Fayette County

Lexington, Louisville struggle to regulate cabs in face of new state laws governing Lyft, Uber

Taxis were lined up at Lexington's Blue Grass Airport in September.
Taxis were lined up at Lexington's Blue Grass Airport in September. mcornelison@herald-leader.com

Lexington and Louisville are getting out of the taxi cab regulation business.


Lexington’s Urban County Council is expected to take a final vote at its Dec. 3 meeting to temporarily suspend the city’s regulations that require taxi cabs to be licensed and inspected. The move is driven by a major change at the state level on how ride-sharing companies such as Uber and Lyft and taxi companies are regulated.

A new state regulation — which took effect in June — essentially took away a local government’s authority to regulate ride-sharing companies. Uber and Lyft connect those in need of a ride with drivers via a GPS-enabled smartphone app. Those companies are now regulated at the state level.

Lexington is left struggling to determine what, if anything, it can do to regulate taxi companies and set fares. The Louisville Metro Council has not yet tackled the issue, nor has it been referred to a committee, said Tony Hyatt, a spokesman for the Louisville Metro Democrats.

By eliminating (the cab ordinance), there will be no governing body that regulates the meter rates. Anybody can charge anything they want at any time.

Mike Mackin, chairman of Yellow Cab of Lexington

The new state regulations still require taxi and transportation network companies such as Uber and Lyft to pay a $250 application fee, provide the state with criminal background checks for all drivers, pay a license fee that includes a $30 fee per vehicle and also provide an insurance bond for each vehicle in the cab or transportation company’s fleet.

At a Nov. 10 Planning and Public Safety Committee meeting, the council ultimately voted to suspend its taxi regulations so Lexington cab companies would not have to pay city licensing fees at the same time they paid state licensing fees come Jan. 1. But the committee also decided to keep the issue in committee to determine if the city of Lexington could still regulate fares.

The Urban County Council has been debating the issue since March 2014, when Lyft and Uber began operating in Lexington. That debate was prompted by concerns from taxi companies that Lyft and Uber did not have to comply with the city’s taxi ordinances that require a company to have a minimum of 25 cabs, a 24-hour central dispatch system and have handicap-accessible vehicles.

The new state regulations do not require a minimum number of cabs. Someone with one cab can operate now in Kentucky.

In December 2014, Gov. Steve Beshear signed emergency state regulations that would govern ride-sharing companies.

The council decided to delay action until the state regulations were finalized. When those regulations took effect in June 2015, the new revisions repealed Lexington and Louisville’s authority to regulate ride-sharing companies but gave “concurrent” jurisdiction to regulate taxis, said Glenda George, a Lexington city lawyer.

Lexington and Louisville were the only two cities in Kentucky allowed to regulate taxi cabs.

But if the city wants to ensure that taxis and ride-sharing companies operate under the same rules, the city should suspend its taxi ordinances, George explained at the Nov. 10 meeting.

“We have some ability to regulate taxi cab companies, but we have no authority over the transportation network companies,” George said.

But some on council have expressed reservations about giving up the city’s authority to regulate how much taxis can charge.

Councilman Kevin Stinnett questioned why the city shouldn’t set up additional protections for its citizens.

“Most cities in Kentucky would want that, most citizens would want that,” Stinnett said.

The city could also lose some revenue because it no longer collects licensing fees for taxis. Rick Curtis, an administrator in the city’s public safety administration, said he estimates that the city receives approximately $30,000 a year from taxi cab licenses and other business taxes.

The city will still receive occupational and other business taxes from the taxi drivers and Uber drivers, said Rusty Cook, director of revenue. The problem is tracking those drivers to get those occupational taxes, Lewis said.

George said the state is not required to send the city the list of drivers for Uber and Lyft, but it has done so. That list does not give people’s addresses so the city is not sure where those people are working.

But Cook said that issue is not unique to taxi and ride sharing companies. The city has a similar problem collecting occupational and other taxes from other independent contractors.

Mike Mackin, chairman of Yellow Cab of Louisville and Lexington, said doing away with local taxi regulations may have some unintended consequences.

Rick Curtis, an administrator in the city’s public safety administration, said he estimates that the city receives approximately $30,000 a year from taxi cab licenses and other business taxes.

“I appreciate the fact that you are trying to make it more competitive for the cab companies to compete with the (transportation network companies),” Mackin told the committee. But if the city eliminates its taxi ordinance, it will no longer have say over fares.

“By eliminating 18A (the cab ordinance), there will be no governing body that regulates the meter rates,” Mackin said. “Anybody can charge anything they want at any time.”

Mackin said even though he would stand to profit if local regulation of rates was eliminated, that could open riders to abuse.

George said although cab companies report what they charge to the city, “in the 20 years that I’ve been here, we have never regulated the rates.”

Stinnett, who has been on the council since 2004, said prior to the 2010 Alltech FEI World Equestrian Games, then-mayor Jim Newberry spoke to taxi companies about the rates to stop any potential price-gouging. “We got them all together in one room and said, ‘This is what we want to charge,’” Stinnett said.

Mackin said airports —such Blue Grass Airport in Lexington — have separate licensing for taxi cab companies.

Although George recommended that the council suspend the ordinance, the council could come back and look at what parts of the ordinance it wanted to keep.

Councilwoman Susan Lamb suggested the committee revisit the issue at the council’s Dec. 8 Planning and Public Safety meeting to further discuss whether it should keep some parts of the taxi ordinance. But the issue is confusing, many on council said.

“If we regulate taxi cab companies at all, it will make the playing field uneven,” said Vice Mayor Steve Kay.

Beth Musgrave: 859-231-3205, @HLCityhall