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Providing Public Transportation Incentives to Federal Workers

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Global Climate


April 22, 2000

In his Earth Day radio address, President Clinton today announced a new Executive Order directing agencies to offer incentives to federal workers to increase the use of public transport. This effort is designed to reduce the contribution federal employees make to traffic congestion and air pollution and to expand their commuting alternatives.

Providing Federal Workers Mass Transit Incentives in the National Capital Region. The President's new Executive Order on mass transit requires all federal agencies in the National Capital Region, which includes the District of Columbia, Montgomery, Prince George's, and Frederick Counties in Maryland; Arlington, Fairfax, Loudoun, and Prince William Counties in Virginia, to help subsidize public transportation costs for their workers. This measure will cut greenhouse gas emissions and other forms of pollution, help reduce road congestion and expand workers' commuting alternatives. The Department of Transportation estimates that 75,000-100,000 additional Federal employees would take advantage of the transit/vanpool benefits, reducing annual vehicle miles of travel in the region by 40 million-54 million and reducing air pollution costs by $70 million-$95 million. The new transportation benefit that goes into effect by October 1, 2000 will:

  • Allow all federal workers in the National Capital Region to spend up to $65 per month ($100, beginning in 2002) to commute to work by public transit or eligible vanpools. Employees receive the benefit completely free of all payroll taxes, federal income taxes and Virginia, D.C., and Maryland state income taxes.

  • Instruct agencies to pay for the benefit using existing appropriated funds, usually taken from administrative accounts such as salaries, benefits, and travel.

Expanding the Mass Transit Incentive Nationwide. The President's new Executive Order encouraging the use of mass transit will provide two additional means for expanding this incentive to Federal employees outside the National Capitol Area. These incentives will also go into effect by October 1, 2000.

  • First, federal employees outside of the National Capital Region will be permitted to spend up to $65 per month ($100, beginning in 2002) of their pre-tax income for transit or eligible vanpool benefits. This new benefit will lower employees' taxable income by the amount of the benefit they purchase and agencies' payroll costs will be reduced since payroll taxes do not apply to the funds used for the benefit.

  • Second, The Department of Transportation, the Environmental Protection Agency, and the Department of Energy will implement a nationwide 3-year pilot program to determine if the mass transit incentive program should be extended to federal employees nationwide. The program will be analyzed to see if it is effective in reducing single occupancy vehicle travel and local area congestion. Employees of these three agencies will receive a "transit pass" fringe benefit nationwide in addition to current compensation, in amounts not to exceed the maximum level allowed by law.

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