing a pre-tax program. Research suggests that the savings made available by programs such as this is often enough to encourage some employees to shift commute modes. Evaluating programs across the country that incorporate the pre-tax option, the Transit Cooperative Research Program, sponsored by the Federal Transit Administration, concluded in 2005 that commute benefits programs can be effective at increasing transit ridership, reducing vehicle travel, and reducing parking demands at a regional level. Although the impacts of these programs on travel behavior at individual worksites vary based on various factors, these benefits programs usually increase transit use on a regional scale. This bill is similar to SB 582 (Emmerson), Session of 2011, except that this bill applies only to the San Francisco Bay Area and is limited to businesses of 50 employees or more. (Amendments taken in the Assembly changed the author of SB CONTINUED SB 1339 Page 5 582 from Senator Emmerson to Senator Yee). In his SB 582 veto message Governor Brown wrote: This bill authorizes a regional planning organization, under certain conditions, to require businesses with 20 or more employees to offer commute benefits. City and county governments already can mandate programs of this type-and some have. While I support the goal of reducing vehicle trips, this bill would impose a new mandate on small businesses at a time of economic uncertainty. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 5/1/12) Bay Area Air Quality Management District (source) AFSCME Alameda-Contra Costa Transit District American Lung Association Bayer HealthCare California Air Pollution Control Officers Association California Transit Association Cities of Burlingame and Millbrae Enterprise Rent-A-Car Company Metropolitan Transportation Commission Regional Asthma Management and Prevention San Francisco Chamber of Commerce San Francisco Lesbian Gay Bisexual Transgender Community Center San Francisco Planning and Urban Research Association San Francisco Small Business Commission San Mateo County Transit District Schumacher and Walker Insurance Associates Sierra Club California Union Square Business Improvement District Walk San Francisco Wendel, Rosen, Black and Dean LLP OPPOSITION : (Verified 5/1/12) CONTINUED SB 1339 Page 6 California Taxpayers Association ARGUMENTS IN SUPPORT : According to the sponsor, BAAQMD, this bill is intended to give itself and MTC a new tool to help reduce traffic congestion, cut air pollution, and achieve the transportation-related greenhouse gas reduction targets established by the Air Resources Board in 2010 consistent with SB 375 (Steinberg), Chapter 728, Statutes of 2008. ARGUMENTS IN OPPOSITION : According to the California Taxpayers Association, "Existing state and federal ridesharing tax incentives have been available to employers for almost three decades on a voluntary basis - they are not mandated by government?many companies with 50 or more employees simply cannot afford to offer ridesharing benefits, especially when business is slow." JJA:kc 5/1/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED