Rick Dimino

Rick Dimino

Uber and Lyft are no longer a new service or foreign concept to Massachusetts. The transportation network companies, or TNCs, provided 81 million rides in the commonwealth in 2018, a 25 percent increase from 2017. As Uber and Lyft continue to grow, the public sector’s oversight role should also evolve, to properly address the true cost of this service on the commonwealth’s roads, municipalities and the overall impact in roadway congestion.

Today, Massachusetts imposes a $0.20 surcharge on every Uber and Lyft ride that begins in the commonwealth. While this fee does generate over $16 million for state and municipal transportation needs, our TNC surcharge rate is much lower than other parts of the country for the same service. 

Massachusetts should increase the fee, but we should also move away from a flat fee approach. Many states, like New York, Rhode Island and Nevada, assess TNC rides based on a percentage of the total cost of the ride, which is a more appropriate way to proactively manage this service to account for longer rides and travel during peak commuting times.  

Alternatives to the Flat Fee 

To encourage the use of shared rides, Massachusetts could set one TNC assessment rate for rides when people travel alone but have a lower rate for the customers who choose shared rides. This would provide choices for customers, and also help the public sector manage the congestion impacts of Uber and Lyft vehicles. 

With limited space available on our roads, there is an emerging consensus that the commonwealth’s must set transportation policies that move as many people in the fewest required vehicles as possible. Discounts for shared TNC rides could be one solution. Another sound approach for minimizing carbon emissions would be to set the lowest rate or even a full exemption on electric vehicles.  

Another highly attractive proposal under consideration would allow municipalities within the metropolitan Boston MBTA service area to impose an additional “congestion surcharge” on TNC ridesThis policy goal is not intended to unfairly target Uber and Lyft, but an effective way of promoting transit use and efficient mobility, while also giving cities and towns a new revenue source that can be applied to future sustainability initiatives. 

Municipalities need assistance to manage the efficient flow of Uber and Lyft vehicles on city roads. Expanding designating curbside spaces for TNC pick-ups and dropoffs makes sense, but there is a real cost when municipalities lose revenue by taking away parking meters. The correct TNC fee structure can find the right balance to fund curbside spaces, but there will need to be an enforcement component to keep these areas working as intended.  

The city of Boston has experimented with designated curbside space for TNC vehicles near Fenway Park and this strategy is soon expanding into the Seaport district. Some neighborhoods may even deserve a special targeted surcharge when travelers use Uber and Lyft inside these for high-impact TNC zones.   

Higher Fees Could Offer Transit Funding 

Overall, Massachusetts needs more money for transportation. We know this from the current condition of our roads and MBTA infrastructure. Higher TNC fees should be a part of a comprehensive solution, but additional revenue from TNC rides cannot alone deliver the total amount needed for our state of good repair needs, new projects that increase capacity or prepare the climate resiliency infrastructure that will be required in the next decade. 

In February A Better City released An Update on Transportation Finance,” which examined the current funding needs at the MassDOT Highway Division and the MBTA. We now project that the commonwealth faces an unfunded $9 billion gap over the next decade just for proper maintenance of our existing state roads and bridges, tunnels and infrastructure at the MBTA.  

It is unclear what would be generated by switching from a flat TNC fee to a percentage of the total bill. However, if the TNC surcharge increased from $0.20 to $1.70, making the surcharge would equal the cost of a MBTA bus fare, TNC revenue would generate approximately $1 billion in new revenue over the next decade. In other words, a significant increase to TNC fees could only potentially address 10 percent of our expected transportation funding gap.  

However, it would still not offer a comprehensive solution to our statewide transportation needs. Gov. Charlie Baker recently filed a transportation bond bill that increases borrowing plans for transportation infrastructure over the next five years, and legislators are expected to debate increases in the gas tax, expanding roadway pricing and changing TNC fees to generate the new funding statewide transportation needs. 

TNCs should be priced appropriately and pay their fair share to for their costs to Massachusetts and municipal government. While TNCs are now an established part of our transportation ecosystem, we need to focus on influencing their role in being ultimately a contributor to enhanced shared mobility, congestion relief and reducing greenhouse gas emissions. We can get it right so that the public sector, riders and Uber and Lyft all benefit as partners in the commonwealth.  

Rick Dimino is president and CEO of A Better City. 

Different Uber, Lyft Fees Offer Potential Benefits to Congestion, Transit

by Rick Dimino time to read: 3 min