BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1128|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: SB 1128
Author: Glazer (D), et al.
Introduced:2/17/16
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE: 10-0, 4/5/16
AYES: Beall, Cannella, Allen, Bates, Galgiani, Leyva, McGuire,
Mendoza, Roth, Wieckowski
NO VOTE RECORDED: Gaines
SUBJECT: Commute benefit policies
SOURCE: Author
DIGEST: This bill removes the sunset from a program requiring
certain employers in the San Francisco Bay Area to offer
alternative-commute benefits to their employees.
ANALYSIS:
Existing law:
1)Authorizes the Bay Area Air Quality Management District
(BAAQMD) and the Metropolitan Transportation Commission (MTC)
to adopt an ordinance requiring employers in the Bay Area with
more than 50 employees to offer specified commute benefits to
their employees until January 1, 2017.
2)Requires these employers to offer employees one of the
following benefits:
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a) Pre-tax option: Employees may exclude from their taxable
wages expenses incurred for transit passes, vanpool
charges, or bicycle commuting up to the maximum amount
allowed by federal tax law.
b) Employer-provided subsidy: The employer subsidizes
public transit or vanpool fees paid by employees. The
subsidy must be equal to the monthly cost of commuting by
public transit or vanpool, or $75, whichever is lower.
c) Employer-provided transportation: The employer provides
free or low-cost commuter transportation service to its
employees.
d) An alternative program approved by either MTC or BAAQMD
that provides at least the same benefit as the above
options.
3)Requires MTC and BAAQMD to report on program outcomes to the
transportation policy committees of the Senate and the
Assembly on or before July 1, 2016.
This bill:
1)Authorizes MTC and BAAQMD to continue their commute benefit
program on a permanent basis by deleting the sunset date.
2)Deletes the requirement that MTC and BAAQMD issue a report to
the Legislature.
3)Changes the requirements relating to bicycles in two of the
commute benefit options to conform to federal law.
Comments
1)Purpose. According to the author, the goal of the commute
benefit program is to promote the use of transit and other
alternative commute modes in order to reduce single-occupant
vehicle commute trips, traffic congestion, and emissions of
greenhouse gases (GHGs) and other air pollutants from motor
vehicles. The program seeks to achieve these objectives by
expanding the number of employers who provide commuter
benefits to their employees.
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2)Background. In 2009, three Bay Area cities adopted ordinances
requiring employers to provide employees with incentives to
commute by public transit, ridesharing, and bicycle. BAAQMD
and MTC recognized this type of policy as an opportunity to
promote the use of alternative transportation throughout the
Bay Area, and sought authorization from the Legislature to
adopt an ordinance that would apply region-wide. SB 1339
(Yee, Chapter 871, Statutes of 2012) allowed the two entities
to develop a pilot ordinance with a January 1, 2017 sunset
date.
3)Costs to implement. The current BAAQMD-MTC commute benefit
program provides four options from which businesses can choose
to achieve compliance, one of which is a pre-tax option
whereby an employee may opt to have the employer deduct from
his or her gross income the cost incurred to pay for
alternative commuting options. This pre-tax program discounts
alternative commuting costs by 30% to 40% for employees and
reduces the payroll tax that an employer pays on employees'
wages by approximately 9%. Supporters argue that the pre-tax
option is a win-win-win solution because it saves money for
employers and employees while resulting in improved regional
outcomes. The other options pose higher costs to employers,
but it is strictly the employer's choice to offer one of these
benefit types. In the first year of the pilot program, the
vast majority (82%) of registered employers offered the
pre-tax option.
4)Changes pertaining to bicycles. Under current law, employers
that choose the pre-tax option are required to offer this
benefit to cyclists. However, federal tax code prohibits
excluding expenses related to bicycle commuting from taxable
income. In order to achieve consistency with federal law,
this bill strikes bicycling as an eligible commute expense for
the tax-exclusion program type. This bill instead allows
employers who offer a subsidy to extend this benefit to
bicycle commuters if they choose.
5)Results. SB 1339 required BAAQMD and MTC to report on the
effects of the commute benefit program to the Legislature in
order to provide an opportunity to evaluate the success of the
program. This bill deletes this requirement because the
report has been completed and released to the public. Of the
3,910 employers who completed online registration in the
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program, 55% were offering commuter benefits for the first
time in response to the program. This translates to
approximately 472,000 individual employees newly eligible to
receive commuter benefits, an estimated 205,000 of whom are
actually using the new benefits. The report estimates that
44,400 of these individuals would not have used an alternative
commute mode if the benefit were not available. The program
has resulted in 4.2 million fewer vehicle trips in the region
in its first 12 months, and prevented GHG emissions equal to
approximately 2.7% of the Bay Area's target under SB 375
(Steinberg, Chapter 728, Statutes of 2008), which set
regional goals for GHG emissions reductions from passenger
vehicle use. Supporters note that there is great potential to
build on these gains if the program is made permanent.
6)Ensuring compliance: an ongoing concern. In 2012, the Senate
Transportation and Housing Committee's analysis of SB 1339
raised the question of how MTC and/or BAAQMD would know
whether or not an employer was complying with the pilot
ordinance. The two entities now estimate that between 10,000
and 11,000 Bay Area employers may be covered by the ordinance
- a number far exceeding the 3,910 employers who enrolled in
the first year. The report emphasizes that eliminating the
sunset will provide additional opportunity to publicize the
program and its benefits and, by extension, register
additional employers. However, the employer mandate
ultimately may not be credible if BAAQMD and MTC are unable to
identify which employers are covered and verify their
compliance. To date, BAAQMD and MTC have emphasized
compliance assistance over enforcement as they implement the
program. This may be the most appropriate approach to
ensuring broad participation, given that offering commute
benefits can result in net savings for both employers and
employees. As the program matures, however, it may be
necessary to revisit the question of how compliance can be
assured.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified4/6/16)
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Alameda County Transportation Commission
Alameda-Contra Costa Transit District
Bay Area Air Quality Management District
California Association for Coordinated Transportation
California Transit Association
Coalition for Clean Air
Golden Gate Bridge Highway and Transportation District
Metropolitan Transportation Commission
Napa Valley Transportation Authority
San Francisco Chamber of Commerce
Santa Clara County Board of Supervisors
OPPOSITION: (Verified4/6/16)
None received
Prepared by: Sarah Carvill / T. & H. / (916) 651-4121
4/6/16 14:50:17
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