The Texas Hammer: Ridesharing and TNCs

The most intense Austin political battle of 2016 was the Proposition 1 campaign, promoted by transportation network companies Uber and Lyft, to overturn TNC regulations enacted by City Council. The companies opposed requiring fingerprint-based background checks of drivers, as well as other measures Council considered necessary to protect the safety of riders (including some regs that the TNCs had accepted elsewhere). The TNCs – primarily Uber – spent more than $10 million on a referendum drive and a multimedia advertising campaign trying to persuade voters to support Prop 1.

That unprecedented spending was either not enough – or possibly too much – as there was significant public backlash to unprecedented corporate spending in a municipal election. "I think that maybe if they'd spent $1 million," Prop 1 opponent and longtime pollster Mark Littlefield said afterward, "they might have won."

Prop 1 and the TNCs lost, 55% to 44%, and Uber and Lyft immediately announced they were ending Austin operations. As we wrote at the time: "The next state legislative session is looming, and ... state lawmakers are always ready to sacrifice 'local control' to major business priorities, and ... state reps are cheaper to buy (OK, 'lobby') than are 'grassroots' petition drives and elections."

The TNCs quickly shifted their attention to the 85th Legislature, looking for bill sponsors hostile to Austin government and sympathetic to the deregulatory cause. Two bills currently under consideration (HB 100 and SB 361) would address TNC regulation by effectively removing from cities the authority to regulate ride-hailing companies. They would reduce regs in Austin and Houston – dropping the fingerprint-check requirement and others like visible trade dress for vehicles. But the current drafts contain what might be a poison pill for Uber, which does not use an "in-app" tipping system: The bills would forbid drivers to solicit cash gratuities.

In advance of this year's Super Bowl, Houston made its separate peace with Uber (Lyft does not operate in that city), keeping the fingerprint requirement but fast-tracking the driver application process. By contrast, Austin responded to the brand-name departures by supporting several competing ride-hailing apps. The most successful thus far is a nonprofit, RideAustin (which also enables riders to easily donate to local charities). RideAustin recently celebrated its millionth ride, and the company's director of community engagement, Joe Deshotel, says its service continues to grow and is now breaking even. CNN reported recently (CNN Tech, March 8) that some drivers have been commuting from Houston to Austin to work, because they get a better return from RideAus­tin and other local companies.

Deshotel says the fingerprint requirement actually polls well statewide, and he compares the legislative backlash to a similar state response to local ordinances limiting natural gas fracking: "This kind of thing is popular with legislators as a way for them to bash Austin, and take power away from local jurisdictions." It's too soon to know the prospects of the TNC dereg bills, but Deshotel says that whatever happens at the Capitol, "Our goal is to continue to do what we're doing, to build relationships in communities. We're going to do everything we can to collaborate with the city in a cooperative way."

The TNCs quickly shifted their attention to the 85th Legislature, looking for bill sponsors hostile to Austin government and sympathetic to the deregulatory cause.