Gov. Jerry Brown’s recent signing of a bill that authorizes a four-year pilot commuter benefits program is expected to take cars off San Francisco Bay Area roads and put money back in the pockets of roughly 60 percent of the area’s workers.
Depending on how eligible employees choose to take advantage of the program, it could offer significant savings — or added expenses — for businesses, transportation officials say.
The legislation affects Bay Area companies with 50 or more full-time employees who work more than 20 hours a week. Those firms are required to offer employees a choice of three primary options, all designed to give a financial incentive to carpool or use mass transit.
Newer companies, such as Silicon Valley titans Google and Oracle, already offer expansive commuter benefit programs. Supporters of the legislation say its greatest impact will come in forcing some older companies to catch up, or risk losing workers to competitors.
Under the pilot program, one of the three employee choices is known as “the pre-tax option.” It enables workers to elect to pay for transit passes, van-pooling and bicycling expenses with pre-tax dollars — reducing the amount they owe in payroll taxes, primarily on Social Security and Medicare. Employees would also save an estimated $500 to $1,000 annually in commuting costs.
Another would allow employers to offer a subsidy of up to $75 to offset the monthly cost of commuting by transit or vanpool. A third choice falls on employers to provide a free transportation shuttle or vanpool.
Companies such as Google with programs in place, or businesses that opt to custom-design a plan, need approval from two regional agencies in charge of enforcing the program: the Metropolitan Transportation Commission and the Bay Area Air Quality Management District.
Not everyone is pleased with the law’s mandate. The California Tax Payer’s Association, a nonprofit group, argues that while employers will see some payroll tax benefits, there are high costs associated with both maintaining and implementing a commuter benefit program.
John Goodwin, public information officer for the Metropolitan Transportation Commission, said this may be true for the employer-paid benefit or employer-provided transit options in the law. But the pre-tax option is “a win-win for employers and employees,” he said.
John Ford, executive director of the Peninsula Traffic Congestion Relief Alliance, said about 1,000 companies in San Mateo County will qualify, though he was unsure of how many have a commute program in place.
Employers will be given six months after the start of 2013 to contract with a benefits company and implement a program that complies with the law. The benefit programs will then remain in effect until Jan. 1, 2017.
So far this year, the Bay Area Air Quality Management District has issued 10 “Spare the Air” smog alerts, an indication of when ozone pollution is forecast to reach unhealthy levels and residents are encouraged to take public transit, bike or walk. “Anything we can do to help people find alternatives to driving their car” should be applauded, said Carol Groome, a San Mateo County supervisor and supporter of the new law.
The air quality district is responsible for regulating sources of air pollution within the nine San Francisco Bay Area counties.
The long-term goal of the law that Brown signed is to help the Bay Area meet its emissions-reductions requirements and to create consistency across political boundaries within the Bay Area, according to Goodwin. Similar commuter benefit programs are in effect in the cities of San Francisco, Berkeley and Richmond and at San Francisco International Airport.
Whether the pilot program succeeds will come down to employee initiative, taking advantage of the benefit options that will soon be available to them, Ford said.
“If the employees have the opportunity to get their transit less expensively than they would now, I think it’s going to give a lot of people incentives to try alternative modes of transportation,” he said. “How much? I don’t know. But every time we get one driver off the road it helps the commute for everyone else.”