Congress Adjourns Without Passing Transit Benefit Extension

December 30, 2011

While Congress passed a two-month extension of the payroll tax cut at the eleventh hour just before Christmas, this bill did not include an extension of the public transportation commuter benefit (at the rate of $230 per month per commuter).

Newspapers across the U.S. have taken up the cause of public transit commuters whose monthly transit/vanpool benefit level will revert to $125 per month on Jan. 1, 2012, while the monthly parking benefit will increase to $240.

APTA emphasized that this increased commuting cost will hit the very workers who may need it the most: 70 percent of those who rely on public transit have household incomes from $15,000 to $99,000 a year, according to its latest demographic survey of riders.

“Unless Congress acts, there will be a financial bias in the federal tax code against public transit use,” said APTA President & CEO Michael P. Melaniphy. “We are seeking to maintain parity with the parking benefit to ensure that there isn’t a disincentive to take public transportation.”

“Get out of that bus, train, light rail or subway and drive your car to work! Crowd the roads! Burn the most gasoline possible! Pollute the air!” wrote the Baltimore Sun. “That’s the unmistakable message Congress has sent the nation’s commuters with its recent choice not to maintain a tax parity between those who elect to take public transit to work and those who drive their own vehicles.”

The Sun article continued: “[O]ffering a tax deduction to drivers that is twice the amount offered to transit riders makes no sense whatsoever and certainly doesn’t have much positive impact on the deficit. It’s bad transportation policy, bad economic policy and bad energy and environmental policy …. This stupidity can’t be left to stand.”

The San Francisco Examiner quoted Christine Maley-Grubl, executive director of the Peninsula Congestion Relief Alliance, regarding the comparison between the reduced public transit benefit and the increased parking benefit: “We want people out of their cars so there is less congestion and less impact on our air quality. That’s not going to happen by giving people additional funds for parking.”

Congress may consider the issue when it reconvenes in mid-January, and may incorporate it into the long-term extension of the payroll tax cut that Congress will address in February.

The higher benefit level was implemented as part of the American Recovery and Reinvestment Act in 2009 and was renewed for one year in 2010. About 250,000 of the approximately 2.7 million commuters who use the public transit credit spend more than $125 per month; most participants in the benefit live in large metropolitan areas. 

Before adjournment, 22 members of the Senate—20 Democrats and two Republicans—signed a bipartisan letter to the Senate Finance Committee urging the extension of these benefits at the higher level of $230. Sen. Robert Menendez (D-NJ) spearheaded the letter to committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT), which states:

“As you know, in 2009 Congress raised the tax-free benefit that workers could apply toward monthly commuting costs, from $120 per month up to $230 per month, putting transit benefits on par with parking benefits. This important benefit eases the burden of commuting costs on families, relieves congestion, reduces the stress on our highway system and decreases our reliance on foreign oil.”

The letter says the reduced transit benefit level “would represent a significant tax increase for middle-class commuters and their employers, who currently do not have to pay federal payroll taxes on the amount of the benefit.”

The other signers are Sens. John Kerry (D-MA); Barbara Mikulski (D-MD); Joe Lieberman (I-CT); Benjamin Cardin (D-MD); Jeff Merkley (D-OR); Frank Lautenberg (D-NJ); Tom Carper (D-DE); Ron Wyden (D-OR); Richard Durbin (D-IL); Charles Schumer (D-NY); Patty Murray (D-WA); Barbara Boxer (D-CA); Chris Coons (D-DE); Tom Udall (D-NM); Daniel Akaka (D-HI); Richard Blumenthal (D-CT); Scott Brown (R-MA); Kirstin Gillibrand (D-NY); Mark Kirk (R-IL); Mark Warner (D-VA); and Sheldon Whitehouse (D-RI).

On the House side, Rep. James McGovern (D-MA) sent out a “Dear Colleagues” letter calling for more co-sponsors on the bill he introduced in July, the Commuter Benefits Equity Act of 2011, to make parity between transit and parking benefits permanent. The bill currently has 47 co-sponsors, including the 23 original signers.

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