Taxi Trouble in Texas
Texas has a well-deserved reputation for being a freedom-loving state. We like our regulations same as we like our steaks: rare.
That, at any rate, is the stereotype, and there is a lot of truth to it. But while the Lone Star state adheres to a hands-off approach to governing in many areas, it ain’t always so.
Consider ridesharing. Using smartphone apps to connect drivers with passengers, companies like Uber and Lyft have grown rapidly over the last few years in many big cities by offering a cheaper, higher quality alternative to traditional taxis. Many drivers work part-time, setting their own hours and making good money doing so.
Yet on Thursday, the San Antonio City Council is set to vote on an ordinance that would impose so many restrictions on ridesharing companies as to effectively ban the practice. Under the new regulations, before Uber or Lyft drivers are allowed to pick up fares, they must submit to a background check, fingerprinting, a driving test, a defensive driving course, a physical exam, an eyesight test, a drug test, written and verbal tests of English proficiency, and random vehicle inspections. Given that the individuals in question already have drivers’ licenses, many of these regulatory hoops are redundant or even pointless.
As if that wasn’t enough, the San Antonio ordinance piles on insurance requirements that far exceed any reasonable justification. Ridesharing drivers are required to have $1 million in comprehensive coverage from the moment they accept a fare. By contrast, a San Antonio taxi need only have the state minimum of $60,000 coverage per incident.
The San Antonio ordinance might not pass. Then again, it might. Last month, a Houston ordinance went into effect requiring a 40-step process for driver registration. Though much less onerous than the proposed San Antonio ordinance, the law was sufficiently burdensome that Lyft announced it was suspending operations in the city. Uber has likewise indicated that it will have to pull out of San Antonio if this ordinance is adopted.
San Antonio, and especially Houston, are relatively conservative for big cities. Republican Greg Abbott won both cities during his recent triumph over Democrat Wendy Davis for governor.
Yet even before these recent ordinances, these cities ranked near the bottom of the class on ridesharing regulation. Last month, the R Street Institute released a scorecard ranking America’s 50 largest cities in terms of how they regulate taxis, limos and other vehicle-for-hire companies. San Antonio received a grade of D- and ranked 47th out of 50, behind every other Texas city. Houston was only slightly better, with a grade of C- and a rank of 40. By contrast, the American city with the most “hands off” approach to ridesharing was Washington, D.C. And Austin, which is known for being the more liberal of Texas’ major cities, also passed a comprehensive ordinance legalizing ridesharing.
Now, Portland, which is as liberal as they come, is currently seeking a court injunction barring Uber from operating in the city. The issue isn’t that liberal cities are better on ridesharing; it’s why the most conservative, free market cities aren’t uniformly good on the issue.
Why are Texas cities lagging when it comes to ridesharing? Demographics and entrenched interests are two important factors.
In denser cities with more reliance on public transport, the benefits that come from ridesharing are all the more vital. Some cities have also been dealing with the issue longer than others, which helps public officials and the public at large gain a better understanding of the value alternative vehicle-for-hire companies can provide.
How a city regulates traditional taxi and limo services is also important. When a city puts caps on its taxi fleet this can create a powerful lobby against more competition, whether from traditional or alternative sources. By contrast, where entry into the taxi market is already relatively easy, there may be less resistance to new transportation models.
Whatever the reason, though, this trend cannot continue. Texas continues to urbanize, and its success depends on being able to continue to attract people to live and work in vibrant communities. Cities like San Antonio can’t afford to be seen as backward when it comes to technology and transportation.
Josiah Neeley is Texas Director for the R Street Institute.