Metrorail Commuters Could Lose Up to $115 Each Month, Starting Now, Thanks to Congress

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Stephen is research director for Mobility Lab. He specializes in the latest research, best practices for urban planning, and analysis of current events in transportation.
January 3, 2014

Unhappy Metro

[Editor’s note: Be sure to check out the Washington Post’s feature article and excellent Metro rider calculator both created in a close collaboration with Mobility Lab’s Research Director Stephen Crim. Great work, Stephen!]

It’s 2014, and Congressional inaction on keeping the transit-benefit cap at $245 could cost the riders who make over 700,000 daily trips on Metrorail as much as $115 per month, depending on where they live and work.

Articles by Time, Atlantic Cities, and the Washington Post have sounded the alarm, noting that companies are now limited to $130 per month in tax-free, monthly transit benefits for employees, while the tax-free limit on free parking is increasing to $250 per month.

But what does this mean for the average Washington-area commuter? That depends on what kind of transit benefit (if any) an employee gets and what his or her employer plans to do now that the tax-free limit has decreased. If an employee had been getting the full cost of his or her transit expenses paid for by the employer (a “direct benefit”) up to the old $245 cap, and if the employer decides to decrease the maximum benefit to the tax-free maximum of $130, then it could mean a lot of money out of a worker’s pocket.

Under this scenario, when you include the Metrorail fare and the fare for any bus or commuter rail connections to Metro, the average employee traveling to Arlington’s Rosslyn station stands to lose around $115 per month if he or she commutes in from Shady Grove or Rockville each day.

transit_benefit_reduction_impact_rosslyn-01-01

Of course, according to the 2012 WMATA Metrorail Rider Survey, only about 3 percent of people commuting to Rosslyn come from that far away; after accounting for the proportion of riders who travel to Rosslyn from every other station in the system, the average loss for all commuters to Rosslyn station is $31. Still, that’s no small change, and WMATA recorded a decrease in ridership in 2012 when the benefit temporarily declined to $125 per month (though the Authority also implemented a fare increase that year).

transit_benefit_reduction_impact_schematic_map-01-01

Of course, employers could elect to keep paying the full cost of an employee’s transit costs, even without the payroll-tax benefit, especially if Congress does what it did the last time this happened, and retroactively returns the benefit to $250 to match the maximum parking allowance. Then again, we are living in an era when it would be naïve to rely on Congress to do something within a set time frame. Furthermore, our transportation system can only suffer if we create disincentives for transit use.

Take a look at the full results of our calculations in Detail Impact of the Transit Benefit Change by Destination Station (PDF) and in Impact of Transit Benefit Change by Destination Station (PDF), which include our calculation assumptions.

If you are a transit rider who receives a benefit, how will the tax change affect you, and how does it compare to these averages? If you are part of an organization that offers a benefit, what do you plan to do in response to the change? Based on these figures, how much will your employees lose if their benefit decreases?

Photo by Carl Holscher. Graphics by Stephen Crim/Mobility Lab

{ 3 comments… read them below or add one }

avatar Rosemary Mascali January 4, 2014 at 5:13 PM

On Long Island, the drop in the transit benefit to $130 per month is the equivalent of a 15-20% increase in the monthly Long Island Rail Road fare. If the MTA tried to hike the fare that much there would have been commuter outrage, yet Congressional inaction quietly did the same thing. All of Long Island has a very high Housing+Transportation Cost Index. In addition, our air quality doesn’t meet EPA standards. Encouraging driving over using transit doesn’t make sense.

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avatar Steve January 8, 2014 at 10:04 AM

This is a backward policy that encourages sprawl and is inequitable. The map shows people that live farther from their jobs get a larger benefit . Those that choose to live closer to work are receiving less pay for the same job. As for tax-free parking benefits, simple, cut that too. Perhaps to zero if you want mass transit to be relatively cheaper. Again, this is an example of backward policy making.

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avatar Mr. Transit January 9, 2014 at 3:22 PM

Parity of the parking and transit benefit is more important than restoring the full $230 per month for the transit benefit. Given the fiscal and political situation in Congress, the transit industry should be pushing for a parity level that results in no more cost than the old level or a slight decrease in lost revenue to the U.S. Treasury.

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