BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 1339
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: yee
VERSION: 2/24/12
Analysis by: Eric Thronson FISCAL: no
Hearing date: April 10, 2012
SUBJECT:
Commute benefit policies
DESCRIPTION:
This bill authorizes, until January 1, 2017, a pilot program in
the San Francisco Bay Area that allows the Metropolitan
Transportation Commission and the Bay Area Air Quality
Management District to adopt jointly an ordinance requiring
certain employers to offer their employees specified commute
benefits.
ANALYSIS:
Existing law creates the Metropolitan Transportation Commission
(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 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
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).
Existing law also creates the Bay Area Air Quality Management
District (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
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vehicle trips. A 22-member board composed of locally elected
officials from each of the 9 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 establishes a pilot program in the greater San
Francisco Bay Area allowing MTC and BAAQMD to adopt jointly a
commute benefit ordinance that requires employers of 50 or more
full-time employees to offer certain employees one of the
following choices:
A program that allows employees to withhold commute
costs from taxable wages, as long as those costs are
incurred for transit or vanpool charges or for bicycle
commuting, as allowed by federal law.
A subsidy for employees that offsets the monthly cost of
commuting by transit or vanpool to not exceed $75 and which
adjusts annually with the California consumer price index.
Transportation provided by the employer at little or no
cost to the employee through a vanpool or bus operated by
or for the employer.
Employers would have at least six months following the adoption
of the ordinance to comply. Employees who performed at least 20
hours of work per week, on average, within the previous calendar
month would be eligible for this benefit.
In addition, MTC and BAAQMD must at least specify the following
when adopting the ordinance: (1) how the district or commission
will inform affected employers of the requirements, (2) how
employers can demonstrate compliance, and (3) any consequences
for noncompliance. Finally, this bill requires that the
agencies jointly submit a report to the Legislature evaluating
the effectiveness of the ordinance by July 1, 2016.
This program will sunset January 1, 2017, unless the Legislature
extends this date.
COMMENTS:
1.Purpose . 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
SB 1339 (YEE) Page 3
established by the Air Resources Board in 2010 consistent with
SB 375 (Steinberg), Chapter 728, Statutes of 2008.
2.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 percent 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.
3.Cost of implementing the pre-tax option . 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. Some opponents have raised
concerns about the cost of implementing the pre-tax option.
Others have indicated the program was inexpensive and easy to
implement. According to the bill's sponsor, the primary
difference leading to these disparate experiences may depend
on the third-party business administering the program. For
example, one program administrator in the Bay Area, Clipper
Direct, charges businesses three dollars per participating
employee per month with no annual or set up fees. Businesses
choosing this vendor or a similar competitor would not likely
SB 1339 (YEE) Page 4
incur any increased costs.
4.Governor's veto . Except for two differences, this bill is
essentially the same as SB 582 (Emmerson), which this
committee passed last year 8 to 0 on April 26, 2011, but was
ultimately vetoed by the governor. (Amendments taken in the
Assembly changed the author of SB 582 from Senator Emmerson to
Senator Yee.) The first significant difference is that while
last year's bill allowed any air quality management district
and metropolitan transportation organization to adopt a
commute benefit ordinance, this bill establishes a pilot
program only in the San Francisco Bay Area. The sponsor
believes that changing this proposal to a pilot in the Bay
Area may alleviate the governor's concerns, particularly
because the boards of the adopting organizations are comprised
of local representatives who are responsible to local
constituencies.
The governor's veto message indicated that he was concerned
this bill would impose a new mandate on small businesses at a
time of economic uncertainty. The second significant change
made to this bill compared to SB 582 is that it lowered 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 percent to only 5 percent
of the businesses in the region. Meanwhile, the ordinance
would still apply to 60 percent of all employees in the bay
area.
5.Unknowns . There exist several unknowns that make it difficult
to assess the potential impacts of the bill. First, the bill
does not specify how a commute benefit ordinance will be
enforced. How will MTC and/or BAAQMD know whether or not an
employer is complying with the ordinance? What are the
penalties for failure to comply? The bill is silent with
regard to these provisions in order to give the regional
boards the flexibility to develop a compliance regime that
meets the needs of employers within their own region.
6.Double-referral . This bill is double-referred to this
committee and to the Committee on Environmental Quality. If
this committee passes the bill, it will therefore be referred
to the Environmental Quality Committee.
POSITIONS: (Communicated to the committee before noon on
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Wednesday, April 4,
2012.)
SUPPORT: Bay Area Air Quality Management District
(sponsor)
San Francisco Chamber of Commerce
Schumacher & Walker Insurance Associates
Enterprise Rent-A-Car Company of San Francisco
Bayer Healthcare
San Francisco Lesbian Gay Bisexual Transgender
Community Center
Metropolitan Transportation Commission
American Federation of State, County, and
Municipal Employees
American Lung Association
Wendel, Rosen, Black & Dean LLP
California Air Pollution Control Officers
Association
California Transit Association
Sierra Club California
OPPOSED: California Taxpayers Association