Gov. Tim Walz vetoed a bill Thursday that would have provided pay raises and job protections to rideshare drivers.

This is Walz's fifth legislative session but his first veto. He said he will create a commission to study driver wages and working conditions with the expectation it will make recommendations for a bill in 2024.

"I am committed to finding solutions that balance the interests of all parties, including drivers and riders," Walz said in a release. "This is not the right bill to achieve these goals."

The governor announced the action hours after Uber announced plans to pull out of all Minnesota markets except the Twin Cities metro area and only offer its already higher-priced premium products such as Uber Black and Uber Black SUV. "We are left with a bill that will make it impossible to continue serving most areas of the state," Uber spokeswoman Freddi Goldstein said Thursday.

Both Uber and Lyft had urged Walz to veto the bill while rideshare drivers had lined the hallway outside the governor's Capitol office in recent days, chanting encouragement for him to sign it.

The bill, sponsored by Sen. Omar Fateh, DFL-Minneapolis, came up late in the session. When it passed the Senate on Sunday, drivers outside the Senate chamber held Fateh aloft as they celebrated.

Fateh issued a statement on social media after the veto. "Today, we saw the power corporations hold on our government despite the [DFL] trifecta," he wrote. "After a year of stakeholder engagement, passing all required committees in both chambers, and both floors, the governor has vetoed the bill to improve working conditions for Uber/Lyft drivers."

The vetoed bill would have mandated drivers be paid $1.45 a mile and 34 cents per minute. The bill included minimum pay guarantees indexed to inflation with adjustments annually on July 1.

Uber and Lyft said ride prices would increase by 50% at a minimum if the bill became law. The 10-mile trip between downtown Minneapolis and St. Paul would be priced at close to $50 under the vetoed bill, Goldstein has said.

In Minneapolis, median Uber driver earnings per hour between April 10 and May 1 were $35.64 including tips and promotions for engaged time, Goldstein said.

Lyft officials also said the company would leave many Minnesota markets outside the metro area if the bill became law, creating transportation deserts across the state

The pressure for a veto also came from Dakota County officials in a letter to Walz on Monday.

"The impact on transportation services for the disability community in Dakota County, without any consideration or planning, warrants your action to hit pause while everyone has an opportunity to explain how they would be adversely affected," read the letter signed by Dakota County Board Chair Liz Workman and Joe Atkins, chair of the Dakota County Legislative Advisory Workgroup.

Dakota County has collaborated with Lyft since 2019 to help people with disabilities get to work and activities. More than 1,400 people with disabilities are using Lyft each month through Dakota County, the letter said.

"These rides from Lyft are critical to their success," the letter said. The vetoed bill "could make these rides unaffordable to the people we support."

Correction: A previous version of this story incorrectly stated when the Senate passed the bill. It passed on Sunday.