Successful Commute Programs Critical components include: 1.An active and informed Employee Transportation Coordinator (you!) 2.Guaranteed ride home 3.Parking management 4.Incentives or subsidies for non-drive alone commuting

v A financial benefit the employer provides on a regular basis, to individual employees – or employees who commute together - that directly lowers their costs of commuting. u free or discounted bus /rail/ferry /vanpool passes (transit subsidies) u cash or vouchers for commute expenses u What is a Commute Subsidy?

Subsidy is the employer’s choice Amount and eligibility requirements of any subsidy are the employer’s decision. Considerations: ¶motivational value of subsidy - do you want it to change behavior or simply reward existing behavior? ·budgetary constraints ¸Instrument to be used ¹tax implications

How can employers subsidize employee commutes? Bus, Rail - Share the cost of or give employees a transit pass or tickets; allow employees to use pre-tax income to purchase pass Vanpool - Share cost of or give employees a transit pass; discount or give parking; allow employees to use pre-tax income to pay fare Carpool - Give cash or other incentive; discount or give parking Bicycling & Walking - Give cash or other incentive, bicycle, walking shoes

What products can be used to subsidize transit? 1.PugetPass 2.FlexPass 3.Commuter Bonus Voucher

v Annual transit pass v Purchase for all employees v Price is based on where company is located and estimated ridership. $4.75 face value = all zone fare v Monthly, 3-month or annual transit pass v Purchase as many or as few passes as needed for employees who use transit v Price is based on transit trip length v $ $4.75 face values determines trip length FlexPass – Puget Pass Comparison

v Valid on regular Metro and Sound Transit bus service and Sounder Commuter Rail. v 500 or more employees: options include Home Free Guarantee (HFG), vanpool, CT and PT. v Less than 500 employees includes: $75/mo. Vanpool, $20/mo. Vanshare and HFG v No ferry v Valid on Metro Transit, Community Transit, Everett Transit, Pierce Transit, Sound Transit and Sounder Commuter Rail. v No HFG v No Vanpool v No Vanshare v Can include ferry FlexPass – Puget Pass Features Comparison

FlexPass – Puget Pass Administrative Comparison v Order and distribute passes annually with user (employee) agreement v Employer must subsidize 50 – 100% of the cost of each pass v Annual Survey required for 500+ passes v Order and distribute passes monthly to employees v No requirement for employer subsidy

FlexPass – Puget Pass Cost Comparison SeaTac FlexPass2 Annual cost per employee$125 Average annualized cost per person$828 # Eligible Employees:100 # Est. bus riders(1- zone)$6310 (2-zone)$815 total bus riders15 Annual FlexPass cost:$12,500Annual PugetPass cost:$12,420

Commuter Bonus Voucher v Employers purchase Commuter Bonus vouchers from Metro in any whole dollar denomination ($10 min.) v Employees use vouchers to purchase the public transportation pass they want v One stop shopping for all Puget Sound transit agencies, vanpools, Washington State Ferries v Vouchers are good for 96 months and are renewable

What is ORCA ? v One Regional Card for All Community Transit Everett Transit King County Metro Transit Kitsap Transit Pierce Transit Sound Transit Washington State Ferries

What is ORCA u Fare payment card using smart chip technology u Tap at payment reader u Seamless transfers u Many revalue options

Business Account Options v Two Categories u Puget Pass, Commuter bonus vouchers ~~> Business Choice u FlexPass ~~> Business Passport

When is ORCA Coming? v Transition begins Spring 2009 v Businesses will be contacted by their transit agency regarding conversion v Businesses with annual agreements will be converted by their renewal date

Tax Implications of Commute Subsidies ÊHow will a subsidy impact your employees’ taxable income? ·How will a subsidy impact your company’s tax bill?

1. Employee Taxable Income v IRS views commute subsidies and incentives (provided by the employer to the employee) as “fringe benefits” v Fringe benefits are taxable income unless specifically excluded from income by law

1. Employee Taxable Income v IRS only excludes 3 types of commute fringe benefits from employee’s taxable income: u commuter vehicle (“vanpool”)- up to $120 per month per employee u a transit pass - up to $120/mo. u qualified parking - up to $230/mo. (2009)

1. Employee Pre-Tax Income v The IRS allows employers to allow employees to use up to $115 per month in pre-tax income to buy transit passes. v Reduces employee’s taxable income v Reduces FICA taxes paid by employee and employer v Employer is responsible for buying the pass with employee funds and for maintaining records of the transit expense

Qualified Bicycle Commuting Reimbursement – New in 2009! v A reimbursement of up to $20 per month for expenses incurred by the employee for the purchase of a bicycle and bicycle improvements, repair, or storage may be made by the employer on a tax-exempt basis. v A “qualified bicycle commuting month” is any month in which an employee: u regularly uses a bicycle for a substantial portion of the commute, and u does not receive any other qualified transportation benefit for vanpool, transit, and parking.

Qualified Bicycle Commuting Reimbursement – New in 2009! v The $20 amount is not indexed for inflation as are the other qualified transportation fringe benefits. v Unlike the other qualified transportation fringe benefits, a qualified bicycle commuting reimbursement benefit cannot be funded through employee pre-tax income.

2. Company’s Tax Bill v Credit on Washington State B&O or Utility taxes for subsidies paid to employees for: u public transit (bus, ferry, rail, vanpools) u carpooling u bicycling or walking to work v Credit = half amount paid to each employee; maximum $60 per employee per year

2. Company’s Tax Bill v Up to $200,000 per employer per year v Up to $2.75 million state-wide per year v Apply through the Washington State Department of Revenue v Must apply in January for previous year’s expenses

2. Company’s Tax Bill v The City of Seattle Employee Hours Tax or 'head tax'Employee Hours Tax v Taxes employers $25 for each employee working within the City of Seattle. v The City bills employers for the tax in December with Business & Occupation taxes. v Businesses may claim an exemption for each employee who commutes by non-drive alone modes 80% of the time.