Another cost of doing business in California?

By CMTA Staff

Capitol Update, May 4, 2012

Senator Leland Yee (D-San Francisco) is the author of SB 1339, “Commute Benefit Policies”, which would authorize the Metropolitan Transportation Commission and the Bay Area Air Quality Management District to jointly adopt a "commute benefit ordinance," and, thereby, require employers — including state and local governments — with 50 or more employees in nine Bay Area counties to offer their employees one of three ridesharing benefits within six months of the adoption of such an ordinance.

The three options are:

  1. Employer subsidy to offset monthly cost of commuting via public transit or by vanpool or $75, whichever is lower.
  2. Employer-provided transit at no cost to employees for vanpool, bus or a similar multi-passenger vehicle.
  3. A pretax option allowing the employee to elect to exclude mass transit, van pool or bicycle commuting costs from taxable wages up to the maximum allowed under federal law.

Even the least costly option, the pretax incentive, would be problematic for private employers during this time of high unemployment.

For example, one company that currently provides a pre-tax ridesharing option to its employees currently pays its third-party administrator a $65,000 annual program fee and an additional charge of up to $6.30 per participating employee, per year. For a company with 3,500 participants, these costs can reach $87,000 per year. The company also paid a $50,000 one-time implementation fee to the third-party administrator to set up the program.

State and federal ridesharing tax incentives have been available to employers for almost three decades on a voluntary basis. While we acknowledge that costs associated with offering employees a fringe benefit are higher for larger businesses, many companies with 50 or more employees simply cannot afford to offer such a fringe benefit, especially when business is slow.

While this bill pertains strictly to the Bay Area, the pilot project would set a precedent that would likely result in the same mandate on businesses in the rest of the state within a few years.

CMTA opposes this bill.

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