Regulation of Uber, Lyft Should Be Local, Not Statewide

 

By Matt Kelly

It seems that everywhere Uber, Lyft, and other transportation network companies (TNCs) set up shop, trouble with local regulators follows. The situation in Florida has been no different. The Uber vs. taxi debate has been so heated that state lawmakers have proposed  legislation (HB 509) to simply regulate all vehicles for hire at the state level. While statewide reforms would ease regulations in some locations, they would tighten restrictions elsewhere. It may be better to allow local government regulators to adapt at their own pace.

Consider Uber’s experience in Broward County. After launching operations there in November 2014, Uber drivers were issued 250 citations by January 2015. In April, county commissioners passed new regulations on TNCs, which dictated insurance requirements, background checks, and vehicle maintenance standards that TNCs claimed favored taxis. In response, Uber ceased operations in Broward altogether. In October, TNCs and Broward County commissioners reached a deal that would ease restrictions on TNCs. TNCs soon resumed operations. In the face of a changing transportation industry, Broward County initially resisted the challenge to its regulatory structure, but eventually accepted the wishes of its businesses and constituents. Similar stories abound through the state.

In some locations, concessionary deregulation of TNCs has been even more striking. Lawmakers in Melbourne and Sarasota voted to eliminate taxi regulations altogether, putting TNCs and taxis on equal footing while deregulating both.

Licensing and safety regulations aren’t easy to discard. Florida’s counties raised an annual average of $17.7 million from licensing fees between 2009-2013, providing a clear incentive to preserve the status quo. It’s understandable then that local governments are slow to change. However, the benefits of TNCs innovations appear too great to ignore. Sometimes quickly and sometimes slowly, local regulators are adapting for the better of businesses and consumers.

But state legislators may usurp local governments’ authority altogether. Legislators failed to pass a bill earlier this year to regulate common-carrier vehicles for hire at the state level. A new bill to the same effect, HB 509, recently passed a hurdle in the House Highway and Water Safety Subcommittee and may be voted on in the spring legislative session. While standardizing rules across localities, statewide reforms would have different effects in different places.

To be sure, a patchwork of regulations across Florida’s counties and municipalities is emerging, and such complexity creates costs for entrepreneurs wishing to operate in multiple jurisdictions. But statewide reforms would not uniformly decrease the cost of business. Although TNCs could be regulated less strictly in Broward County under statewide rules, they may experience more onerous regulation in places like Sarasota.

The market disruptions TNCs introduce are instructive on multiple levels. Surge pricing, driver and user rating features, employing drivers as independent contractors, and other TNC business practices have done much to show private enterprise can effectively self-regulate and flexibly allocate resources in an advanced economy. Government responses to these innovations have also shown much about the political economy of entrepreneurship and regulation. The myriad of reforms occurring in Florida and across the world to accommodate (or crush) TNCs reflect competition for business among local governments. Who is to say at this early stage which regulatory regime will prove most economically beneficial and fair?

Rather than a statewide solution, it may be better to allow local governments to adapt at their own pace. Closer to their constituents, local governments are arguably more responsive to local needs than the state legislature. It would be a shame if state lawmakers preempt a healthy democratic change at work.

About DeVoe Moore Center

The DeVoe L. Moore Center is conducts economic research and policy analysis focused on state and local policy issues and is located in the College of Social Sciences and Public Policy at Florida State University in Tallahassee. As an educational institution the DMC provides professional research experience to undergraduate and master’s students through an extensive program of internships and independent study, preparing them for a future in public policy, economic development, public sector accountability and entrepreneurship.
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