BILL ANALYSIS Ó SB 1339 Page 1 Date of Hearing: June 18, 2012 ASSEMBLY COMMITTEE ON TRANSPORTATION Bonnie Lowenthal, Chair SB 1339 (Yee) - As Introduced: February 24, 2012 SENATE VOTE : 30-7 SUBJECT : Commute benefit policies SUMMARY : 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 jointly adopt an ordinance requiring covered employers to offer covered employees specified commute benefits. Specifically, this bill : 1)Allows MTC and the BAAQMD to jointly adopt a commute benefit ordinance that requires covered employers, as defined, to offer one of the following options to their covered employees, as defined: a) A pretax option consistent with federal law allowing covered employees to exclude from taxable wages 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; and, c) Transportation furnished by the covered employer at no or low cost to the covered employee in a vanpool, bus, or multi-passenger vehicle operated by or for the employer. 1)Provides that a covered employer is not prevented from offering a more generous commuter benefit if consistent with the commute benefit ordinance. 2)Allows a covered employer offering an alternative commuter benefit not identified in a) - c) above, to seek approval of the alternative benefit from either MTC or the BAAQMD under specified conditions. 3)Requires that the commute benefit ordinance allow covered employers with at least six months to comply after adoption of SB 1339 Page 2 the ordinance. 4)Establishes the role of transportation management associations in the place of covered employers in determining compliance with 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)Provides that the statutory or regulatory authority of the MTC or the BAAQMD is not limited or restricted by the provisions of this bill. 7)Requires MTC or the BAAQMD, on or before July 1, 2016, if they implement a commute benefit ordinance, to jointly submit a report to the transportation policy committees of the Legislature on the effectiveness of the ordinance and sets requirements for that report. 8)Prohibits the use of MTC's federal planning funds to be used for the implementation and enforcement of the benefit commute ordinance. 9)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. 10)Defines "covered employee" to mean an employee who performed at least an average of 20 hours of work per week within the previous calendar month within the area where the ordinance is adopted. 11)Sunsets the provisions of this bill on January 1, 2017. EXISTING LAW : 1)Provides air districts, such as the BAAQMD, with primary responsibility for controlling air pollution from all sources, other than emissions from mobile sources. Establishes the jurisdiction of the BAAQMD for regulating stationary sources of air pollution within the nine counties that surround San SB 1339 Page 3 Francisco Bay (although portions of two counties are partially excluded): Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, southwestern Solano, and southern Sonoma counties. The BAAQMD is governed by a 22-member board that is comprised of all locally elected officials. 2)Authorizes BAAQMD to adopt and implement regulations to encourage or require the use of measures which reduce the number or length of vehicle trips. 3)Prohibits air districts or any other public agency, including a congestion management agency, from requiring an employer to implement an employee trip reduction program unless the program is expressly required by federal law. 4)Under federal law, establishes metropolitan planning organizations (MPOs) for the purpose of developing regional transportation plans in urbanized areas with populations greater than 50,000. 5)Creates MTC, which serves as the MPO and the regional transportation planning agency for the nine-county San Francisco Bay Area (the same counties within the jurisdiction of BAAQMD except that the MTC jurisdiction includes both Solano and Sonoma Counties in their entirety). MTC is generally responsible for transportation planning, coordinating, and allocating funds from certain state and federal highway and transit programs. Its voting members consists of fourteen 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). 6)Requires each employer with 50 or more employees that provides a parking subsidy to employees to provide a cash allowance to an employee who does not use the parking space in an amount equivalent to the amount the employer would otherwise pay to provide that employee a parking space. 7)Requires the California Air Resources Board (ARB) to establish greenhouse gas emission reduction targets for vehicles and requires a regional transportation plan to include a sustainable communities strategy designed to achieve the targets. SB 1339 Page 4 8)Under federal law, allows employers to allow employees to pay for transit and vanpool expenses with pre-tax dollars, up to $230 per month. FISCAL EFFECT : Unknown COMMENTS : This bill is basically a reintroduction of a measure that was vetoed by the Governor, SB 582 (Yee of 2011), on August 1, 2011. This bill would authorize, until January 1, 2017, MTC and the BAAQMD to jointly adopt a regional ordinance requiring certain employers located within their common area of jurisdiction to offer employees specified commute benefits with the goal of reducing single-occupant vehicle trips. If a commute benefit ordinance is adopted, a joint assessment of the effectiveness of the ordinance is required of MTC and the BAAQMD by July 1, 2016. The author indicates that a regional commute benefit policy will give MTC and the BAAQMD a new tool to help achieve the greenhouse gas reduction targets set by ARB and reduce other tailpipe emissions and further contends that "without legislation, such a commute benefit requirement would not be allowed." Current local ordinances : Several cities, including Berkeley, Richmond, and San Francisco, and San Mateo County, have already adopted commute benefit ordinances with similar options as those provided in this bill. According to the author, "In the cities where these policies are already in place, most employers have chosen the first option. This option provides a significant financial benefit to the employer by reducing payroll taxes (roughly 9% of subject wages) and lowers employee commute costs by up to 40%." Accordingly, although several entities have implemented their own local ordinances, this bill will establish a uniform procedure to be followed by all covered employers within the San Francisco Bay Area region. Increased role for MTC : MTC, as an urbanized area with more than 50,000 persons, is the designated MPO with the purpose of developing the area's regional transportation plan, as required by federal law. MTC is also the regional transportation planning agency established under state law and is generally SB 1339 Page 5 responsible for transportation planning and allocating funds from certain state and federal highway and transit programs. While MTC can use its authority to program funding for projects that it deems to meet regional priorities as a means to compel local transportation agencies within its jurisdiction to adopt policies and programs consistent with regional transportation goals, it does not have authority to directly govern private sector businesses as this bill provides. Furthermore, SB 375 (Steinberg) Chapter 728, Statutes of 2008, requires ARB to develop regional targets for greenhouse gas emission reductions for the automobile and light-duty truck sector and requires MTC to develop and incorporate into its regional transportation plan a sustainable communities strategy that demonstrates how the region will achieve its regional target. While MTC does not have authority over many elements addressed by a sustainable communities strategy, such as local land use, the policy contained in SB 375 reflects climate change as a regional concern and acknowledges that regional planning agencies have a role to play in reducing greenhouse gas emissions. On a limited pilot basis, this bill would confer additional options to the MTC for their SB 375 compliance efforts in reducing greenhouse gas emissions from single occupancy vehicle trips. Federal planning funds : Federal planning funds allocated to MTC are authorized for general transportation planning purposes. Implementation and enforcement of the commute benefit ordinance would not necessarily be consistent with the purposes for which the federal planning funds are allocated and, accordingly, such uses are expressly prohibited by this bill. Non-elected local voting commissioner : This bill prescribes new roles and responsibilities for MTC on a limited-term basis for enacting regional commute benefit option ordinances. However, the current governing board of MTC is not fully comprised of locally-elected, voting members. One MTC commissioner was appointed by a regional body and is not elected by popular vote, unlike all the other commissioners. Accordingly, that commissioner is not accountable to the local citizenry but is accountable to that appointing power. For the enactment of the regional commute benefit ordinance as this bill provides, should the MTC vote be from only the 13 other local elected officials? SB 1339 Page 6 Commute benefit option implementation questions : There are questions related to the implementation of this bill's impact. This bill does not specify if the commute benefit ordinance will be enforced by BAAQMD or MTC, or both. How will these entities know whether or not a covered employer is complying with the ordinance? What are the penalties for failure to comply? If there are monetary sanctions, how will the moneys be distributed? According to the sponsors, this bill is silent regarding answers to these questions in order to allow flexibility in developing a compliance regime that meets the needs of covered employers within the region. Support and opposition : Writing is support of this bill, numerous entities indicate that the bill promotes convenient alternatives to single-occupant vehicle travel by making them more cost-effective and provides "win-win benefits" to both employers and employees in terms of lower payroll and income taxes and significant public benefits in terms of reduced tailpipe emissions and traffic congestion. Writing in opposition to this bill, the California Manufacturers and Technology Association and the California Taxpayers Association indicate that the costs of implementing and maintaining an employee fringe benefit program can be high and is especially problematic for state and local government employers as well as private employers "during this time of economic crisis." Governor's veto : This bill is essentially the same as SB 582, which this committee passed last year on a vote of 14 to 0, on June 21, 2011, but was ultimately vetoed. In his veto message, the governor expressed concerns that SB 582 would impose a new mandate on small businesses at a time of economic uncertainty. He further indicated that local governments can already mandate these programs and have done so. In response, the author has restricted the bill to establish a pilot program only for San Francisco Bay Area employers and not extend its provisions statewide. Further, this bill lowers the number of businesses potentially affected by the ordinance by increasing the size threshold from businesses with 20 employees to businesses with 50 employees. This change reduces the number affected from 14% to only 5% of the businesses in the region. Meanwhile, the ordinance would still apply to 60% of all employees in the affected region. SB 1339 Page 7 REGISTERED SUPPORT / OPPOSITION : Support Bay Area Air Quality Management District (co-sponsor) Metropolitan Transportation Commission (co-sponsor) Alameda-Contra Costa Transit District American Federation of State, County and Municipal Employees American Lung Association in California Bayer HealthCare California Air Pollution Control Officers Association California Transit Association City of Burlingame Enterprise Rent-A-Car Company of San Francisco 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 Transform Wendel, Rosen, Black and Dean Opposition California Manufacturers and Technology Association California Taxpayers Association Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093