By Marie Rohde
For WisBusiness.com
As a group of cab drivers fights to increase the number of taxicab permits available in Milwaukee, the state Assembly is poised to vote on a bill that would overhaul the system entirely.
The pending legislation, Assembly Bill 529, would allow Milwaukee to switch over to a medallion system for its cabs, replacing the current setup of city-issued permits. Those permits have been capped at 321 for more than 20 years, leading a group of cabbies to file suit last year looking for more permits to be issued.
Rep. Jeff Stone, R-Greendale, said the medallions, unlike permits, would be a bankable asset that owners could use to borrow money and grow their business. They could be used as collateral for loans or sold to the highest bidder on the open market.
Of the change, he said, “I would agree that at first blush it appears a little counter-intuitive but what it really does is it creates a free-market system within the taxicab industry that we do not have now.”
Rep. Paul Farrow, R-Pewaukee, said the medallion system would give the city greater oversight of the sale of permits. He also said that before Milwaukee capped the number of cab permits, “we had a glut of taxicabs and we didn’t a livable income.”
The city now charges $175 a year for a permit renewal and the number of permits has been capped since 1991. The new law would allow the city to charge up to $500 a year. The city would also get a 10 percent cut of the sale price of medallions, but not of the 321 permits converted to medallions.
Permits can already transfer hands, and have reportedly sold for tens of thousands of dollars apiece.
Anthony Sanders, the lawyer for the cabbies who sued last year, said that high sale price is evidence that there are not enough permits to go around. The proposed legislation would limit the number of new medallions that can be issued each year to between three and seven, but only after the city conducts a survey to determine if more cabs are needed.
Current permit-holders, the only ones to testify at a Feb. 7 public hearing, said the current number of permits is adequate. Some were cabbies with 40 years or more experience who look at their permits as a retirement plan or an asset to pass on to their children. Others said the change would allow young drivers to get a toehold in the industry and own their own businesses.
In an interview, Sanders said his clients want to be able to buy $175-a-year permits so they can build their own businesses and compete with other cab companies in town. He said the new bill could open the door to riches for some, but it would hurt those now locked out of the system.
Sanders said he and other bill opponents didn’t testify against the bill because they were not informed about its introduction.
“This medallion bill was introduced on a Friday and the only public testimony allowed was the next Tuesday, two business days later,” Sanders said. “It’s no coincidence that everyone who testified was in favor of the bill. No one else knew about it.”
The lawsuit filed by the cabbies was never mentioned during hearings on the bill.
Only two upstate legislators – Democrat Janet Bewley of Ashland and Republican Alvin Ott of Forest Junction – expressed concern. They suggested that the law flies in the face of free enterprise and may enrich a few. The notion was dismissed as contrary to the intent of the law by several other legislators.
Bewley noted that all the drivers who testified “were older gentlemen looking forward to cashing out. I didn’t see any young drivers who are now working for someone else.” She questioned whether a driver would have the means to purchase a medallion when bidding against others in the business that have greater assets.
“You gotta pay to play to get in the cab business,” Bewley said.
Sanders said the legislation would not kill his lawsuit but predicted it would make it more difficult to deregulate the industry.
“It’s crony capitalism pure and simple,” he said. “If the Republican majority votes for this bill they will be flushing their tea party principles down the toilet.”
The bill, which passed the Assembly Transportation Committee on a 13-0 vote, is on today’s Assembly calendar.
