Legislature(2017 - 2018)CAPITOL 106
03/17/2017 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HJR14 | |
| HB132 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 79 | TELECONFERENCED | |
| += | HB 132 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| *+ | HJR 14 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 17, 2017
3:19 p.m.
MEMBERS PRESENT
Representative Sam Kito, Chair
Representative Adam Wool, Vice Chair
Representative Andy Josephson
Representative Louise Stutes
Representative Chris Birch
Representative Colleen Sullivan-Leonard
MEMBERS ABSENT
Representative Gary Knopp
Representative Mike Chenault (alternate)
Representative Bryce Edgmon (alternate)
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 14
Urging the Federal Communications Commission to increase the
Rural Health Care Program budget sufficiently to adjust for
inflation, advances in technology and the services available
with increased broadband, and the increase in demand for
broadband-based services and provide for any unused funds to be
carried forward to future funding years, ensuring that rural
communities in the state continue to have access to affordable
broadband telehealth services.
- HEARD & HELD
HOUSE BILL NO. 132
"An Act relating to transportation network companies and
transportation network company drivers."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HJR 14
SHORT TITLE: FCC: INCREASE RURAL HEALTH CARE BUDGET
SPONSOR(s): REPRESENTATIVE(s) EDGMON
03/06/17 (H) READ THE FIRST TIME - REFERRALS
03/06/17 (H) L&C
03/15/17 (H) L&C AT 3:15 PM BARNES 124
03/15/17 (H) -- MEETING CANCELED --
03/17/17 (H) L&C AT 3:15 PM CAPITOL 106
BILL: HB 132
SHORT TITLE: TRANSPORTATION NETWORK COMPANIES
SPONSOR(s): REPRESENTATIVE(s) WOOL
02/15/17 (H) READ THE FIRST TIME - REFERRALS
02/15/17 (H) TRA, L&C
02/23/17 (H) TRA AT 1:30 PM BARNES 124
02/23/17 (H) <Bill Hearing Canceled>
02/28/17 (H) TRA AT 1:30 PM BARNES 124
02/28/17 (H) Heard & Held
02/28/17 (H) MINUTE(TRA)
03/02/17 (H) TRA AT 1:30 PM BARNES 124
03/02/17 (H) Heard & Held
03/02/17 (H) MINUTE(TRA)
03/06/17 (H) L&C AT 3:15 PM BARNES 124
03/06/17 (H) Scheduled but Not Heard
03/07/17 (H) TRA AT 1:30 PM BARNES 124
03/07/17 (H) Moved CSHB 132(TRA) Out of Committee
03/07/17 (H) MINUTE(TRA)
03/08/17 (H) TRA RPT CS(TRA) 1DP 4NR 2AM
03/08/17 (H) DP: WOOL
03/08/17 (H) NR: SULLIVAN-LEONARD, NEUMAN, DRUMMOND,
STUTES
03/08/17 (H) AM: CLAMAN, KOPP
03/10/17 (H) L&C AT 3:15 PM BARNES 124
03/10/17 (H) Heard & Held
03/10/17 (H) MINUTE(L&C)
03/17/17 (H) L&C AT 3:15 PM CAPITOL 106
WITNESS REGISTER
TIM CLARK, Staff
Representative Bryce Edgmon
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HJR 14 on behalf of
Representative Edgmon, sponsor.
JENNIFER HARRISON, Chief Executive Officer
Eastern Aleutian Tribes
Sand Point, Alaska
POSITION STATEMENT: During the hearing of HJR 14, testified in
support of the resolution.
COLIN UNDERWOOD, Manager
Alaska Communications
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HJR 14, offered
support for the resolution.
JON ZASADA, Director
Policy Integration
Alaska Primary Care Association (APCA)
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HJR 14, offered
support for the resolution.
VERNE BOERNER, President/CEO
Alaska Native Health Board
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HJR 14, offered
support for the resolution.
MICHAEL FARREN, Research Fellow
Project for the Study of American Capitalism
Mercatus Center
George Mason University
Fairfax, Virginia
POSITION STATEMENT: During the hearing of HJR 14, discussed the
issue of local control.
HENRY MOORE, Owner
Hank's Cab
Sitka, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
opposition to Mr. Farren's statements.
SIGGURD RUTTER
Sitka, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
opposition to Mr. Ferren's testimony.
PATTI SLATER
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
support for the legislation.
JASON CUSTER, Chairman
Government Affairs Committee
Ketchikan Chamber of Commerce
Ketchikan, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
support for the legislation.
BEN MULLIGAN, Deputy Director
Alaska Chamber of Commerce
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
support for the legislation.
DAVE O'MALLEY
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 132, discussed the
transportation network company (TNC) industry.
JOELLE HALL, Director of Operations
AFL-CIO
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
opposition to the legislation.
KENNETH SWAZER
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
support for the legislation.
BRYANT HAMMOND, City Clerk
City of Nome
Nome, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
concern for the legislation.
STEPHANIE SPRING
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
support for the legislation.
GENESIS ALLEN-LOCKHART
Anchorage, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
support for the legislation.
DAVID PRUHS, Council Member
Fairbanks City Council
Fairbanks, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
concern for Sec. 8 of the legislation.
JUNE ROGERS, Council Member
Fairbanks City Council
Fairbanks, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
opposition to the legislation.
RYAN McKEE
Unknown City, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
support for the legislation.
JARED CURE, Owner
Narrows Bar
Juneau, Alaska
POSITION STATEMENT: During the hearing of HB 132, offered
support for the legislation.
DON CREARY, Member
Leadership Council of the App-Based Drivers Association
Teamsters Local 117
Seattle, Washington
POSITION STATEMENT: During the hearing of HB 132, testified as
an Uber driver.
ACTION NARRATIVE
3:19:19 PM
CHAIR SAM KITO called the House Labor and Commerce Standing
Committee meeting to order at 3:19 p.m. Representatives Wool,
Stutes, Birch, Sullivan-Leonard, and Kito were present at the
call to order. Representative Josephson arrived as the meeting
was in progress.
HJR 14-FCC: INCREASE RURAL HEALTH CARE BUDGET
3:19:49 PM
CHAIR KITO announced that the first order of business would be
HOUSE JOINT RESOLUTION NO. 14, Urging the Federal Communications
Commission to increase the Rural Health Care Program budget
sufficiently to adjust for inflation, advances in technology and
the services available with increased broadband, and the
increase in demand for broadband-based services and provide for
any unused funds to be carried forward to future funding years,
ensuring that rural communities in the state continue to have
access to affordable broadband telehealth services.
3:20:25 PM
TIM CLARK, Staff, Representative Bryce Edgmon, Alaska State
Legislature, advised that during the last few years, rural
Alaska has made great strides in long-distance delivery of
healthcare via telemedicine. These broadband services expand
locally available treatment options for an increasing number of
maladies, including substance abuse treatment; and the service
accelerates diagnosis, treatment, and assists Alaskans in
avoiding expensive travel for care. Except, he explained, these
broadband services are about to hit a roadblock because the
existence of such services depends upon support from the Federal
Communications Commission (FCC) Rural Health Care Universal
Services Support Program. The budget for this program has been
capped at the same level since its establishment in 1997, and
the $400 million budget has been enough to meet demand.
Although, he noted, after two decades of advances in technology,
increases in demand, and the effects of inflation, the FCC now
expects that in 2017 the demand may exceed the budget cap for
the first time. This resolution urges the FCC to increase the
Rural Health Care Universal Services Support budget sufficiently
to adjust for inflation, keep with advances in technology, the
services available with increased broadband, and meet the
increase in demand for broadband based services in Alaska.
Additionally, he explained, the resolution encourages the FCC to
index the program budget for inflation, and allow any unused
funds to be carried forward to future funding years, thereby
allowing healthcare providers to continue improving access to
care in rural Alaska.
3:23:16 PM
REPRESENTATIVE SULLIVAN-LEONARD asked whether there is a state
match on this item for telehealth for the rural areas.
MR. CLARK responded no, and he said it is entirely funded
through Universal Services Support program charges.
3:23:53 PM
JENNIFER HARRISON, Chief Executive Officer, Eastern Aleutian
Tribes, advised that this is a complicated program as far as
submitting an application and getting bids from local
telecommunications firms, and it is quite expensive. The amount
of money that the Eastern Aleutian Tribes receives to get
internet for its eight clinics along the Aleutian Islands is
substantial. Without this funding, she offered, the Eastern
Aleutian Tribes would be looking at possibly closing clinics, so
the funding is important. She stressed that travel costs to the
Aleutian Islands are approximately $1,000 round trip, therefore,
every trip patients do not take saves a substantial amount of
money. Also, she explained, not all patients have access to
travel assistance provided by Medicaid or the Alaska Tribal
Health Compact, and in the event this program was removed, the
higher levels of care would not be available to these
individuals and would dramatically decrease their quality of
health. The Eastern Aleutian Tribes support HJR 14, she
emphasized.
3:25:39 PM
COLIN UNDERWOOD, Manag
Communications, offered support for the legislation and noted
that the nationwide healthcare industry, particularly in Alaska,
has seen a revolution in the manner in which healthcare is
provided. He pointed out that many federal laws have been
enacted to incentivize the digital transformation of healthcare,
and while that is "wonderful," no attention is made to this
program that supports the vital backbone infrastructure
necessary to deliver that digital telehealth network, he said.
This resolution voices support to the FCC by pointing out the
importance of also funding this program. He remarked that while
the federal government continues to incentivize and provide
requirements modernizing moving to a digital platform, it is
also important to continue programs that have been in existence
for nearly 20 years unmodified.
3:26:55 PM
REPRESENTATIVE BIRCH referred to distance delivery for
education, healthcare, and asked whether there is a point where
"you've got enough bandwidth" in a community.
MR. UNDERWOOD responded that the FCC published an updated
national broadband plan in 2010 that included a study showing
that for any community health center, the minimum recommended
bandwidth was 10 megabits symmetrical, which means 10 megs
downloaded as well as 10 megs uploaded to provide basic
healthcare services. Unfortunately, he said, Alaskans do not
have the luxury of many healthcare specialists in these remote
locations and many critical access hospitals and community
health centers based in Anchorage or elsewhere around the state,
provide some of that specialty care. He explained that will
doing so will; increase broadband demands "from that base level
right there," including video conferencing, real time telehealth
services, and those types of opportunities. Additionally, he
pointed out, technology has increased in the healthcare space
now with x-rays and digital imagining for example, and the
quality has quadrupled which also increases file sizes. He
offered a scenario of a patient in an emergent situation who may
require a 64 slice CT scan, wherein a few years ago that scan
may have been 8 slices, but the result is now a much better
picture and diagnosis. The FCC has some minimum guidelines, he
said, and the rest is driven by technology demands in providing
the best care possible in Alaska.
3:29:45 PM
REPRESENTATIVE BIRCH referred to 10 megabits symmetrical, and
commented that it did not sound like much and asked whether it
was sufficient for a healthcare center.
MR. UNDERWOOD clarified that that is the amount the FCC deemed a
minimum standard, however most community health centers are
looking to move to 50 megabytes. He related that the hospitals
Alaska Communications is serving today are looking at hundreds
of megabytes, with one customer closer to a gigabyte in
connectivity because there is a tremendous demand for broadband
services to deliver these high-quality healthcare services.
3:30:46 PM
REPRESENTATIVE BIRCH referred to his initial question and asked
how much bandwidth is enough because he was trying to get a
sense of a $400 million cap and what it provides to the extent
it is an allocation or request. He asked Mr. Underwood's sense
of the education requirement, whether that was a competing
interest for the Universal Services support funds and how many
people were drawing on the fund. He assumed, he said, that it
was a share of whatever people pay every month on their phone
bill, but asked whether there are other competing interests in
Alaska and other communities.
MR. UNDERWOOD answered that the universal service Schools and
Libraries program (E-Rate) budget nationwide is $3.9 billion and
it was increased again this year. That program, he explained,
has been able to adjust every year for inflation, and "We are
asking now for the same consideration for the healthcare
program." As to competition, he advised that the funds are
separate in that healthcare and education are not competing for
the same dollars, but are being pulled out of the same Universal
Services fund bucket.
3:32:34 PM
REPRESENTATIVE BIRCH asked the size of the Universal Services
fund bucket upon which all are collectively drawing.
MR. UNDERWOOD said he would have to get back to Representative
Birch.
REPRESENTATIVE BIRCH said, "We are paying a bit of that, aren't
we?"
MR. UNDERWOOD agreed, and he said every month funds come out of
an individual's telephone bill which reads: "USS Universal
Services" or something similar, and that charge goes into that
nationwide bucket, he said.
REPRESENTATIVE BIRCH surmised that this resolution is attempting
to obtain a larger share for Alaska's rural communities.
MR. UNDERWOOD agreed, and he said Alaska uses the largest
percentage of the program given its geographic size, diversity,
and how each of the communities are spread out. He explained
that there are unused funds in the Universal Services program
and this resolution asks to reallocate some of those unused
funds to this program in order to match the demands the federal
government put on healthcare providers. Wherein, he offered,
the federal government requires that "You must transform to
digital healthcare and you must integrate with electronic health
records." This resolution, he reiterated, simply asks that the
FCC recognize those federal requirements and helps support these
healthcare providers to continue providing the best healthcare
possible, he said.
3:34:07 PM
REPRESENTATIVE BIRCH asked whether anything other than
healthcare and education was fed by the Universal Services Fund
that comes to Alaska.
MR. UNDERWOOD replied that there are two other programs, the
rural healthcare program, and E-rate, a life line program and
subsidy for low income families for mobile or landline dial tone
service, as well as the High Cost or Connect America Fund which
is typically geared toward certain telecom providers to help
build out in high cost areas.
REPRESENTATIVE BIRCH asked how many dollars were involved
because the rural communities probably have needs in all four of
the areas being discussed. He asked how many dollars the
coordinated programs add up to for Alaska, presuming the
components were healthcare, education, life line, and Connect
America.
MR. UNDERWOOD opined that for the 2015 fund year for healthcare
and E-Rate, the State of Alaska received approximately $100
million for rural healthcare subsidies, and the E-Rate program
was closer to $80 million. As far as the other two programs, he
said he was unaware of the amount of money brought into the
state. Although, he commented, it may be important to note that
the education and healthcare entities in communities serve as
the "anchor tenant" and provide a lot of the backbone
connectivity into those communities. That connectivity, he
explained, could later provide additional services and without
healthcare and education there was not the business case to
build a lot of the infrastructure out there.
3:37:10 PM
JON ZASADA, Director, Policy Integration, Alaska Primary Care
Association (APCA), advised that the Alaska Primary Care
Association (APCA) supports the work of Alaska's federally
qualified community health centers. He offered that 25 of its
29 members benefit from the Rural Health Care Program (RHC) and
receive almost $38 million per year in subsidies for internet
service. Passage of this resolution would assist Alaska's
federal delegation in its negotiations in raising the cap,
modernizing this program, and instituting an inflation-proofing
component so this does not happen in the future, he said. The
APCA members are fearful that if the cap is not raised and pro-
rated billing is implemented, many will move from paying roughly
$500 per month, to $5 or $10,000 per month for internet
services. Clearly, he commented, that would negatively affect
their sustainability and ability to serve patients. Reverting
back to low bandwidth or undedicated internet service is not a
possibility for providers who use the service to operate their
[audio difficulties] based electronic health records to support
telemedicine and have images reviewed by specialists far away,
he stressed. The APCA would appreciate the support of this
resolution.
3:39:39 PM
CHAIR KITO opened public testimony on HJR 14.
3:39:53 PM
VERNE BOERNER, President/CEO, Alaska Native Health Board,
advised that the Alaska Native Health Board is the statewide
voice on Alaska Native Health issues, it is a 28-member
organization representing tribes from [audio difficulties]
organizations carrying out health services on behalf of the 229
federally recognized tribes in Alaska and over 158,000 Alaska
Native people. Additionally, she said, the Alaska Native Health
System serves as a critical component of the Alaska Public
Health System by providing care and services to thousands of
non-Alaska Native people and Alaskan veterans. She expressed
that this resolution helps to improve access to telehealth,
thereby improving quality of life by reducing travel costs,
intervening earlier at a lower cost and with greater success.
The January 28, 2016 Broadband Progress Report showed
significant improvements by digital divide from the FCC
persists, she said. The report stated that the benchmark speeds
of 25 megabits per second per downloads, and 3 megabits per
second uploads remains a problem, and that the divide in rural
Alaska is quite extreme. The February 15, 2015 report showed
that 81 percent of rural areas do not have access to that
minimum benchmark of 25 megabits per second for download and 3
megabits for upload, and this program is crucial in protecting
early access to care in rural communities.
3:42:34 PM
CHAIR KITO advised that public testimony would be left open for
HJR 14.
[HJR 14 was held over.]
HB 132-TRANSPORTATION NETWORK COMPANIES
3:42:50 PM
CHAIR KITO announced that the final order of business would be
HOUSE BILL NO. 132, "An Act relating to transportation network
companies and transportation network company drivers." [Before
the committee was CSHB 132, version 30-LS0522\J.]
3:43:14 PM
REPRESENTATIVE WOOL said that HB 132 provides legislative
structure statewide for transportation network companies (TNCs)
to come to Alaska.
3:44:09 PM
MICHAEL FARREN, Research Fellow, Project for the Study of
American Capitalism, Mercatus Center, George Mason University,
advised that his research on the ridesharing economy over the
past few years has focused on the idea of government-granted
privilege. He explained that government-granted privilege
occurs when special interest groups use cronyism to have
regulations passed for its own benefit, thereby hurting everyday
people by limiting their opportunities for better jobs and
slowing down economic growth. In most cases, he related, local
governments are the best rule making authority because it can
create more nuanced regulations and avoid unintended
consequences. Although in this case, he commented, local
regulations are more likely to be captured by special interests
or by the regulated industries; therefore, better regulations
may come from the state level. He noted his submitted written
testimony that provided his analysis of HB 132, and said he
would discuss the preemption of local municipalities from
creating its own TNC regulations, and the preemption for all
"for-hire transportation services" regulations. Michigan, he
explained, has already taken this approach with legislation
passed last December, and both Texas and California are
currently considering creating their own statewide taxi
regulations, which is something Pennsylvania has had for a long
time. He said he is in favor of this type of preemption for the
following three reasons: transportation services, such as taxi
cabs, often cross municipal boundaries and it makes sense that
the state regulates; there is an extremely long and sorted
history of taxi cab regulations captured by local taxi cab
special interests; and preemption essentially absolves local
policy makers from dealing with the problem wherein better
sustainable solutions can actually be created.
MR. FARREN noted, in addressing the first point, that state
level regulations make sense for transportation services because
they cross municipal boundaries. He cautioned the if every
municipality in a county [or borough] created its own taxi cab
regulations, the taxi cab driver would have to have literally
dozens of different local licenses just to provide service.
This approach can create miniature taxi cab "thief-doms" in
every town because a city's regulations can create barriers to
entry, wherein the few number of local firms end up with some
degree of monopoly power resulting in reduced service, lower
quality service, higher prices, and fewer job opportunities, he
explained.
3:48:14 PM
MR. FARREN turned to the second point and advised that it builds
off of the first point, in that local taxi cab firms often wield
excessive influence and capture the regulations, twisting them
to provide protection from outside competition rather than
serving the public interest. Preemption, he said, not only of
the TNC regulations but also for taxi cabs, limousines, and
shuttles, is a good way to solve the problem. He referred to
the table located at the back of his written testimony that
surveys some of the taxi cab regulations in Alaska, and noted
that [Anchorage], Juneau, and Kodiak really do restrict new
entrepreneurs from competing with established companies.
Fairbanks and Juneau are approximately the same size and because
Fairbanks has relatively mild regulations compared to Juneau, it
offers a sense of the impact anti-competitive regulations can
have on the supply of transportation services. In this case,
Fairbanks has over three times the number of taxi cab permits as
Juneau, about 226 to 71 permits. Looking at this another way,
he commented, Anchorage is approximately ten times the size of
Fairbanks, and yet, Fairbanks has more taxi cabs than Anchorage.
Actually, he explained, applying the taxi cab driver population
ratio in Fairbanks to Anchorage, Anchorage would have over 2,000
taxi cab drivers rather than the 188 taxi cabs it actually has
due to the existing medallion. This is a serious problem for
Anchorage, he warned, because it means people who really need
service are not receiving service, such as people with
disabilities receiving accessible taxi cab services. He
reminded the committee that last December, the Anchorage City
Council, after great difficulty and years of struggle, finally
passed a measure allowing for a mild expansion in the number of
taxi cab medallions, and that expansion included wheelchair
accessible taxi cabs. Except, he expressed, due to the local
taxi cab special interests, those taxi cab interests have put on
the April 4th ballot a measure that would repeal the change and
essentially keep their market closed and protected.
3:50:53 PM
MR. FARREN said that as to the third point, preemption is a good
idea when it helps local leaders deal with these competing local
interests. Obviously, he said, local policy makers want to
serve their constituents in the right manner, but they face
strong pressure to maintain the status quo by the taxi cab
special interests. State preemption allows these local leaders
to essentially rail against the overbearing state authority that
is stealing away their power, but at the same time being
secretly pleased that the problem is being solved and it is no
longer their problem.
MR. FARREN stated that these are three reasons Alaska should
consider state preemption for all "for hire transportation
services." Preemption is an idea that Michigan and Pennsylvania
have already implemented, California and Texas are currently
considering preemption, and Alaska should consider whether it is
wise to do the same.
3:52:14 PM
REPRESENTATIVE JOSEPHSON noted that his concern about the bill
relates to the rights of the drivers, and asked whether Mr.
Farren was taking any position. For example, he pointed out, a
couple of months ago the Federal Trade Commission fined Uber $20
million for advertising that its drivers would make $90,000 per
year when, in fact, nothing like that generally happens, and in
the end, there was an agreement not to litigate. He surmised
that Mr. Farren was not saying that TNCs are perfect
institutions, but rather he was merely saying "that states
should regulate them and cities shouldn't."
MR. FARREN agreed, and he said the way that he would argue for
it in terms of regulating TNCs, the state should be equally as
careful in terms of avoiding the situation to create government
granted privilege from the existing TNCs because that is a
problem just as much as treating government granted privilege
for local taxi cab merchants. He related that one of the things
he appreciates about Alaska's proposed TNC regulations compared
to what exists in many states throughout the United States
currently, is that it has not enshrined the current business
model of Uber or Lyft into the regulations. He remarked that
the regulations are relatively open and he described that the
regulations say, "this is what you need to do, but they don't
tell them how to do it," and that allows for other TNCs to come
in and compete. Therefore, he explained, the state may up with
an Alaska specific TNC that is aware of the special needs of
Alaskan citizens better than the TNCs coming in from outside.
3:55:23 PM
REPRESENTATIVE SULLIVAN-LEONARD asked how it was that he was
invited to provide this type of research to this committee,
whether he was paid to provide the research, or whether it was
research he provided for other states.
MR. FARREN responded that this is the topic his research team
has been researching for the last several years, and he has made
himself available to policy makers considering TNC regulations
in each state. He explained that this has grown through his
team's work on government-granted privilege because the taxi cab
industry and taxi cab regulations represent a literal textbook
example of how overbearing regulations create situations where
it is a near monopoly, if not an exact monopoly. He pointed out
that Uber, Lyft, and sharing economy type firms offer a new way
forward, and described it as the reason for their research,
which is how he came to provide this testimony.
3:56:56 PM
REPRESENTATIVE SULLIVAN-LEONARD related that his research
appears to be a one-sided study when he states that his goal is
to communicate how these government-granted privileges harm the
economy of the very fabric of society. She said it causes her
pause and asked whether he has spoken with any of Alaska's
municipalities and received feedback not only on the effects of
the TNCs coming into Alaska, but how they operate and manage
other rideshare or taxi cab industries in the municipalities.
MR. FARREN responded that he has a lot of experience and
knowledge regarding what has happened as TNCs have moved into
communities across the United States, as well as Alaska. The
supply of transportation services skyrocketed because more rides
were being offered and the prices were actually decreasing. He
related that that is exactly what economic theory would predict
would happen because when there is a closed market, essentially
a monopolist or a taxi cartel, when a new competitor arrives and
offers rides for cheaper than the regulated prices previously in
effect, many more people purchase the service and the market
expands. He advised, that means there are areas of New York
City, Chicago, and other places that are finally seeing
transportation services offered wherein the supply of
transportation services had been so restricted by city
regulations with the concentration on serving the airports and
downtown areas with the low-income areas being left alone.
Platform firms such as Uber, Lyft, and other TNCs, allow people
to drive as the demand exists in communities, and that probably
Alaska and other rural areas will see a provision of
transportation services where none has ever been provided
previously, he said.
3:59:44 PM
REPRESENTATIVE SULLIVAN-LEONARD reiterated her question and
asked whether he had spoken with some of Alaska's municipalities
for feedback.
MR. FARREN answered that he had not spoken to any municipalities
in Alaska on this particular issue; however, he believes that
the fact he has spoken with dozens of taxi cab regulators across
the United States is sufficient.
4:00:23 PM
REPRESENTATIVE BIRCH noted that from a local perspective, he
served on the Anchorage Municipal Assembly for a number of years
and was a supporter of de-regulating the taxi cab industry and
addressing some of the concerns Mr. Farren pointed out in his
spreadsheet. From the standpoint of concerns and overlap,
Anchorage includes the communities of Eagle River, Palmer,
Wasilla, and upwards of 40,000 people per day commute into the
Anchorage municipality. There is a demand for the
transportation component in one form or another, he said. He
then referred to the phrase "government granted privilege" and
commented that it resonates with him in that there is an
opportunity here to open the market and engage new competitors
in the business, and asked the downside of this approach and
opening up this opportunity.
MR. FARREN replied that whenever there is new innovation, it
essentially upends the "old order" and it can be difficult to
get through. This requires some deep breathing and saying,
"We're not sure how we're going to do this, we're not sure
exactly what the future looks like, but ... we've weathered it
in the past and we will weather it again." He said he guessed
the sense of unease of not knowing exactly what the future will
be is probably the biggest problem and hurdle many people have
to overcome.
4:03:42 PM
REPRESENTATIVE BIRCH noted that, obviously there is a skilled
cadre of folks that have driven in their respective communities
in Alaska for a number of years, and asked how can such drivers
be assimilated into a TNC type of framework.
MR. FARREN commented that many taxi cab drivers have shifted
over and become TNC drivers. The most sense for drivers is a
mixture of street hailing taxi cabs and connecting with
passengers through online platform firms with a better dispatch
system than has ever been provided. The regulations, in
general, prevent taxi cab drivers from becoming TNC drivers in
most cities. Except, he commented, taxi cab drivers sitting at
airports, for example, may have to wait two hours between rides
rather than having a new ride every one-half hour because they
are matched with a passenger more quickly. The fact that a
person can be matched with a taxi cab driver more easily leads
more people to use this type of services, in addition to the
prices falling. Areas in Alaska must "make do" with the
resources available, and the resources become better when
allowing for this connection between customer and service
provider that platform firms offer.
4:06:47 PM
REPRESENTATIVE JOSEPHSON asked who funds Mr. Farren's research.
MR. FARREN responded that the Mercatus Center is a non-profit
research center at George Mason University, funded through a
variety of charitable institutions, and he said he was unsure of
the funding. He explained that there is a firewall between the
research side and the donations or development side so he is not
certain what entity funds the work.
REPRESENTATIVE JOSEPHSON surmised that he was unaware whether
the Koch Brothers fund his work.
MR. FARREN responded correct, and he reiterated that there is a
firewall between the two and essentially "we are the equivalent
of university professors" doing academic research at an econ
program that is double blind peer reviewed. Therefore, he
explained, it is the highest quality of academic research and
"we created our own" research program.
4:08:19 PM
CHAIR KITO opened public testimony on HB 132.
4:08:56 PM
HENRY MOORE, Owner, Hank's Cab, commented that he was puzzled by
Mr. Farren's statements wherein he compares Alaska with the
Lower-48 big cities, and explained that passengers in Sitka can
order pre-arranged rides. He related that Sitka is competitive
with five different businesses, and they work hard for their
customers.
4:11:04 PM
SIGGURD RUTTER commented that Mr. Farren's testimony was cutoff
and he did not hear whether Mr. Farren was paid by Uber for his
testimony. He said the taxi cab business is competitive in
Sitka with five taxi cab providers in a town of 9,000 people,
with no problem in crossing municipal boundaries due to its
isolation. His concern with this bill, he related, is that it
is based largely on "outright untruths and misrepresentations"
and is misguided because the bill would usurp municipal
management and replace it with a single state system gained to
promote interstate ride providers. In doing so, he stressed, it
would sacrifice municipal oversight regulating taxi cab fares,
the screening of taxi cab drivers, and would eliminate municipal
taxation, and work to the detriment of public safety. He
described the premise of this as "an outright lie" because it
asserts that the typical business model calls for a 25 percent
fee for the internet provider, and "fully 75 percent of the
profits will go to the driver." He pointed out that there is
not a business in the world that receives 100 percent profit, it
is approximately 50 percent of its profit in the taxi cab
business. Therefore, the internet provider is trying to grab "a
full 50 percent of the profits" and if a taxi cab operator was
to work for a [TNC] and pay his driver, both he and his driver
would receive "a quarter share." Twenty-five percent of the
gross taxi cab revenue is money that should be "spread around
this community" such as fuel, tires, and mechanics, and he said
he spends $20,000 per year on vehicle maintenance in a local
shop. He related that taking 25 percent profit out and leaving
the business with the bill will affect public safety because
owners will skimp on the tires and equipment.
4:14:35 PM
PATTI SLATER advised that she had the opportunity to use
ridesharing services, such as Lyft in Portland, Oregon, and
pointed out that the app allows her to see a picture of the
driver, a description of the car, license plate, and GPS
location which allows her to feel comfortable and safe. It
would be "a wonderful thing" to offer the citizens of Alaska and
visitors ridesharing opportunities as happens in cities across
the United States. Oftentimes, she offered, "people are
shocked" that the services are not available, and the State of
Alaska desperately needs these services.
4:15:52 PM
JASON CUSTER, Chairman, Government Affairs Committee, Ketchikan
Chamber of Commerce, advised he was calling on behalf of the
Ketchikan Chamber of Commerce representing over 200 members
including private businesses, local governments, and tribal
entities. The Ketchikan Chamber of Commerce Board of Directors
voted to support the passage of the HB 132 as written,
specifying free market competition regulated on the state level,
and he commented that none of the directors voted against this
position. The Ketchikan Chamber of Commerce welcomes
ridesharing services within its community and believes these
businesses deserve a fair, predictable, and consistent
investment environment in Alaska to compete to do business.
Ridesharing offers transportation opportunities, and it creates
more diverse and flexible employment options because Alaska's
visitors desire and expect ridesharing to be available in the
communities in the same manner they expect internet access and
cell phone coverage. He related that ridesharing will help
support the economy by keeping Ketchikan competitive with other
destinations, and HB 132 will help the community attract and
retain ridesharing opportunities. The Ketchikan Chamber of
Commerce asks that the committee support the passage of HB 132,
he said.
4:17:29 PM
BEN MULLIGAN, Deputy Director, Alaska Chamber, advised that the
Alaska Chamber supports HB 132 because it provides necessary
transportation options in areas where [transportation services
may not be available], and it provides competition. The Alaska
Chamber supports a consistent set of rules across the state
because the Matanuska-Susitna Borough has overlapping
jurisdictions, he said.
4:18:45 PM
DAVE O'MALLEY advised that he is a long-time driver and advocate
in the taxi cab industry, and in 2015 he was the first Uber
driver during the six months it was in Anchorage. He mentioned
that he heard people complain about lousy taxi cab service,
dirty cabs, and such, yet Uber customers continuously praised
the service. He said he hoped for Uber to stay in Anchorage,
but it did not. He stated that people refer to the Anchorage
taxi cab system, as a monopoly and cartel; he describes it as an
extortion racket that has stayed in business through paid
lobbyists, (audio difficulties) public relation, (audio
difficulties) large donations, and local politicians. The taxi
(indisc.) paying huge sums to keep competition out and maintain
status quo, which is purely the increase of the value of their
permits along with the value of (audio difficulties). He said,
"We drivers want choice" and he is convinced (audio
difficulties), and he and most of the taxi cab drivers he knows
do support HB 132, and asks that the committee pass the
legislation.
4:21:06 PM
JOELLE HALL, Director of Operations, AFL-CIO, advised that the
AFL-CIO represents 50,000 workers throughout the state in a
variety of industries. The AFL-CIO opposes HB 132 because it
opposes this classification of workers, the action in the bill
would exclude TNC drivers from workers' compensation and
unemployment insurance as a special class of worker. She
described this as a dangerous precedent because TNC drivers do
not meet the standard of a true independent contractor, and taxi
cab drivers are exempt under the statute because they took the
steps to set up a business model that complies with the
independent contractor status. The TNC business model does not
comply with all of the standards required of an independent
contractor because in order to meet the standards, the driver
would need to pay all of the fees associated with insuring their
vehicles and pay the TNC app because there are fees for services
required for the TNC drivers to run their business; however,
that is not the manner in which this model works. In the case
of TNCs, TNCs pay the insurance when the rider is in the car
(audio difficulties) up to the driver so they can monitor the
driver's actions and collect payment. Independent contractors
are usually responsible for the cost of doing business, collect
all of the revenues, and pay their venders directly. TNC
drivers fail to meet the standard of an independent contractor,
she said, and it is a slippery slope that will open the door to
other industries looking to avoid workers' compensation or
unemployment insurance. Additionally, the AFL-CIO opposes the
preemption language in the bill as each community regulates taxi
cabs differently, and since TNCs are in direct competition to
taxi cabs, the AFL-CIO believes that it is only fair that the
communities currently regulating taxi cabs deserve to regulate
the TNCs. She described that it is an issue of fair competition
wherein each jurisdiction would deal with it as it regulates
this industry.
4:23:10 PM
REPRESENTATIVE WOOL related that the audio difficulties made it
difficult to hear her testimony, and asked whether she said taxi
cab drivers have workers compensation exemptions and do not have
sick time, over time, or any type of work compensation.
MS. HALL responded yes, and she opined that this bill is adding
TNC drivers to a list that also includes taxi cab drivers who
are exempt from workers' compensation and unemployment
insurance, as are babysitters and jobs of that nature.
4:23:51 PM
REPRESENTATIVE WOOL surmised that the AFL-CIO's problem with the
bill is not that TNC drivers will not have workers' compensation
coverage because taxi cab drivers do not have workers'
compensation coverage, the problem is who buys the insurance.
With taxi cabs, car insurance is paid by the taxi cab company,
but with TNCs the individual drivers pay. He said he was
unclear about the insurance concern.
MS. HALL related that her concern is the opposite of
Representative Wool's statement; as a taxi cab business owner,
insurance is commercial insurance 24/7 when driving for work.
When driving for a TNC, the driver's personal insurance covers
the driver while looking for a rider, except once the app is
pressed and someone is in the car, the TNC pays the insurance.
She explained that that is not how an independent contractor
model works, that is not in any other business model, and that
would not be legal for an independent contractor.
4:25:06 PM
REPRESENTATIVE WOOL said he slightly disagrees as to who pays
the insurance coverage in period 1 of the TNC, and asked who the
AFL-CIO would like to see paying for the insurance to be an
independent contractor.
MS. HALL responded that if the driver is truly an independent
contractor, the driver should be paying this insurance as it is
their responsibility to pay the fees associated with running
their business.
4:25:41 PM
REPRESENTATIVE JOSEPHSON asked whether Ms. Hall had commented
that what would make this unique in an independent contractor
situation, is that generally an independent contractor would, in
the first instance, receive the fee from the customer and not in
the second instance.
MS. HALL replied yes, and she said that normally an independent
contractor would receive a fee for their service immediately,
and from that fee they would pay their vendors, and would
ideally pay for insurance out of that as a taxi cab driver pays
for their insurance. She explained that a taxi cab driver pays
for their dispatcher, and essentially the app the TNC drivers
use is a form of dispatch. In this particular model, the app is
given to the driver and the app is then used to collect the fees
which is a different model of an independent contractor than
currently exists in law, and this is a "half thing" wherein
these are not full employees and are not independent
contractors. She pointed out that this creates a middle step
and the middle step is worrisome because this business model
does not comply with the definition of an independent
contractor.
4:27:14 PM
REPRESENTATIVE JOSEPHSON related that he finds the benefits of
the new technology intriguing and where the world is moving, and
that people need to be in that place in a competitive market.
He offered that assuming there is enough insurance for the
passenger, his concern is with the rights of the drivers, what
their benefits are, their pay, their retirement and such. He
asked whether she shares that concern.
MS. HALL answered absolutely, and she said the AFL-CIO is
concerned that this particular form of worker is exempted from
workers' compensation directly; therefore, it fails to meet the
standard of the true independent contractor. A true independent
contractor drive in our environment all of the time and taxi cab
drivers and other drivers meet this qualification. She related
that this is a vital and important part of the state's economy,
and the concern is that a worker being treated partially as an
employee by the industry they work for, and are partially
exempt, do not have complete control and do not have true
dominion. There are rules in the test for an independent
contractor that this particular job classification does not
meet, and the bill exempts them from the protections that would
normally be required over any other type of employee. She
advised that the middle step of not being a full independent
contractor and not an employee is a dangerous precedent for all
workers that could come from behind and try to walk right behind
TNC drivers and enter into this particular crack and lose their
protections as well.
4:29:41 PM
REPRESENTATIVE BIRCH asked whether Ms. Hall has used an Uber or
Lyft.
MS. HALL responded yes, and she said it was in Chicago.
REPRESENTATIVE BIRCH commented that previous testimony revealed
that drivers want a choice and that the public generally finds
the service easy to use with positive experiences. He asked
whether Ms. Hall had had a positive experience.
MS. HALL answered absolutely, and she said the AFL-CIO is not
disputing that people like the service because there is no doubt
people enjoy this service. The concern of the AFL-CIO is the
creation of a third class of worker that is not protected as an
employee, and is not fully an independent contractor. In the
event TNCs want to come to town, they should be one or the
other, and they could probably easily comply with either one of
the scenarios of either employing their workers or truly
treating them as independent contractors, she remarked.
4:31:19 PM
KENNETH SWAZER, advised he is a member of the Facebook page
"Alaska's Worst Drivers" with over 31,000 members who post
pictures of individuals parking or driving unsafely. It is
clear that drunk drivers are repeat offenders, and the
membership believes in transportation options wherein a recent
survey of over one hundred members regarding Uber coming in
showed that over 80 percent favored supporting HB 132, he said.
4:32:25 PM
BRYANT HAMMOND, City Clerk, City of Nome, advised that his
office handles licensing and taxation for the City of Nome and
offered concern regarding the language in CSHB 132, Sec. 7, page
11, lines 17-19, which read as follows:
*Sec. 7. AS 29.10.200 is amended by adding a new
paragraph to read:
(66) AS 29.35.148 (regulation of transportation
network companies or drivers.)
MR. HAMMOND offered concern that Sec. 7 reserves regulation to
the State of Alaska in that municipalities should be able to set
standards and address issues on a local level, as with taxi cabs
and motor buses currently. In response to Mr. Farren's three
points, he said the first point does not apply to the isolated
City of Nome as it is a 13-mile square municipality in the
unorganized borough. As to Mr. Farren's second point, Nome has
two local taxi cab companies and a total of 13 taxi cab
licenses, and he commented that while Mr. Farren's third point
was somewhat appealing in that the local level could wash their
hands of it, he was unsure that moving control of the
regulations would be in the best interest of Nome's citizens.
He asked that the committee amend the language to allow for
local control regulation and taxation and that he would support
of that amendment.
4:34:01 PM
STEPHANIE SPRING, advised she is a registered voter and resident
of Anchorage and offered support for HB 132 because it will
increase the quantity of drivers and passengers throughout
Alaska, create job opportunities, provide better flexibility,
provide support for taxi cabs in different locations, increase
competition in the area of ridesharing, and increase standards
within Alaska.
4:35:07 PM
GENESIS ALLEN-LOCKHART described that her first-time experience
in ridesharing was with Lyft in Las Vegas, Nevada, and it was
exceptional because she was able to locate and call her driver,
see the ratings, and the car's GPS on a map which was nice
because she was a tourist. The tour season is approaching and
it would benefit the citizens and tourists to have the
flexibility of using another means of transportation, she said.
Ms. Allen-Lockhart commented that she has used yellow cabs and
Lyft was much cheaper than a cab, plus Lyft offers a $50 credit
to try out the program rather than using a person's own money.
The legislation would allow people to work when they are able to
and the legislation has many good benefits, she said.
4:38:02 PM
DAVID PRUHS, Council Member, Fairbanks City Council, advised
that the City of Fairbanks is in favor of Uber, but requests the
striking CSHB 132, Sec. 8, [pages 11-12 lines 20-31, and line 1,
respectively], and he thanked Mr. Farren for equating Fairbanks
as basically the standard for taxi cab operations in Alaska. He
said he would read the Fairbanks standard [as described in the
Code of Ordinances, Section 86-77] based upon the protection of
riders and those who are able to give them a ride, he read as
follows:
An application for issuance or removal of a
chauffeur's license must be made upon forms provided
by the city clerk and submitted by the city clerk for
review. The applicant must be 21 years of age or
older, must be able to read, write, and speak English,
must have a current State of Alaska driver's license,
must not have any delinquent city criminal or traffic
fines or fees, must not have had their driver's
license suspended or revoked within two years of the
date of application, must not have a conviction within
24 months of reckless or negligent driving or driving
with a license cancelled, suspended, revoked, or in
violation of limitation. Except as otherwise provided
in this subsection, the applicant must not have had a
felony conviction within eight years or misdemeanor
conviction within four years of: prostitution or
promotion of prostitution; any offense involving a
controlled substance; felony or misdemeanor assault;
burglary, felony theft fraud or embezzlement; any
sexual offense; any homicide or assault involving
operation of a motor vehicle; two separate felony
convictions of any type; driving while intoxicated
within five years or within eight years of a felony
conviction; and finally, refusal to submit to a
chemical test.
MR. PRUHS explained that Sec. 8 removes the standard of safety
the City of Fairbanks imposed, and 95 percent of the time an
applicant is approved the same day of application. He opined
that a few applicants have come to the city council for review.
4:40:39 PM
JUNE ROGERS, Council Member, Fairbanks City Council, advised
that the Fairbanks City Council is in opposition to the
legislation as written, but is supportive of the work thus far
in regard to the state looking at the responsibilities for this
type of activity in communities. She referred to government-
granted privilege, and opined that government has responsibility
for community safety, and the Fairbanks code makes certain that
it is approaching the best possible environment for those who
are working and using the services. She said that recently the
Fairbanks City Council reviewed an appeal that was "definitely
something that -- that was a decline, unanimous decline." She
pointed out that circumstances can sometimes appear differently
when actually working through an appeal and speaking to a person
directly in order to receive total information about the person
transporting children and grandchildren. Many of the
individuals testified in the meeting that their children go to
school in taxi cabs and precious transportation takes place when
someone is transporting children to school. She said she hopes
some of the information given by Joelle Hall of the AFL-CIO is
given scrutiny because that is in direct conflict with state
law.
4:43:09 PMs
REPRESENTATIVE SULLIVAN-LEONARD asked whether she serves on the
Fairbanks City Council as does Mr. Pruhs, and if so, whether she
has the full Fairbanks City Council consensus as to her
testimony position.
MS. ROGERS answered yes, and she said a letter was submitted on
behalf of the City of Fairbanks through the Fairbanks City
Council.
4:43:41 PM
REPRESENTATIVE WOOL asked whether she was aware background
checks and other sort of checks are required for a TNC driver,
and that all of the requirements Mr. Pruhs listed are equally
required of TNC drivers.
MS. ROGERS replied yes, however, she said that the example she
brought up is a different circumstance when speaking directly
with the person and reviewing more extensive records.
4:44:29 PM
MR. PRUHS advised that "What we do is, I would say the six cases
that we've reviewed were granted five of them where normally
they would be denied," and the Fairbanks City Council is more on
the side of helping a person get through something. He
acknowledged that he does not know the standards of the TNC, but
would hope the TNCs would meet their standard if the bill
passed. He related that the council is in favor of Uber, but
wants a "tried and true a standard of safety" for the riders.
4:45:14 PM
REPRESENTATIVE BIRCH asked whether Mr. Pruhs would be able to
make the opportunity to compare the City of Fairbanks standard
with the TNC standard.
MR. PRUHS answered, "Of course we would."
4:46:44 PM
RYAN McKEE advised that often Alaska is behind the Lower-48 and
when it comes to rideshare, Alaska is once again late to the
game. [The audio was disconnected at the Matanuska-Susitna
LIO.]
4:47:53 PM
JARED CURE, Owner, Narrows Bar, advised he recently purchased
the Narrows Bar, and would speak firsthand as to the effects of
ridesharing on the community of Juneau. After high school, he
lived in San Francisco for over ten years in the growing tech
sector and saw Uber and Lyft grow out of a need for more
efficient transportation solutions. In the mid-2000s, before
ridesharing, underground and unlicensed taxi cab companies
sprouted up in "The Sunset" area to fill the needs of
neighborhood residents. This was not a perfect solution, he
described, but at least they would show up and because they were
unmarked no one would wave them down before they arrived at your
location. When Uber launched in 2010, he switched all of his
business to Uber acknowledging that it solved a problem for both
customers and drivers because a person could see their driver in
real time on a map, know who they were, their car, and exactly
when they would arrive. He pointed out that taxi cab companies
have had ample time to adapt to new technology and respond to
the needs of their riders, and rather than investing in their
businesses and adding value for customers, they lobby for
continued monopolies. A little competition would be a good
thing, he noted. As a bar owner, he said, this issue affects
him more than most because efficient access to transportation is
more often than not the difference between his customers driving
drunk or having a safe ride home. He related that 88 percent of
Lyft users say they avoid driving under the influence because
they have Lyft as an option, and 66 percent of Lyft rides take
place during times of high alcohol consumption. Studies have
shown that ridership increases 40-60 percent when rideshare is
an option, and he pointed out that under the laws of Alaska, his
business, his employees, and himself personally can be held
liable for a customer's actions even if he serves them just one
drink. He asked that the committee allow his customers access
to safe and reliable transportation options.
4:50:11 PM
MR. McKEE advised that the only people opposed to this
legislation are the taxi cab drivers, the medallion holders, or
the lobbyists hired to keep this industry out of Alaska. The
users of taxi cabs and rideshares all support this legislation
and paying customers are asking the committee to give them this
chance. He said the Mothers Against Drunk Driving has shown how
ridesharing lowers DUI rates and offers employment and income.
He said he could not see why the committee would not pass HB 132
from committee.
REPRESENTATIVE JOSEPHSON commented that a legislator could be
concerned with drivers working for a TNC and to be watchful of
that concern. He asked whether Mr. McKee was speaking on his
own behalf or for a national organization, for example.
MR. MCKEE advised he was speaking on his own behalf as he has
followed this issue for a long time, and was excited for Uber
when it operated in Anchorage only to have it leave when the
Municipality of Anchorage basically required it to cover
workers' compensation. He related that he visits the Lower-48
often and is able to enjoy the benefits of rideshare, and he
would like to see Alaska join modern society.
4:53:03 PM
REPRESENTATIVE BIRCH said he understands that it is a
symmetrical relationship and from his understanding of the way
rideshare works, the driver also receives a rating on the
perspective customer.
MR. MCKEE stated that the rating system goes both ways and the
rating system matters to both the riders and the drivers because
neither party wants to be obnoxious or rude and receive a bad
rating. On either side, he said, once a person receives a bad
rating they are not allowed to use the service.
REPRESENTATIVE BIRCH surmised that the rating aspects appeals to
him because it is a two-way street.
MR. MCKEE agreed, and he said it is a good way to be held
accountable and many people can attest to the fact that a
problem is immediately addressed, as opposed to a taxi cab
driver.
4:56:31 PM
DON CREARY, Member, Leadership Council of the App-Based Drivers
Association, Teamsters Local 117, advised that he has driven
over three years for Uber with 11,000 rides. He described that
similar to many drivers in the Seattle area, he has gone from
great enthusiasm about this company to a fair amount of anger
and frustration due to the constant cutting of "our pay," which
has been experienced in every other city in the country and will
be experienced in Alaska. He offered that the Washington
drivers have been struggling with preemption for the last three
years, and Uber keeps trying to get preemption to eventually
whittle away at all regulations. He explained that the App-
Based Drivers Association has a good relationship with the
Seattle City Council and the association can go to it with
issues that these companies consistently ignore. For example,
he said, drivers must explain to parents that if they do not
have car seats for their toddlers, they cannot receive a ride
due to safety and it is against the law. The company's'
response is to thank the driver for their concern, to not break
the law, other Uber drivers do it, and "you are an independent
contractor, it's up to you." He cancels the ride and the next
Uber driver gives the children a ride. He expressed confidence
that in working with the Seattle City Council that this issue
will be resolved, but he has no faith in going through these
companies that the issue would ever be resolved. Preemption, he
explained, would stop the drivers from addressing their local
city councils with issues these companies will ignore based upon
his three years of experience, he assured the committee. He
stressed that he wished he was an independent contractor even
though he was referred to as an independent contractor because
the only way he is an independent contractor is that he has the
freedom to work whenever he desires, other than that he works to
the dictates of the company in every regard.
4:59:39 PM
REPRESENTATIVE WOOL asked whether he is affiliated with the
Teamsters Union or if he is is an Uber driver.
MR. CREARY clarified that he is an Uber driver, and a member of
the App-Based Drivers Association under the Teamsters Local 117
umbrella.
REPRESENTATIVE WOOL opined that the City of Seattle passed an
ordinance allowing the drivers to organize, and asked whether
his capacity is as a teamster as an Uber driver, or something he
does on the side.
MR. CREARY reiterated that he is a driver, with an association
under the Teamsters Local 117 umbrella, it is not yet a union,
and the teamsters advise the association.
REPRESENTATIVE WOOL surmised that Mr. Creary is not officially
in the Teamsters Union.
MR. CREARY answered, "Not as of yet." In response to
Representative Wool, he acknowledged that the Teamsters Union
flew Mr. Cleary to the hearing today.
REPRESENTATIVE WOOL surmised that Mr. Creary was testifying as a
Teamster, but he was not really a Teamster and has been an Uber
driver for three years in Seattle. He asked whether he had
driven for Lyft.
MR. CREARY advised that he drives for both companies.
5:01:12 PM
REPRESENTATIVE WOOL asked whether he had ever driven for a taxi
cab company.
MR. CREARY said that he had worked for a taxi cab company many
years ago, and confirmed that he is still a driver for Uber and
Lyft.
5:01:29 PM
MR. CREARY, in response to Representative Josephson, said that
he is a known critic of Uber.
REPRESENTATIVE JOSEPHSON noted that notwithstanding being a
known critic of Uber, asked whether Uber had canceled his app.
MR. CREARY answered, "Not yet."
REPRESENTATIVE JOSEPHSON surmised that Mr. Creary had advised
Uber that people asked him to carry young children without car
seats, with Uber's response being that it was up to him, and
asked what else Uber had to say.
MR. CREARY answered that he emailed Uber, and the response was
that it appreciated his concerns but he was an independent
contractor.
REPRESENTATIVE JOSEPHSON said he was interested in Mr. Creary's
working conditions and how much money he earns, commenting that
he recently read about the City of Seattle's concerns with TNCs.
MR. CREARY answered that the money will vary from approximately
$600-$800 for 45-55 hours of work, and three years ago he would
have received $1,000-$1,100 for the same amount of time.
MR. CREARY, in response to Representative Josephson, answered
that the above-mentioned money estimates are from the same TNC.
He attributed the reduced income to rate cuts because he
received $1.70 per mile three years ago and currently receives
$1.35 per mile.
5:03:27 PM
MR. CREARY, in response to Representative Stutes, clarified that
he drove a taxi cab in 1982-1983.
REPRESENTATIVE STUTES related that she was intrigued as to
whether or not he was an independent contractor or an employee,
and asked how he was paid when he drove for the taxi cab
company.
MR. CREARY responded that he would take his money home every
night, pay the dispatch, and keep the remaining money.
MR. CREARY, in response to Representative Stutes, advised that
he is paid by Uber or Lyft via a weekly direct deposit to his
bank account. In further response to Representative Stutes, he
answered that he does not handle any money.
5:04:46 PM
REPRESENTATIVE BIRCH commented that 11,000 rides in three years
is approximately 10 rides per day.
MR. CREARY interjected that he is on the low side compared to
other drivers because many drivers, due to these rate cuts,
drive 70-80 hours per week, between 150-200 rides per week.
REPRESENTATIVE BIRCH asked the amount of money for a typical
fare from the airport to downtown for one person, and the
comparison of a taxi cab with an Uber fare.
MR. CREARY responded that as an Uber driver, he will receive
approximately $23 minus gas, and the charge to the customer is
approximately $28.
REPRESENTATIVE BIRCH surmised that he would pay a $28 charge and
asked whether that includes the tip.
MR. CREARY said that is a whole other issue, no tipping is
allowed.
REPRESENTATIE BIRCH surmised that it is a $28 fare, he receives
$23, and pays for the gas, he asked whether that ratio has
changed over time.
MR. CREARY answered that when he first started driving he would
receive $30 for that same ride.
REPRESENTATIVE BIRCH said he was trying to understand whether
they are just trying to price the ride to meet the market and
bringing the driver's cut down proportionally or whether it is
the share that goes to the driver that is changing.
MR. CREARY responded that the percentage is the same and the
amount he receives is less. He said it is not in keeping with
the market, it is designed to undercut and drive everyone else
out of business.
5:07:36 PM
CHAIR KITO commented that Mr. Creary said the goal is to drive
other companies out of business, and asked whether Mr. Creary
knows of companies that have been driven out of business.
MR. CREARY responded a taxi cab company in San Francisco filed
for bankruptcy, except he forgot the name of the company.
CHAIR KITO cautioned that if he was making statements, the
committee should be able to find out ...
5:08:05 PM
MR. CREARY interrupted Chair Kito, and in response to
Representative Stutes, answered that the app tells him the cost
of the fare for each ride, and he knows per trip how much money
he is earning.
REPRESENTATIVE STUTES surmised that when he is paid he knows he
is receiving the appropriate amount for the number of trips.
MR. CREARY said that he assumes he is receiving the appropriate
amount.
REPRESENTATIVE STUTES said that if he has the amount on his app,
could he not just deduct 25 percent.
MR. CREARY commented that he does not have an issue with that
and is confident he is paid properly.
5:09:14 PM
REPRESENTATIVE BIRCH calculated that on the $28 fare, $5 goes to
Uber, approximately 17.8 percent, and the driver actually gets
80 percent.
MR. CREARY answered that he receives 80 percent.
REPRESENTATIVE BIRCH said that the issue is primarily the fact
that the $28 is coming down, not that his share has changed.
MR. CREARY interjected that his share is the same, the issue is
that the rate the passenger is paying keeps going down and that
is a direct cut in a driver's pay.
REPRESENTATIVE BIRCH commented that it is a competitive market.
Mr. Creary does not have a contract and he can go find another
job, go to a different employer, and he offered that he is
trying to find out what keeps Mr. Creary driving for Uber.
MR. CREARY answered that he drove for this company at a time
when it was a good job that many people enjoyed, and he believes
it can be that again if the drivers organize. He states that
possibly he is naïve.
REPRESENTATIVE BIRCH confirmed that Mr. Creary does not have a
contractual obligation to stay at Uber. It sounds like "the 80
percent is hanging in there all right." He offered that the
market can be competitive, and it is probably competing with
whoever owns the train because is it about a $2 ride.
MR. CREARY disagreed, and he said that if Uber charged another
$0.50 per mile those people would still be going to the airport.
These prices are low specifically to keep other people out of
the market.
5:11:08 PM
REPRESENTATIVE JOSEPHSON asked Mr. Creary to describe a system
where everyone wins or comes close to winning.
REPRESENTATIVE BIRCH answered that when he first started driving
for Uber and Lyft, the consensus amongst all of the drivers was
that this was a "win, win, win" situation for investors, the
company, the riders, and the drivers. During that time, they
were receiving $0.50 more a mile, riders would express that they
really loved the service and that the drivers were making good
money, so it was "really great." There was never a concern that
the service was great, but the riders sure wished it was cheaper
or that the ride was too expensive; oftentimes he was told the
opposite, in that riders did not mind paying more. The prices
being charged are not market prices, he opined, and believes
they could charge higher prices and the business would continue.
When he started, he described that it as an ascending vibrant
market at that time wherein he offered less rides and made more
money. Mr. Creary related that in January 2014, the company was
valued at $10 billion with the rates at that much higher level,
and by August the rates were still 25-30 percent higher and the
company was valued at $50 billion.
[HB 132 was held over.]
5:13:06 PM
ADJOURNMENT
The House Labor and Commerce Standing Committee meeting was
recessed at 5:13 p.m., to be continued at 12:30 p.m. on March
18, 2017.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB132 (TRA) Fiscal Note-DOA-DMV 3.10.17.pdf |
HL&C 3/17/2017 3:15:00 PM |
HB 132 |
| HB132 Supporting Documents - Letters of Support 3.17.17.pdf |
HL&C 3/17/2017 3:15:00 PM |
HB 132 |
| HB132 Supporting Documents - Mercatus Farren TNC Preemption Testimony 3.17.17.pdf |
HL&C 3/17/2017 3:15:00 PM |
HB 132 |
| HB132 Supporting Documents - Letters of Opposition 3.17.17.pdf |
HL&C 3/17/2017 3:15:00 PM |
HB 132 |
| HB132 Supporting Documents Index 3.17.17.pdf |
HL&C 3/17/2017 3:15:00 PM |
HB 132 |