BILL ANALYSIS
------------------------------------------------------------
|SENATE REVENUE & TAXATION COMMITTEE | SB1754 - Kelley|
| | |
------------------------------------------------------------
------------------------------------------------------------
|Senator Wesley Chesbro, | Amended: 4-5-00|
|Chair | |
| | |
------------------------------------------------------------
------------------------------------------------------------
| |
| |
------------------------------------------------------------
-----------------------------------------------------------
|Hearing: April 12, 2000 | Tax Levy | Fiscal: Yes|
| | | |
-----------------------------------------------------------
SB 1754 - Kelley
Page
SUBJECT: Income & Corporation Taxes: Allows tax credits
for employers who provide subsidized public
transit passes to employees in certain areas of
San Diego County, and allows a tax credit for
those employees
PRIOR LAW for tax years 1989 through 1995 allowed
employers a tax credit of 10% to 40% of the cost of
providing subsidized transit passes to employees (the
percentage depending on whether the employer offered free
or subsidized parking). Prior law also allowed a credit for
the purchase or lease of shuttle or commuter vehicles as
part of an employer-sponsored ridesharing incentive program
(20% for an employer with 200 or more employees and 30% for
employers with fewer than 200 employees).
EXISTING LAW (state and federal) allows employers to
deduct ordinary and necessary business expenses, which
would generally include the cost of providing transit
passes to employees. Existing state law also allows
employees to exclude from gross income the fair market
value of any benefit (except salary or wages) received from
an employer for participation in a ridesharing program in
California, including the value of a monthly transit pass
for use by the employee or his/her dependents.
THIS BILL allows a 40% tax credit for the costs
incurred by an employer for providing subsidized public
transit passes (defined as any pass, token, fare card,
voucher, or similar item entitling a person to
transportation on a publicly-owned mass transit vehicle) in
a redevelopment area or high density employment area
located in San Diego County. "High density employment area"
includes but isn't limited to Centre City, Coronado, Mira
Mesa and Sorrento Valley.
The bill also allows a credit for employees who
receive subsidized transit passes, equal to 40% of the
employee's cost of the pass if the employee uses mass
transit in San Diego County for at least 80 days during the
SB 1754 - Kelley
Page
year, and 20% of the employee cost for those using mass
transit for at least 40 days during the year.
The bill appropriates $140,000 to the San Diego
Association of Governments from the Infrastructure and
Economic Development Bank fund "for the purpose of creating
new options for mass transit during the time that the tax
credits allowed by this act are in effect."
Finally, the bill requires the transit agencies in San
Diego County to make an annual report to the Legislature as
to the results of the program implemented by the act (i.e.,
the credits and the appropriation).
FISCAL EFFECT:
Franchise Tax Board estimates not yet available. If
the transit pass credit were implemented statewide the
revenue loss would be $2 million annually. Confined to the
specific regions of San Diego County, however, the loss
will, of course, be much lower.
COMMENTS:
A. Purpose of the bill
The intent of the bill is to re-establish tax credits
for employers providing subsidized transit passes, and to
further encourage employees to utilize transit passes by
offering them a credit as well.
Traffic congestion in California is rapidly becoming
unbearable, especially in certain areas of high density
employment. The bill is intended to serve as a pilot
program in the particular areas of heavy urban traffic in
San Diego County, in the hope that use of subsidized
transit passes will materially reduce traffic congestion.
B. Prior credit expired
SB 1754 - Kelley
Page
The prior credit was authorized for seven years. Staff
are aware of no studies that evaluated whether the credits
reduced congestion or increased transit readership. This
bill requires the public transit agencies in San Diego
County to report to the Legislature on the results of the
program.
C. Prior credit reduced for employers who also provided
subsidized parking
This bill does not reduce the credit for employers who
also provide subsidized or free parking for their
employees. The prior tax credit allowed employers who
provided no free or subsidized employee parking to receive
a 40% credit, but the credit was reduced to 20% if the
employer provided subsidized parking, and was further
reduced to 10% of free parking was provided.
D. Prior legislation
This bill is similar to AB 913 (Cunneen) of the
1995-96 Session, AB 171 (Cunneen) of 1997, AB 1702
(Figueroa) of 1997-98, and SB 17 (Figueroa) of 1999. SB 17
remains in Senate Appropriations. And SB 1427 (Rainey) was
heard and defeated at the Committee's March 29 hearing.
SB 1754 - Kelley
Page
Support and Opposition
Support:San Diego Regional Chamber of Commerce
Metropolitan Transit Development Board
Syzygy Technologies, Inc.
West Capital
City of Coronado
San Diego Regional Economic Development
Corporation
California State University, San Marcos
---------------------------------
Consultant: Martin Helmke
April 7, 2000 10:31 AM