Don’t overregulate taxis, ride-sharing
The hallmark of downtown Sacramento’s renaissance has been the emergence of a high-quality restaurant and bar scene. It is perhaps unsurprising, then, that Sacramento, geographically diffuse as it is, has the ninth-highest rate of alcohol-related fatalities in the nation, according to the National Highway Traffic Safety Administration.
To reduce drunken driving fatalities, it is crucial that Sacramento maintain a healthy transportation-for-hire industry that accommodates taxis, limos and ride-sharing services, formally known as transportation network companies.
In recent years, it has become both more important and more difficult to maintain regulatory balance in the industry. It has become increasingly competitive as services such as Uber and Lyft, which offer smartphone applications to arrange rides with amateur or semiprofessional drivers, have claimed a niche.
This new source of competition has put taxis and limo services on the defensive, which in turn have put political pressure on elected leaders. Some cities have buckled, erecting regulatory barriers to TNC operations. In more extreme cases, cities sought to tear them down completely.
To appraise the state of the market, my colleagues at the R Street Institute have released a study examining transportation-for-hire regulations in 50 cities across the nation. Sacramento ranks 11th best, and fourth out of eight cities in California. While encouraging, Sacramento’s relative success is a function of some particularly onerous approaches in other jurisdictions.
There is room for improvement.
Sacramento has been among the nation’s best in embracing ride-sharing services. California’s legal framework, cemented during the last legislative session, has resolved much of the insurance and liability ambiguity that plagues regulators elsewhere. For its part, City Hall has maintained a light-handed approach by refusing to adopt anti-competitive fleet or service restrictions.
But for taxis, the regulatory situation is markedly worse. Sacramento limits the number of taxi permits and strictly controls how cabs can be dispatched to customers. In May, the City Council passed new rules mandating cabbies to accept credit cards and drive vehicles less than eight years old. The regulations also require taxi drivers to pass a test that checks their ability to speak English and their knowledge of the city’s geography.
On their face, these regulations aspire to ensure a higher level of service by forcing low-performing companies out of the market. In reality, these regulations place taxis at a competitive disadvantage.
To encourage the competition necessary to lower rates and increase availability, the last thing Sacramento should consider is extending these regulations. Similarly burdensome requirements on TNCs would only stymie their development. With the arrival of new competition, Sacramento should instead let consumers decide.
As ride-sharing services succeed, taxis will adapt to demands for newer vehicles and better service, or they will simply go out of business. Municipal regulations are slow, cumbersome and imprecise when compared with the realities enforced by ever more discerning customers.
Downtown Sacramento’s transportation-for-hire environment should embrace the new without burdening the old. But each sector of the industry will be necessary to overcome the region’s penchant for drinking and driving.
