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SB 582

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Regional Commuter Benefit Legislation Vetoed

August 2011
On August 1, 2011 Governor Brown vetoed Senate Bill 582 (Yee), a measure aimed at reducing both traffic congestion and greenhouse gas emissions by providing a financial incentive for employees to commute to work by public transit, vanpool, bicycling or other means than driving alone.

Jointly sponsored by the Metropolitan Transportation Commission (MTC) and the Bay Area Air Quality Management District (BAAQMD), the final version of the SB 582 would have established a four-year pilot program under which local air districts and metropolitan planning organizations could take joint action to require employers with 50 or more employees (or, at the agencies’ discretion, 20 or more employees) to adopt commute benefit policies that offer workers one of the following:

  • The option to pay for their transit, vanpooling or bicycling expenses with pre-tax dollars, as allowed by federal law;
  • A transit or vanpool subsidy of $75 per month;
  • A free shuttle or vanpool operated by or for the employer; or
  • Any employer-chosen alternative to these options that can be demonstrated to provide an equal or greater benefit.

SB 582 was modeled on local ordinances already adopted in San Francisco, Berkeley and Richmond, and at San Francisco International Airport (SFO). While the employer threshold is set at 20 or more in San Francisco and SFO, Berkeley and Richmond set the threshold at 10 or more, in recognition that setting it at 20 would have denied the benefit to most of the cities’ workers, thereby reducing its efficacy.

Not surprisingly, the vast majority of employers subject to these local ordinances in the Bay Area have chosen the pre-tax option, which actually saves the employer payroll taxes (about 9 percent of the amount withheld) and is simple to administer.  Based on the maximum amount that can be withheld per employee under federal law (currently $230/month), an employer can reduce its payroll tax burden by $244 per year per employee, while saving their employee roughly $1,100 per year in taxes. In evidence of business support for this program, Macy’s and Payless Shoesource chose to expand their programs to all their employees nationwide, after being required to offer them in S.F. Similarly, United Airlines, Delta Airlines and Continental Airlines have all chosen to offer commute benefits nationwide after being required to offer the benefits to employees working at SFO. It is also noteworthy that both the Berkeley Chamber of Commerce and the San Francisco Chamber of Commerce actively lobbied in favor of SB 582.

While the bill enjoyed strong bipartisan support in the Senate, passing by a vote of 36-2, late breaking opposition by the California Chamber of Commerce, Cal Tax and the California Manufacturing and Trade Association characterized it as harmful to businesses, resulting in a much tighter vote of 47-28 on the Assembly Floor. The Governor’s veto message noted his support for the goal of reducing vehicle trips, but expressed concern imposing a “new mandate on small businesses at a time of economic uncertainty.”

During the fall, MTC and BAAQMD will review the legislation to determine whether changes could be made that might help to secure the Brown Administration’s support in 2012, while still authorizing a meaningful commuter benefit ordinance for the San Francisco Bay Area.

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