Lightfoot proposes temporary fuel surcharge on taxi fares

The surcharge would start at $1 for fares up to $20, then go to $2 for fares up to $30 and $3 for tabs over $40. The Business and Consumer Affairs commissioner would be empowered to terminate the surcharge whenever gasoline prices fall below $5 a gallon.

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Taxis on Madison Street in Chicago in 2012.

With the advent of ride-hailing services, which are regulated differently than taxis, the number of cabs in Chicago has declined to about 2,000. Yellow and Checker, once the giants of the industry, have just 450 cabs in Chicago.

Sun-Times file photo

Chicago cabdrivers squeezed by skyrocketing gas prices may soon get some relief — at the expense of their dwindling pool of riders.

Mayor Lori Lightfoot is proposing a surcharge of $1 for fares up to $20, $2 for fares as high as $30 and $3 for tabs over $40. 

Business and Consumer Affairs Commissioner Ken Meyer would be empowered to issue a “public vehicle industry notice” to terminate the surcharge whenever gasoline prices fall below $5 a gallon.

Signs notifying riders of the fuel surcharge would have to be posted in a “prominent place” within the vehicle. The size and location of that sign would be determined by a rule issued by the department charged with regulating the taxicab industry. 

John Moberg, president of Yellow Taxi and Checker Taxi, said the modest surcharge “certainly would help,” with the biggest impact on larger vehicles accessible to passengers with disabilities. The impact would be negligible on smaller, hybrid vehicles.

Moberg was asked whether the proposed relief is enough for an industry he described as “limping along for quite some time.”

“Do the drivers need more revenue? No doubt. But at the same time, we can’t discourage people from riding. All of us are feeling financial strain right now. The entire city,” Moberg said. 

“How much can the people of Chicago bear? You don’t want to raise rates to the point where people just stay home. Through the whole COVID shutdown, we’re a different people now than we were two years ago. We’ve adjusted our lifestyles. … A number of us are almost frightened regarding going out — then adding the economic situation on top of it.” 

Chicago’s once-thriving taxicab industry has been shrinking ever since the unregulated advent of ride-hailing services like Lyft and Uber.

It took years before the city finally stepped in and regulated that industry. By that time, the value of taxicab medallions — essentially, the license needed to operate in Chicago — already had plummeted.

Yellow and Checker, once the behemoths of the taxicab industry with well over 2,000 medallions, now have just 450 cabs on the streets of Chicago, Moberg said. In the entire city, just 2,000 cabs remain on the street.

A medallion that once sold for “approaching if not over $400,000” is now valued at just $11,000 or $12,000, he said. 

“It has been limping for quite some time. We had the infusion of ride-share, which we felt was given much more lenient regulation than we were. Then regulations were increased during the Rahm [Emanuel] administration. And we were starting to level off and recover from that when COVID hit,” Moberg said.

“So, you’re talking about a cab industry that right now is maybe at 30% of what it once was. At best.”

Downtown Ald. Brendan Reilly (42nd) offered a sarcastic response to the proposed fuel surcharge.

“The City of Chicago hasn’t already done enough to kill off the taxi industry for Uber and Lyft? This initiative ought to finish the job,” Reilly wrote in an email to the Sun-Times.

In a statement, the Department of Business Affairs and Consumer Protection called Chicago’s tiered approach “unique” compared to the “flat fuel surcharge fees” in other cities.

“The fuel surcharge fee will go 100 percent to taxicab drivers to offset the dramatically increased fuel prices they are paying at the pump right now,” the statement said.

“The high cost of gasoline right now is resulting in less take-home earnings for the cabdrivers as their overhead expenses have skyrocketed. The fuel surcharge will cover the increased overhead.”

The struggling taxi industry got what advocates then called a “death blow” in April 2017.

That’s when the U.S. Supreme Court let stand a federal appeals court ruling that snuffed out an attempt by the cab companies to level what they called an uneven playing field that favored Uber, whose investors included Emanuel’s brother.

The appeals court ruling essentially said the business models of taxis and ride-hailing services are different and, therefore, they can continue to operate under different sets of rules in Chicago.

That decision validated a 2014 city ordinance letting Uber and Lyft operate without taxi medallions, city-regulated fares, driver fingerprinting or other regulations cab companies and their drivers must follow.

Mara Georges, the former longtime city corporation counsel, who was then representing the taxicab industry, said that ruling could be a death blow for the cab industry as Chicagoans have come to know it.

“The fleets will disappear and you’ll have taxis owned by individual owners. The problem with that is that much of the control the city has exercised over taxicabs has come through the fleet,” Georges said then.

“It’s going to end up being more of a Wild West situation where you’ve got all kinds of independent drivers out there just looking to pick up fares and make as much money as they can.”

At the time, the Washington, D.C.-based Institute for Justice had claimed victory in the name of passenger choice.

“The Court’s decision has cleared the way for transportation freedom across the country,” Institute for Justice Senior Attorney Anthony Sanders was quoted as saying in a press release.

“In city after city, we are seeing lawsuits like these filed by incumbent businesses that want to freeze the current regulatory environment in amber. And these lawsuits, rightly, are failing. Consumers and entrepreneurs, not lawyers and bureaucrats, should decide what transportation options are available.”

Uber and Lyft had long maintained that a background check based on FBI fingerprinting would discriminate against minorities who are “far more likely to have an interaction with the criminal justice system,” often for minor, nonviolent offenses where the charges are dropped but the record has not yet been expunged.

In 2016, a divided City Council agreed to license ride-hailing drivers but, amid threats from Uber and Lyft to abandon the Chicago market, opted not to require fingerprinting.

• Also at Wednesday’s City Council meeting, Lightfoot introduced an ordinance authorizing the city to issue permits under a pilot program for so-called “personal delivery devices.”

These will be app-based robot delivery services that will “ robot delivery services are app-based and partner with food establishments to make deliveries within a small radius of the restaurants and grocery stores,” according to a news release.

The vehicle was described as an “electric-powered device that is intended to transport property primarily on areas normally designated for pedestrians.” 

Operators who have “the ability to control movement” of the device would be required to get a permit before operating on sidewalks and crosswalks “within geographic zones” designated by the city.  

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