State transit credit stalls

Md. hopes to boost enrollment through ad campaign this year

58 firms participating

Employers who defray workers' travel costs receive tax break

March 19, 2001|By Marcia Myers | Marcia Myers,SUN STAFF

Luring riders to public transportation with tax breaks is proving tougher than expected.

When the General Assembly passed a commuter tax incentive package in 1999, the idea was to get thousands more people out of their cars and help promote the governor's goal to double transit use in the next 20 years. But since the program was put in place more than a year ago, it has had few takers -- despite being one of the most attractive such packages in the nation.

Of the 50,000 Maryland companies contacted about the program, 58 have signed up. State officials had expected about 6,000 commuters to benefit from it by now, but the number is closer to 2,000.

"The hard part is convincing them how easy it is to do and how little paperwork there is," said Marsha J. Kaiser, director of planning for the state Department of Transportation. "You're telling people it's a tax cut, and you've got to prove it to them. It takes time for people to trust it."

The law permits employers who provide commuting benefits for workers to take a tax credit of up to 50 percent on their first $60 of costs per employee per month. It applies to monthly or weekly passes, tokens and fare cards, as well as to the costs of eligible van pools, guaranteed ride-home and parking cash-out programs in which employers pay workers to give up their parking spaces.

No other state offers such a significant tax credit, or applies it so broadly, according to Environmental Defense, a national environmental watchdog group.

Among the early converts was Master-Halco Inc., a fence manufacturing company that recently moved from East Baltimore to a new plant in Edgewood in Harford County.

Many of its workers are city residents who don't drive, and the company was concerned about losing them with the move. Harford planning officials helped set up a shuttle service and persuaded the company that contributing to transit costs would be a benefit for employees -- and earn the company tax credits at the same time.

The company pays $20 of the $97 monthly transit cost per employee, and is eligible for the state income tax credit on half of that. Under a federal program, Master-Halco also withdraws the employee share of the cost as a pretax benefit.

"We tried to take as much of the sting out of the move as we could," said Pat Theurrauch, Master-Halco's human resources director. The incentives help 26 employees who use the shuttle along the Route 40 corridor between East Baltimore and Edgewood.

Without it, says 53-year-old Melvin Long, he would have been forced to find other work, despite 29 years with the company. He has to rise an hour earlier these days, but he doesn't mind because the shuttle has allowed him to stay on. Besides, he says it is more comfortable than the bus or subway rides that used to take him to and from work.

"It's so nice, I hate to get off," he said.

`Good business sense'

Baltimore attorney Mark Scurti also signed up, though his law firm, Scurti and Gulling, employs six people and only one of them uses public transportation. He pays $54 a month -- the full price for a transit pass for that worker -- and is eligible for the 50 percent tax credit on that.

"I just thought it made good business sense," he said. "To find really good qualified individuals to come into downtown to work, it's important that you provide them with transportation."

Paperwork wasn't a problem, he said. "It was quite easy. Within a week, the Mass Transit Administration had the application to me and explained the process," he said.

Executives at WageWorks, a national firm that helps companies enroll in such programs, say the slow response in Maryland is not unlike the response in other states -- or the initial reaction nationally to 401(k) programs.

"This whole program is fairly new to the world, and employers and even the tax consulting firms that usually help companies with these things are just getting started with it," said Dan Corbett, a vice president in the company's office in Olney.

The reaction in Washington state, which began a similar program five years ago, was more enthusiastic, with 115 companies signing on in the first year.

"One of the lessons the department of revenue here kept raising to us was that if you don't make it easy, employers won't participate," said Matt Hensen, a transit planner at Metro Transit, a division of the King County (Seattle-area) department of transportation. "It's tricky. Notions of what's easy and not easy are often the perception of the employer."

Ad campaign to begin

To bring attention to the program anew and better educate Maryland companies and employees, the state will launch a $1 million campaign in coming weeks with television and radio spots, print ads and brochures.

The state transportation agency has spent $100,000 during the past year sending information directly to companies and tax advisers. But the state's efforts could be helped greatly if more local governments weighed in, said Michael Replogle of Environmental Defense.

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