SPRINGFIELD – Inviting a likely override attempt, Gov. Pat Quinn Monday vetoed legislation pushed by the state’s clout-heavy taxi industry to impose a new, statewide regulatory framework on commercial ridesharing services like Uber.
A pair of bills vetoed by the governor would have required driver background checks, vehicle inspections and new insurance requirements, among other things, for ridesharing services.
But in a message to legislators, Quinn said the legislation would prevent local governments from imposing their own rules and would hurt consumers, who can use applications on their smartphones to summon drivers for carriers like UberX, Lyft and Sidecar.
“To rush into a whole new statewide regulatory network before the need for one is clear would not only stifle innovation, it would be a disservice to consumers who utilize the service while setting a troubling precedent for the future,” Quinn said in a message to lawmakers.
The governor’s veto ensures that Chicago’s less rigid ridesharing regulations championed by Mayor Rahm Emanuel will stand and take effect later this week.
After the veto, Emanuel issued a statement thanking the governor for his “thoughtful approach to regulating an emerging industry so new transportation options can flourish” in Chicago “while consumers are ensured a safe and reliable experience.”
Quinn’s Republican rival for governor, Bruce Rauner, had called on Quinn last month to veto the legislation.
“One month after Bruce urged Gov. Quinn to veto the anti-ridesharing legislation Pat Quinn finally did the right thing,” Rauner campaign spokesman Mike Schrimpf said in a prepared statement. “It’s too bad that Pat Quinn refused to follow Bruce’s lead on term limits and getting rid of the Quinn-Madigan tax hike.”
Disappointed in the governor’s move, backers of the legislation left open the possibility of seeking an override of Quinn’s veto this fall. The House roll call on the primary piece of legislation was 80-26, and 71 votes are necessary to override a veto. In the Senate, the vote was 46-8, with two voting present. Thirty-six votes are necessary in the Senate to override a veto.
“I’m disappointed that the two bills I worked on this spring to put consumer safety first and provide a fair marketplace for the ridesharing services were vetoed. I disagree with the contention that this should be decided only locally, as these services stretch across city and county lines, and the bills would provide important baseline protections that local governments could build upon,” said Rep. Michael Zalewski, D-Riverside, who pushed the legislation in Springfield.
“Both the main bill and trailer bill received overwhelming support in the House and Senate in the spring. I will now talk with my colleagues and evaluate the best path for moving forward,” Zalewski said in a prepared statement. “It is clear to me we need to provide consumers with the assurances they will get to their destinations safely when they use these services.”
Uber fought the legislation that reached Quinn’s desk and had employed an armada of statehouse lobbyists to kill the bills, including former Quinn chief of staff Jack Lavin, who was hired to lobby for the firm in mid-May.
Lavin’s emails, as chief of staff, were subpoenaed last month as part of an ongoing criminal investigation by federal prosecutors in Springfield into Quinn’s 2010 Neighborhood Recovery Initiative anti-violence program.
“Gov. Quinn caved in to the lobbyists,” said Fayez Khozindar, chairman of United Taxidrivers Community Council, who condemned the governor’s move as one that would threaten the safety of passengers.
But an Uber Chicago official praised Quinn’s move.
“The veto of anti-ridesharing legislation today by Gov. Quinn shows not only his commitment to affordable transportation choices for Illinois consumers, but his commitment to the thousands of drivers who rely on ridesharing to pay their bills and invest in their communities,” said Chris Taylor, Uber Chicago’s general manager.
Chicago’s less rigid ridesharing regulations were approved by a divided City Council to fill the regulatory vacuum that has allowed ride-sharing companies to siphon business from taxicabs.
The ridesharing industry — whose investors include the mayor’s brother — was pleased with the ordinance approved by a 34-10 vote. The taxicab industry, its City Council allies and a union representing cabdrivers were not.
That’s because the ordinance does not regulate ridesharing fares or “surge-pricing” and does not restrict the number of companies, vehicles or drivers that could operate on Chicago streets.
It also creates a two-tier system that allows part-time drivers to escape rigid screening. And it opens the door to the lucrative airport market that UberX once tried to enter illegally, only to be stopped by the city.
Ridesharing companies would be prohibited from picking up street hails or riders at McCormick Place, O’Hare and Midway airports “unless the commissioner determines, in duly promulgated rules, following consultation with the commissioner of aviation, that such pickups can be accomplished in a manner that preserves security, public safety and the orderly flow of traffic; and . . . designated taxicab stands or loading zones.”
Ald. Anthony Beale (9th) was incensed by the double standard.
“This ordinance will hit the hardworking men and women who drive cabs in our city. These men and women are the ambassadors of this great city. They drive tourists around,” Beale, chairman of the City Council’s Transportation Committee, said during the May 28 debate.
“We asked them to get licensed. We asked them to get insurance. Yet, we allow a company to come in that has the technology savvy to create an app. They’re not paying $360,000 for a medallion. Those medallions will be useless if this ordinance passes.”
Emanuel countered that he carefully crafted “one of the most comprehensive ordinances in the nation” to regulate a new industry that has provided a popular transportation alternative that consumers demand.
“There’s a criminal background check that didn’t exist before. There’s a vehicle inspection that didn’t exist before. There’s training required that didn’t exist before. Those are a step in the right direction,” the mayor said on that day.
“We had a good debate, thorough discussion. And we now have the type of comprehensive regulatory architecture that had not existed this morning. This is not at the expense of the taxi industry. They have regulations. Given that this industry is here, we have to set a set of rules and regulations that enhance public safety.”
The Illinois Transportation Trade Association, a trade group representing the taxicab industry, has formed a political action committee with an annual budget of $1 million.
Mara Georges, former Mayor Richard M. Daley’s corporation counsel, is the spokesperson. Senior advisers are Daley’s political enforcer Victor Reyes, the former Hispanic Democratic Organization chieftain, and Mike Noonan, a former political operative for Illinois House Speaker Michael Madigan, D-Chicago.
Georges has argued that the mayor’s ordinance “misleads the public and shields ridesharing companies from important consumer protections and public safety obligations. “She argued that it “sets up a scheme to allow full-time rideshare drivers to avoid police background checks through the use of ‘averaging’ all driver hours, instead of holding every individual driver accountable for their hours.”
She has argued repeatedly that the state bill struck “the appropriate balance between protecting consumers and promoting transportation options,” while Emanuel’s version “doesn’t go far enough and will ultimately put consumers at risk.”
During City Council hearings on the contentious issue, Emanuel’s chief of policy, Michael Negron, addressed the elephant in the room — mayoral bias — without mentioning the involvement of the mayor’s brother, Ari Emanuel, an investor in Uber.
“Our goal is not to protect any one company or any one industry from competition. Our focus is on protecting consumers,” Negron said.
“But, we also want to provide a fair playing field for taxis and liveries. So this ordinance imposes different sets of requirements, based on how many hours drivers spend behind the wheel.”
He noted that roughly 70 to 75 percent of ridesharing drivers are on the road for less than 20 hours a week and less than five percent do it full-time.
Negron also explained why the mayor opposed the state ridesharing bill that Quinn vetoed.
The bill not only would impose what he called an “unfunded mandate” on cash-strapped Chicago by requiring City Hall to track driver hours, but, thanks to an 11th-hour amendment added “at the behest of the taxi industry,” the bill also would have allowed cabs to impose surge pricing, just as ridesharing already does, Negron said.
“On any given night, there are a few hundred rideshare drivers who might engage in surge pricing. On any given night, however, there are thousands and thousands of taxi drivers looking for fares,” Negron said.
“If the state allows taxis to surge price, residents who know nothing about either rideshares or surge pricing who view this as some kind of crazy thing that young people do in different parts of the city will know what surge pricing is. You [aldermen] will start to hear about it from your residents as people pop into a taxi and face fares that are three, four, five, six times normal rates.”