Testimony of Representative Lisa Subeck on SB 106/AB 143
Committee on State Affairs and Government Operations
April 2, 2015
Chair Swearingen and members of the committee, thank you for allowing me the opportunity to testify before you today on AB 143. I come to this hearing with a unique perspective, as I not only serve in the State Assembly, but I am also completing my term on the Madison Common Council, which ends later this month.
As you may know, the City of Madison adopted changes earlier this week to its regulations of taxi cabs to add a new definition for Transportation Networking Companies (TNC). Additionally, the city made specific allowances so that TNCs would not have to meet all of the same expectations as taxi cabs and other vehicles for hire but did leave intact a few key provisions to ensure a level playing field.
The introduction of AB 143 raises a number of concerns for the City of Madison and potentially for other municipalities in the future. I strongly oppose the bill and have grave concerns about what its passage will mean for the City of Madison’s transportation infrastructure. I urge you to oppose this bill, as well. If the bill does pass, I hope that we can at least slow down enough to consider its impact and potentially some reasonable amendments.
Ability of Municipalities to Govern Locally (Preemption)
A key aspect of this bill that should sound alarm bells for all of us is the provision that preempts local government, removing local authority to regulate TNCs. To be clear, I understand and agree with the notion that sometimes it is appropriate for the state to pass regulations that must be enforced on the local level. To that end, such regulations should be a floor and not a ceiling, requiring that local government meet a minimum standard rather than setting a maximum standard of regulation not to be exceeded.
If it is appropriate for the state to regulate TNCs, such regulation should not prevent a municipality for enacting its own more stringent rules that protect consumers and ensure local transportation needs are met. Each city, town, and village is unique, and local government should be empowered to respond to local needs.
24 Hour, Citywide Service
While Madison’s ordinance creates a new definition to accommodate TNCs and provides some exemptions to the rules that govern taxicab operators, a few key provisions of Madison’s taxicab ordinance would apply to TNCs. Two of these provisions – a requirement to provide 24 hour service and a requirement to provide citywide service – are strongly rooted in historical challenges to Madison’s transportation infrastructure. Prior to passage of these provisions, there existed a significant inequity in transportation services available to low-income, predominantly minority individuals living in largely low-income neighborhoods because taxicab companies could refuse service to certain areas of the city at their own will. Under the guise of preserving safety, taxis would frequently refuse to pick up passengers in certain parts of the city. Additionally, in the absence of 24-hour service, individuals who worked second or third shift or who have other late-night transit needs could not be guaranteed taxicab availability at times when service is simply less profitable.
In response to these concerns, Madison passed pieces of its current taxicab ordinance that require companies to provide 24 hour service and service to serve the entire city. This model has worked well for Madison. However, the introduction of a parallel set of rules for TNCs that does not include these provisions could jeopardize a system that currently works for the city and its residents. Specifically, if taxicabs continue to provide 24 hours service but must compete with TNCs who are not required to provide service during less profitable hours, taxicab companies will be at a competitive disadvantage that could put them out of business and leave city residents with very limited service options only during peak hours and in limited areas.
The Madison ordinance would not allow surge pricing – times of high demand when unsuspecting consumers are gouged by disproportionately high prices – while the proposed state law would allow this predatory practice. It is crucial for all consumers to be able to hire transportation services at a predictable and affordable price. This is a serious issue for Madison’s low-income residents who require affordable transportation and also for unsuspecting students who are new to using taxicabs and TNCs or who may use a TNC for the first time at bar time. In cities without large low-income or student populations, allowing surge pricing may be workable, but for cities like Madison with large numbers of students and low-income individuals, such a lack of consumer protections may be disastrous. An alternative may include allowing surge pricing but placing a cap on it so that predatory practices are not allowed.
An additional concern regarding surge pricing that we heard about from drivers and former drivers is that out-of-state drivers frequently come in to take advantage of premium pay during these peak periods, leaving local drivers unable to meet the minimum number of rides needed during the surge periods to earn the additional premium pay. This means out of state drivers compete for these rides, resulting in money paid by riders leaving the local economy. A potential solution could be to require licensing or permitting of drivers.
Works for Madison
While Madison’s regulations may not work for every community, they serve our city well and have not stifled competition. Despite what some may consider stringent regulations, Madison is the home to four successful taxicab companies, all of whom meet the requirements of 24 hours service, citywide service, and other local regulations. One of these companies is relatively new, having formed as recently as 2011, and uses an electronic application technology similar to that used by TNCs.
Like Uber and other TNCs, at least one of these companies, Badger Cab, uses contractors for drivers, yet they are able to meet the City of Madison’s requirements for 24 hour service and all other expectations.
While Madison makes some exemptions for TNCs, key components of the taxicab ordinance remain in place and apply to all public passenger vehicles for hire. State preemption of Madison’s regulations could seriously damage the competitive environment currently in place and leave Madison residents with limited service and without significant consumer protections in place.
Other differences between Madison’s proposed ordinance and this bill are included in the chart below. The most significant difference is the insurance requirement. Madison would require that the TNC be responsible for all insurance and has some slightly higher levels of insurance, while this bill allows a combination of insurance of the driver and the TNC. The idea of a mix of insurance to meeting the requirements is particularly concerning because each insurance company could deny a claim on the basis that the other is responsible. Other differences include specifics on non-discrimination, refusal of service requirements, and disclosure of pricing.
Below, you will find a chart highlighting some key differences between Madison’s ordinance, as amended earlier this week, and AB 143. For the reasons stated previously, I urge the committee to reject this bill or to at very least consider some reasonable amendments that would give cities more leeway. This proposed bill is not only bad for the City of Madison, but may have negative consequences for municipalities throughout the state and your districts. Most importantly, this bill usurps local authority to regulate TNCs by setting a ceiling of maximum regulation rather than a floor to establish minimum standards that local governments must meet and may exceed. This sort of preemptive action to tie the hands of local government is the wrong way to go.