Bloomberg News

NYC Will Lose $1 Billion If Cuomo Vetoes Taxi Bill, Mayor Says

December 09, 2011

Dec. 8 (Bloomberg) -- New York City’s budget deficit would increase by a third to $3 billion if Governor Andrew Cuomo vetoes a bill that would let the city sell 2,000 taxi medallions and permit radio-call cabs to pick up passengers who hail them outside Manhattan, Mayor Michael Bloomberg said.

The mayor has said the plan would provide $1 billion in a $70.3 billion budget for the fiscal year that starts July 1. On Nov. 18, Bloomberg included medallion sales in a list of agency cuts and revenue sources he said would reduce a projected $4.6 billion gap to $2 billion. State law requires him to prepare a preliminary budget by the first week of February.

Last night, Cuomo said he intended to veto the bill. The governor cited objections from yellow-cab owners who say their medallions, which sell for as much as $1 million at auction, could lose value.

“There’s a myriad of issues and they’re all significant,” Cuomo said during a news conference in Albany after the Senate approved his tax overhaul. “I said from Day One if we don’t have a resolution of these issues, I’m going to veto the bill.”

Efforts to resolve the differences would most likely resume in January and February, the governor said.

The plan, which passed the Legislature in June, would allow so-called livery drivers, now legally bound to answer only radio calls, to pick up passengers who hail them on streets in northern Manhattan and the other four boroughs -- areas of “nearly non-existent taxi availability,” according to a state Assembly memorandum describing the bill.

‘Very Big Difference’

“It also will generate a billion dollars of revenue for the city at a time when we have $5 billion deficits we’re trying to close,” the mayor said during a WCBS radio interview today. “A billion would make a very big difference.”

Later at a news conference, Bloomberg said Cuomo “has assured me this bill would be passed with some minor changes.”

In his statement last night, Cuomo said he wouldn’t sign the bill unless all cabs with newly sold medallions were accessible to disabled passengers. That provision had already been agreed to, said Julie Wood, a spokeswoman for Bloomberg. The deal would have expanded the number of freshly minted medallions for sale to 2,000 from 1,500, taking into account the possibility that handicapped-accessible taxi medallions might not be worth as much as medallions not so encumbered, she said.

Diluting Value

Fernando Mateo, president of the New York Federation of Taxi Drivers, said the plan’s authorization of new medallion sales would dilute the value of his members’ investments. The city has about 13,200 medallions.

Another provision that would allow the city to sell 30,000 “hailing privilege” permits would also hurt yellow-cab drivers who now have exclusive rights to that business, Mateo said.

As many as 450 “hail privilege” permits would be sold to garages that operate as for-hire vehicle base stations, according to the law.

“Once you take away the exclusive right to pick up street hails, the medallion is no longer going to be worth as much as it is now, and that will make it more difficult to obtain financing, as it won’t retain its value,” Mateo said.

The sale of city taxi licenses hit a record $1 million in October, bolstering shares of Medallion Financial Corp., which owns medallions and lends money to buyers.

Medallion Financial’s shares, which traded on the Nasdaq Stock Market under the ticker symbol TAXI, have increased 42 percent this year through Dec. 7, compared with a 7 percent drop in the Russell 2000 Financial Services Index, according to data compiled by Bloomberg.

The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

--With assistance from Freeman Klopott in Albany. Editors: Mark Schoifet, Stephen Merelman.

To contact the reporter on this story: Henry Goldman in New York City Hall at hgoldman@loomberg.net;

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.


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