September 20, 2017
Recent data from the 2016 American Community Survey has spoken: at 18.3 percent, DC now has the highest percentage of commuters in the country walking and biking to work, while another 37 percent take transit. However, the way employer benefits are currently set up gives the biggest reward to people who drive. This means more traffic and longer commutes. A proposed bill called “parking cash-out” could give employees the chance to trade in their parking space for extra cash and encourage drivers to explore other commuting options.
Parking cash-out will give more people access to transit benefits
Right now, employers can provide their workers with a tax-free commuting benefit that covers up to $255 a month for parking and another $255 a month for public transit. This means that an employee who takes advantage of both the transit and parking benefit can set aside over $500 of tax-free income toward parking and transit. They can also get a bike benefit — but it’s capped at $20 a month and can’t be combined with the parking or public transit benefit. People who walk to work, meanwhile, are on their own.
While a parking subsidy is not very useful to people who work where parking is free and abundant, the value of it can add up for people driving into a place where parking is at a premium. In parking-scarce areas like downtown DC, the parking subsidy makes driving more attractive for workers — and contributes to more congestion and longer commutes.
DC councilmembers Charles Allen, Mary Cheh, and Brianne Nadeau have introduced a plan to give people an equally strong incentive to bike and walk to work: the Transportation Benefits Equity Act. This bill would require employers of a certain size that already provide their employees with subsidized parking to give their employees the option to trade in that benefit for cash. That means employees who walk or bike would now have the chance to pocket the value of their parking space as taxable income, or use the parking benefit for transit. Employees who drive to work could still use their parking benefits to commute in and park at work.
DC residents already prefer to get to work in ways that don’t rely on driving. This flexible commuter benefit (known as “parking cash-out”) would give these employees an incentive to keep up their habit and encourage more people to walk or bike to work instead. Cheryl Cort, Policy Director at the Coalition for Smarter Growth, estimates that a benefit like the one proposed in the Transportation Benefits Equity Act would lead to a 10 to 12 percent reduction in the number of people driving alone to and from work.
Parking cash-out is easy to turn into reality
This bill would be easy to implement because it builds on DC’s Commuter Benefits Law, which requires all employers with 20 or more employees to provide them with the option to use their own pre-tax money to pay for transit. The parking cash-out bill will use the systems employers already have to make to their payroll systems to administer pre-tax benefits under the Commuter Benefits Law. If an employee wants to opt for transit rather than a parking benefit, their benefit would just be switched from parking to transit in the system. If an employee wants to use their parking benefit to walk or bicycle, they would receive the value of the parking space as taxable income.
Proponents point out that the bill could even wind up benefiting employers in the long run. According to the World Resource Institute, converting a non-active employee into a bike commuter saves $3,000 in employer health care costs and reduced absenteeism.
The DC Council is considering passing a parking cash-out bill
The DC Council will hold a hearing on the Transportation Benefits Equity Acton September 25. You can tell the Council you support more incentives to get people biking, walking, or riding transit to work by testifying in person or by sending a letter of support. You can also sign a petition with the Coalition for Smarter Growth.