BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  SB 1339|
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                                 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 
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          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.


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             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 

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             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 

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          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)


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          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

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