Proposition N - Taxi Permit Holder Disability

Voter Guide
November 1, 2003
This measure appeared on the November 2003 San Francisco ballot.

 

What it does

The City issues a limited number of taxi permits. Permit holders must drive their taxi a minimum of 156 shifts of at least four hours each, per year (just three four-hour shifts a week). Failure to meet this requirement subjects the permit to revocation or suspension by the Taxi Commission. This measure would exempt from the driving requirement permit holders who are unable to drive due to disability.

Why it is on the ballot

Most major US cities have some form of permit or medallion system to regulate entry to the taxicab market. San Francisco, however, is unique in that permits are non-transferable and may only be issued to taxi drivers, not to firms. A permit holder can lease his or her permit to a taxi firm or other driver. Since only a limited number of permits are issued, lease fees typically amount to $1,800 per month. This income is over and above any income earned by the permit holder for driving a taxicab.

This system means that there are two “classes” of taxi drivers in San Francisco—permit holders and non-permit holders. Non-permit holders pay permit holders (indirectly, via taxi firms) for the privilege of using the permit at times when the holder is not driving. Want your own permit? Join a waiting list that can take 15 years.

This system was established through Prop. K in 1978.3 It was intended to reward drivers, make taxi driving a viable career option, and ensure that the profits from leasing permits remained in the industry.

Until recent years, however, the driving requirement was scarcely enforced by the Police Commission and, since it was created in 1998, the Taxicab Commission. Even now, the Board of Permit Appeals has reinstated many permits revoked by the Taxicab Commission, while acknowledging that permit holders have breached the driving requirement. This ballot measure has been promoted by permit holders fearful that the Taxicab Commission and Board of Permit Appeals will take a stronger line in the future regarding enforcement of the driving requirement.

Pros

Proponents state:

  • Prop. N would, in effect, provide disability insurance and retirement benefits for taxicab permit holders in San Francisco.
  • There may be safety benefits to passengers, since drivers would have less incentive to conceal a disability that would result in the loss of their permit because they couldn’t fulfill the driving requirement.

Cons

Opponents state:

  • Prop. N does not need to be on the ballot. Proponents acknowledge that the policy could be instituted by either the Taxicab Commission or the Board of Supervisors. While they have unsuccessfully attempted to persuade the Taxicab Commission, proponents have not approached the Board of Supervisors to adopt the ordinance
  • The measure would lead to poorer taxicab service in San Francisco, since it would reduce the proportion of drivers who are permit holders. Permit holders, in general, provide better service than non-permit holders. They are usually more experienced, know the city better, know where to find fares in the neighborhoods (rather than simply add to the waiting lines of taxis at the airport), and are invested in the safety and success of the industry as a whole. The measure would ensure that, over time, a large number of permit holders would not be driving; their place behind the wheel would be taken by inexperienced, non-permit holding drivers
  • There would be other negative impacts on service, since the measure would make taxi driving a less attractive career. It would reduce the number of permits available for reissue, increasing the length of the waiting list for permits. It would undermine recent efforts by the Taxicab Commission to enforce the driving requirement and reduce the length of the waiting list. It would also undermine the principle of Prop. K, that the scarcity value of permits should accrue to those in the industry
  • The measure would only benefit a select minority of taxi drivers—those who already benefit from the permit system
  • The measure does not provide any definition of disability, or even specify who would make that determination.

SPUR's analysis

SPUR’s policy regarding taxicabs is described in Making Taxi Service Work In San Francisco [PDF 268Kb, 56 pages], adopted in September 2001. This does not explicitly address the issue of permit revocation on grounds of disability. However, it recommends that the driving requirement should be vigorously enforced.

The permit system introduced by Prop. K was not intended as a retirement and disability insurance system. The measure would distort this system to further reward an already privileged class of taxi drivers—those who earn $1,800 per month simply by virtue of holding a permit, on top of the income they earn from driving a cab.

There is no reason why permit holders should not contribute to their own retirement and purchase disability insurance. Such contributions would be a fraction of the $1,800 per month in unearned income they receive from their permits. The City should investigate the possibility of creating group coverage for all taxi drivers, not just permit holders. Insurance would be an equally effective option to address any safety concerns regarding disabled drivers.

Reforms to the taxi industry are needed, as documented in SPUR’s 2001 report. Unfortunately, Prop. N does not begin to address these issues, but drives the taxi industry in the wrong direction.

SPUR recommends a "No" vote on Proposition N.

Notes
3. This requirement only applies to permits issued subsequent to Prop. K. Before 1978, permits could be sold to the highest bidder, usually cab companies or non-driving speculators, fetching $80,000 or more.