St. Paul may let cab companies set fares

The City Council is considering letting cab companies determine their own rates. Minneapolis isn't planning on following suit.

By CHRIS HAVENS, Star Tribune

Last update: November 18, 2008 - 11:36 PM

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In a move that would directly affect how much it would cost to hail a ride in a St. Paul cab, the City Council is considering whether to let cab companies set their own fares.

The push for deregulation is intended to create more competition among companies and foster better service, said Bob Kessler, director of St. Paul's Safety and Inspections Department. It also would allow for speedier adjustments to cover costs, such as fluctuating gas prices, he added.

"We think people will learn quickly who has the best service and fares," Kessler said.

Under current practice, the city sets rates for minimum fares and mile increments. The new proposal comes after St. Paul authorized a fare increase in July -- the first raise in three years.

"We think it [the proposal] is the biggest improvement in taxi service in 25 years," said Mike Breckman, manager of Yellow Cab Co. in St. Paul. "The city has never determined the price of taxi fare based on cost and overhead, and it enables us to do that."

Under the proposed ordinance, rate changes would be allowed twice a year. Companies couldn't increase minimum fares by more than $1 at a time, and incremental rates couldn't change more than 10 percent at a time. The new rates would need city approval and would be posted publicly before taking effect.

Approving the ordinance would add another wrinkle to the already disjointed taxi system in the metro area.

Minneapolis determines rates for licensed cabs working in the city, but Bloomington does not. The Metropolitan Airports Commission, which licenses cabs at the Minneapolis-St. Paul airport, allows cab companies to charge the higher of fares in St. Paul or Minneapolis. The MAC also has the right to set fares independently.

Deregulating fares wouldn't work at the airport, however, because taxis queue up in a single line, said MAC spokesman Patrick Hogan. "Customers have to take the first available taxi, so there isn't the same opportunity of shopping around for the lowest available fare," he said. That would mean it could cost one rate to get to the airport from St. Paul and another to get back.

Kessler hopes deregulating fares in St. Paul could be a step toward a metrowide licensing system.

The cab system now is a mix of regulations and companies. Some cab companies offer dispatch, bookkeeping and other services to driver-owners, while others also own cabs and lease them to drivers. Some cabs are licensed to pick up fares only in one city, but others are licensed in up to three places.

A regional system could range from having a single entity handle cab licensing to having cities set common regulations and even to dividing up the regulatory tasks of inspections, licensing and driver training.

Bloomington, St. Paul, Minneapolis and the MAC would be the likely leaders establishing such a system, but serious talks aren't imminent.

Minneapolis City Council Member Gary Schiff, who has led taxi reform efforts, said Minneapolis staff members are studying how a reciprocity agreement worked during the Republican National Convention. The agreement allowed drivers to earn fares in both directions during the RNC.

Schiff said there's been exploration of a permanent reciprocity agreement, but the fare changes in St. Paul, if adopted, could complicate things.

There will be a hearing on the proposed changes at 5:30 p.m. today in the third-floor Council Chambers at City Hall, 15 W. Kellogg Blvd.

Chris Havens • 651-298-1542

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