11/30/2010: TransForm Comments on Proposed Congressional Cuts in Commuter Benefits

For Immediate Release

Contact:
Carli Paine, Transportation Program Director
(510) 740-3150 x315
(617) 803-1586 cell

Despite rising fares, transit riders face cut in commuter benefits

Pre-tax transit benefit limit set to drop from $230 to $120 if Congress fails to act

After already absorbing fare increases from nearly every transit agency in the Bay Area, transit commuters now face a cut in pre-tax commuter benefits for their bus, train or ferry ride to work. Transit riders’ pre-tax commuter benefits will be cut nearly in half at the end of 2010 unless Congress extends the increased transit commuter benefit included in the 2009 stimulus bill.

"This bill levels the playing field by supporting all commuters and reducing congestion," says Carli Paine, Transportation Program Director for TransForm. "People who choose to take a bus or train to work should get the same commuter benefits as people who opt to drive."

The commuter benefit currently covers up to $230 per month from a person’s gross income to pay for their public transit commutes, which is an increase from the $120 per month benefit that was in place until 2009. Employees whose monthly public transit costs are less than $230 can deduct their full transit ticket from their paychecks, tax free.

The change could cost transit riders $500 per year in additional taxes starting in 2011, depending on their tax bracket. Employers, too, would face an increase in payroll taxes as up to $1,320 in wages per transit-riding employee shifts from the “pre-tax” to the “taxable income” category. And, transit agencies fear the reversion will cause commuters to switch to driving, reducing farebox revenues at a time when they are struggling with budget shortfalls.

“Extending the commuter benefit is critical”, said San Francisco County Supervisor Sean Elsbernd, who also chairs the Caltrain Board of Directors. “Traffic congestion isn’t just a problem for motorists; it has negative impacts on our air quality, our economy and our overall quality of life. We should be exploring ways to offer greater incentives to promote transit ridership, not taking them away.”

Bay Area commuters who could be impacted include:

  • Qiana Cameron, a salesperson at Veritable Vegetable in San Francisco, commutes from Richmond with a combination of AC Transit, BART and Muni at a monthly cost of over $300. Currently she uses the entire pre-tax benefit to assist her with commute costs, but after January 1 only about 40% of her transit costs would be covered.
  • Charles Johnson, a systems engineer at SolutionSet in San Francisco, commutes from Alameda on the ferry and/or BART with a monthly cost of $180-$200. Currently he can use the pre-tax benefit for 100% of his commute costs, but after January 1 it would only cover 60-66% of his costs.
  • Nick Caston, a senior associate with Barnes, Mosher, Whitehurst, Lauter & Partners in San Francisco, commutes from Santa Rosa with either Golden Gate Transit or ferry at a monthly cost of approximately $200 per month. Currently the pre-tax benefit could cover 100% of his transit commute costs, but after January 1 only 60% of his transit costs would be covered.
  • Ellie Casson, a campaign organizer with Greenbelt Alliance in San Jose, commutes from the Mission District in San Francisco on Caltrain at a monthly cost of approximately $215. Currently she can use the pre-tax benefit for 100% of her commute costs, but after January 1 it would only cover 56% of her monthly costs.

Until 2009, commuters who drove to work received a greater tax break than those who took mass transit. In 2009 the discrepancy was corrected by increasing the mass transit benefit from $120 per month to $230 per month, but is set to revert back to $120 on December 31, 2010.

Senator Charles Schumer of NY has introduced the Commuter Benefits Equity Act (S. 322) to make the mass transit benefit permanent, and Senator Barbara Boxer is among the 15 co-sponsors who currently support this legislation. Senator Feinstein has not taken a position on the bill. A companion bill in the House of Representatives, H.R. 891 (McGovern-, has 48 co-sponsors.

Advocates, transit agencies, and businesses are urging passage of the Commuter Benefits Equity Act before the end of the year to ensure the transit commuter benefit is continued. Congress resumed its lame-duck session on Monday, November 29 for the final session of the 111th Congress, the end date of which has yet to be determined.

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