Jeramey Jannene

Milwaukee Taxi Cab Medallion Bill Passes Assembly

By - Feb 22nd, 2012 02:13 pm
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Yellow Cab in Milwaukee, WI

Yellow Cab in Milwaukee, WI

The City of Milwaukee is working on state legislation to allow the city to profit from the sale of additional taxi cab permits (to be called medallions) and address the perceived shortage of taxi cabs in the city. Currently under Wisconsin law, permit and license fees can not exceed the cost to issue said permits. This gives the Common Council and Mayor little incentive to raise the cap on the number of permits (currently capped at the seemingly random number of 321 since 1992), despite the fact that the permits are changing hands in the private market for between $80,000 to $150,000.

The proposed bill would allow first class cities (the state’s class system that includes only Milwaukee in the first class) to issue medallions to currently licensed operators for no more than $500, and would allow an annual public auction to issue more medallions. The new medallions are not to exceed an additional two percent per year for the first five years (six per year), and one percent thereafter. An additional provision in the bill would allow a first class city to collect a fee not to exceed 10% of the highest price paid at the most recent auction for the transfer of a medallion.

As with the current system, a medallion licensee would be allowed to enter into an agreement with another person to operate the motor vehicle (who is licensed by the city).

Assuming the bill passes, the bill could bring in a substantial amount of annual income for the city and raise the number of available taxi cabs. The bill protects the substantial investment made by many current permit holders, while delivering the city a source of the revenue from the market it created and increasing the number of cabs.

It remains to be seen if the auction process would result in the same market makeup, where Michael Sanfelippo owns 162 of 321 permits. Also of question is if the city would issue actual medallions, as New York City does annually.

The bill passed the Assembly yesterday, with a final vote of 55-39. The bill had a bi-partisan list of sponsors including Representatives Farrow, Zamarripa, Young, Stone, D. Cullen, Richards, Fields, Zepnick, and E. Coggs, and Senators Lasee, Taylor, and Darling.

Next up the Wisconsin State Senate.

Assembly Bill 529

Senate Bill 437

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10 thoughts on “Milwaukee Taxi Cab Medallion Bill Passes Assembly”

  1. Rob says:

    So current taxi license holders get to lock in the value of their closed-market licenses AND new entrants are required to pay a 10% fee above whatever private value the current holder is asking for the license? And only 30 new taxis are allowed in the first five years? This is a horrible idea — which makes sense considering the taxi companies lobbied for it. It preserves the artificially-inflated value of their licenses, which would be threatened by simply lifting the cap.

  2. Dave Reid says:

    @Rob But here’s the question that I have… If they simply do away with the fee, then don’t many individual cabbies stand to lose thousands of dollars of what had essentially been an investment, how do we handle this?

  3. Rob says:

    @Dave

    I think that could probably be true, but I don’t know if they’re currently able to leverage the perceived value in their license (e.g., use it towards a business loan) or if it’s simply a number that exists based on the scarce supply of other taxis. If it’s the latter, I don’t see why that ought to become the taxpayers’ problem.

    Another way to look at it — is their taxi company valuable because it’s a well run, profitable business, OR is it only valuable because they operate in a closed-off market with no real competition? I don’t know the full answer to that, but I think it deserves to tested by lifting the cap (either all the way or in much larger increments than this bill proposes) and allowing responsible, licensed drivers to enter the market if they so choose.

  4. Dave Reid says:

    @Rob I don’t know if they can leverage their ‘investment’ currently. But I do know individual cabbies that have spend significant sums to get into the business, and so if we simply did away with the cap well is that fair to them? That said I personally agree that 2% (and then 1%) is too slow a rate to increase the pool. But it is a first step.

  5. Rob says:

    @ Dave

    I don’t think it’s perfectly fair, but I wonder how many licenses are held by individuals versus the large five cab companies? I feel for individuals who paid way too much for a license, but I can’t see that being the only relevant issue to consider. More to to the point, I don’t think this bill was written with the individual cab driver in mind. Look at who lobbied in favor of it.

    Also, why is this an issue being addressed at the state level and not at the city level? There’s a lot about this bill that seems to perpetuate the already broken licensing system we have in place. I agree allowing the cap to increase is a first step, but if this bill passes there can be no more discussion about raising the cap — it’s set at 2/1% even if the city determines there’s additional demand.

  6. Sniperetn says:

    I was a taxi driver when i was in college. Mike Sanfileppo is dominating the market with close to illegal monopoly. he owns 162 taxis out of the total of 360 cabs in the City. We were nothing but slaves for his company. He forced us to fill gas from his gas station only buy forcing us to buy gas coupons. $600/ week rent. I heard that he got in trouble with State/county for violation on medical/SSI ..rides…..

    The license currently has no “real estate” value so you cannot grab a loan from the bank using it as a collateral unlike NY and Chicago.

    many people own one – 5 cabs. one immigrant from India owns 10 cabs. the market value is about 1 million dollars.

  7. My View says:

    I think that this medallion proposal is a good idea to ensure every current license owner who has had to pay for their cab licenses have something to ensure their investment. You cannot just lift the cap and give them out for free becuase a few people don’t think it’s fair. Many of these people have spent thousands to hundreds of thousands to be in this industry. Also, I don’t understand why everyone targets the big guys…what did they do anything wrong? They paid for their licenses just like someone who may only own one. Nor are they the ones who are making the rules the city enforces.

    I think the slow increase is a good idea to see what type of demand is out there before “opening the gates”. It may be much smaller then people are making it out to be. I don’t know what the total expenses are to be a cab owner, but I can bet they aren’t cheap….car that meets safety starndards, inreasing gas prices, insurance that I’m sure is through the roof…

  8. Scott says:

    Any government limit on the number of cabs is an unconstitutional, un-American,and unethical denial of equal opportunity for people to earn an honest living.

    Medallions and other schemes are nothing but a denial of economic liberty for people whose version of the American Dream is to go into business for themselves.

    In a free country that obeys the US Constitution, the consumer is the boss in determining how cabs is “enough”, not politicians and their cab-industry allies.

  9. Jesse Hagen says:

    Scott, I don’t see how you saying all that about the constitution makes it true. Show me, don’t tell me. Anyway, this isn’t the proper forum to debate the US consitution.

  10. Scott says:

    Jesse,

    It most certainly is the proper forum. Taxi medallions violate the 14th amendment ( equal protection) as well as the commerce clause of the Constitution.

    One of the very bedrocks of this country is equal opportunity for all. Medallions and other government-created barriers-to-entry violate that very bedrock.

    Taxis should be able to pass safety and emissions inspections, be adequately insured, and not swindle their customers. Beyond that, the gov’t should not be involved in the taxi business,period.

    Suffice to say Americans wouldn’t tolerate gov’t-backed cartels in restaurants, pizza stores, clothing stores, dry cleaners,etc. They shouldn’t tolerate it in the taxi business either.

    Taxi medallions are a combination communist central planning with a dose of banana republic /feudal system corruption mixed in.

Comments are closed.