PPA battles Uber and Lyft in Harrisburg over state of ride share in Philly

The PPA is pushing Harrisburg to impose a new tax on Uber and Lyft.

Uber drivers offering service in Philadelphia. Read moreTNS

Published June 7, 2018, 7:07 p.m. ET

Pictures of bald tires and busted bumpers offered a troubling statement on the condition of cars for hire in Philadelphia during hearings Thursday in Harrisburg.

"I could exhaust all of my allotted time today reviewing the unconscionable vehicle conditions we have found over the years," Scott Petri, the Philadelphia Parking Authority's chief executive, said during testimony before the Pennsylvania House's Consumer Affairs Committee.

PPA inspectors have found animal feces, leaking gas tanks, exhaust leaks into passenger compartments, and wood blocks holding the car's frame into place in taxis or ride-share vehicles, Petri said. He specifically described a taxi with a catalytic converter that was leaking carbon monoxide into the vehicle and a ride-share vehicle with damage that could have caused a tire to fall off or the steering column to fail.

Petri used the anecdotes to demonstrate that the fleets on the street in Philadelphia are declining, and to argue in favor of a change in the way taxis and ride-share vehicles are taxed to raise money for inspections. He is proposing a 50-cent tax on any trip in a car-for-hire in Philadelphia. Currently Uber and Lyft pay a 1.4 percent tax on all revenue, which is reported by the companies with little PPA review.

Ride-share companies Uber and Lyft oppose the idea and told the committee the evidence showed that ride-share vehicles in Philadelphia were much safer than Petri had suggested. Since inspections began in March 2017, said Shari Shapiro, Uber's senior manager for public affairs in Pennsylvania, 90 percent of the 400 Uber vehicles examined passed PPA inspection. Lyft reported 95 percent of its vehicles had passed inspection, said Campbell Matthews, a company spokesman.

"This is why it's confusing that the PPA would claim these are widespread issues when the PPA's own data clearly indicates otherwise," he said in a statement Thursday.

The PPA has scrambled to keep up with the city's 1,600 cabs and estimated 20,000 ride-share vehicles. Longtime cabdrivers have described a much diminished presence of inspectors on the streets, as the PPA tries to handle inspecting taxis and 840 ride-share vehicles a month, the number mandated by legislation but only about 4 percent of the total number of vehicles operating. A loss of revenue to the taxi and limo division has caused the staff to shrink by 55 percent, Petri said.

He has said the agency needs to bring the budget of its Taxi and Limousine Division from $4 million to about $9 million to cover the costs of regulation. Two-thirds of ride-share tax revenue collected by the PPA goes to the school district, and Petri said creating the 50-cent levy would boost money for the district from $3 million to $11 million a year.

In 2017, Pennsylvania's Auditor General issued a report on the PPA that found significant financial mismanagement and listed 117 recommendations. Shapiro said the PPA should address its own shortfalls before trying to raise more money. She also noted the legislation authorizing ride-share operation in Pennsylvania expires at the end of 2019, which offers a better opportunity to revisit how the industry is taxed.

Last month, Uber reported it had underestimated its 2017 revenue in Philadelphia and owed an additional $240,393. Petri pointed to this as evidence that the PPA needed a more transparent funding formula, but Shapiro said the incident was proof Uber was a fair partner.

"Performing periodic audits, voluntarily disclosing any issues and promptly paying any outstanding funds is what financially responsible organizations do, and what Uber did here," she said in her testimony.

The Pennsylvania Public Utilities Commission, which regulates ride-share businesses throughout the rest of Pennsylvania, offered a contrasting perspective on the industry, with Chairwoman Gladys Brown saying her people had few complaints about Uber or Lyft.

"Currently, there are approximately 50,000 TNC drivers operating in Pennsylvania," she said, referring to a technical name for the businesses, transportation network companies. "The number of violations that the commission has found since 2016 is minimal, and most violations are minor, such as failure to display the TNC decal."

If any change is going to happen in the way ride-share businesses are taxed, it will likely come in the form of a rider on an existing bill, rather than a new piece of legislation, officials have said. An addition is being written, Petri said Thursday, but nothing has been introduced yet.