Cities, towns see money from ride-hailing fees

SETH WENIG/AP file photoA state-mandated fee on ride-hailing services such as Uber and Lyft has generated thousands of dollars for Cape Ann and North Shore cities and towns. 

BOSTON — The state is raking in money from fees charged to ride-hailing companies such as Uber and Lyft, reflecting an explosion in use of the emerging transportation services.

The law signed by Gov. Charlie Baker in 2016 regulating smartphone-based transportation companies included a 20 cent per ride fee, half of which is distributed to cities and towns annually based on how many trips originate there.

Statewide there were 64.8 million trips last year, according to the Department of Public Utilities. That represents a windfall of more than $12.9 million for cities and towns.

More than half of the trips — or 34.9 million — originated in Boston. The city collected more than $3.4 million in fees.

“The numbers are very eye-opening,” said Geoff Beckwith, executive director of the Massachusetts Municipal Association. “It speaks to the ubiquitous nature of the new economy and these transportation network companies, and how quickly people have incorporated Uber and Lyft into their daily activities.”

Locally, Lawrence reported one of the highest number of trips last year — 350,752 — and collected more than $35,000 in fees from the companies.

Salem recorded 296,348 rides last year, collecting about $30,000; Peabody reported 177,346 rides, collecting about $17,000.

Newburyport had 26,196 rides, collecting $2,619 in fees; while Gloucester had 8,815 rides and $881 in fees.

Most trips are relatively local, with an average length of about 4.5 miles, according to state data. Of rides starting in Boston, 1.8 million left from Logan Airport.

By statute money from the fees must be used to address the impact of the transportation services on roads, bridges and other infrastructure, or toward other public projects “substantially related” to operating the services.

Salem has decided to use the $30,000 it received from the ride-hailing companies last year on a program for which residents may propose projects to encourage alternative transportation then vote on them. Winning projects will be considered for funding as part of the city budget.

Mayor Kim Driscoll said the city might use future fee disbursements for “specific programs like a shuttle service or bike share.”

In Haverhill, Mayor Jim Fiorentini said he plans to use the $10,000 his city received to bolster local and regional bus service by increasing how much the city pays into the Merrimack Valley Regional Transit Authority. He said the agency is weighing service cuts.

Like many municipal leaders, Fiorentini said he was “surprised” by the large number of people using ride-hailing services to get around.

The state’s share of ride-hailing fees is earmarked for the state’s transportation fund and to support the taxi industry, which has seen a decline in ridership as Uber and Lyft have raced into the market in recent years.

The 20 cent per ride levy doesn’t include local licensing fees charged to the companies to operate within cities and towns, which vary by community.

State law allows local officials to license taxis and livery drivers that pick up fares within their borders. That can include charging fees or requiring insurance and criminal background checks for drivers.

Beckwith said most communities haven’t set up their regulations yet for ride-hailing companies, which will create another revenue stream.

“Time is going to tell whether the revenue will cover the cost of local regulation,” he said. “We’re still early in the process.”

Ride-hailing services leverage mobile apps, which customers use to find rides. Area drivers are notified of those requests. Riders pay through the app; no money changes hands.

To date, the state had cleared at least 150,000 drivers to work in the ride-hailing industry, though it’s not clear if all of them are currently working.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhi.com.

Ride-hailing trips/fees 2017

Community Trips Started Fees

Gloucester 8,815 $881

Manchester 3,353 $335

Essex 1,568 $156

Rockport 1,253 $125

Ipswich 4,632 $463 

Salem 296,482 $29,648

Newburyport 26,196 $2,619

Source: Massachusetts Department of Public Utilities

 

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