NYC taxi plan nixed; budget hole possible

New York City's plan to expand taxi service outside Manhattan is unconstitutional, a judge ruled Friday in a decision that could leave the city with a $1.46 billion hole in its budget.

Manhattan State Supreme Court Justice Arthur Engoron ruled that the plan violates the state constitution's "home rule" provisions, which protect cities from undue interference by state legislators. The taxi plan was enacted by the State Legislature after a failed attempt to get it through the City Council.

The city is expected to appeal the ruling, which could leave officials scrambling to remake this year's budget. Officials have said 2,000 yellow-cab medallion sales included in the plan would earn the city $635 million this fiscal year and $825 million more over the following two years.

The plan, put temporarily on hold in June after owners of the city's signature yellow cabs sued, would let the city sell 18,000 permits allowing livery cabs to pick up passengers who hail them on streets in upper Manhattan and the other boroughs.

Currently, only yellow cabs can do that.

Mayor Michael Bloomberg has said the plan would make travel safer, easier and cheaper for millions of people and provide the city a much needed cash infusion in tight budget times. Yellow-cab owners argue it would cut their business.

Under the plan, the livery cab "street hail" permits would initially be sold by the city for $1,500; taxi medallions have gone for as much as $1 million on the open market. The 2,000 new yellow-cab medallions would have been restricted to vehicles that are wheelchair-accessible.

After negotiations over the outer-borough taxi issue stalled in the City Council, Bloomberg took it to Albany, saying it was a goal that had eluded the city for three decades and would expand cab service in areas that are home to 7 million people.

Gov. Andrew M. Cuomo and the State Legislature reached a deal on it in December.

The Metropolitan Taxicab Board of Trade sued in April, on the eve of a city Taxi and Limousine Commission vote to put the proposal into action. The commission voted to approve the plan anyway.