Muni’s appointed board yesterday voted to approve a 12 percent fare hike. And, this morning, Supervisor Dean Preston queried the City Attorney’s office if the city’s transit agency was in violation of state laws forbidding price-gouging during times of strife.
California Penal Code Section 396 states that, following a declaration of emergency, it is unlawful for “a person, contractor, business, or other entity” to charge “more than 10 percent greater than the price charged by that person for those goods or services immediately prior to the proclamation or declaration of emergency.”
Preston notes that there does not appear to be any carve-out for public agencies such as Muni — and that “transportation” is listed as one of the services protected from gouging.
“If someone running a private bus shuttle did what Muni is proposing, it’d violate the penal code and they could go to jail,” Preston said. “But Muni authorizes it? This does not make sense.”
Preston noted that, “most public agencies get this. The Public Utilities Commission and others are not charging fees and late fees and penalties right now.”
Calls and messages to Muni have not yet been returned. City Attorney spokesman John Coté replied that, “any request for legal guidance from our office would be protected by the attorney-client privilege, and we would not be at liberty to disclose that.”
Muni spokeswoman Erica Kato previously described the forthcoming fare hikes as a necessity for an agency that has seen its revenue and ridership crater during the ongoing pandemic.
“If there was another option not to raise fares, we would absolutely use it,” she said. “But at this time of economic uncertainty, no other option exists to maintain the service that we have and to expand upon the programs that we are offering … to support the people that need our assistance the most.”
While the anti-gouging law is most commonly associated with situations such as the $6 tube of hand-sanitizer at the corner store, Preston, a tenants’ rights attorney, notes he worked with the state Attorney General to stave off rent hikes following the Santa Rosa fires. “The statute prevents rent hikes of more than 10 percent,” he notes, “even in cities with no rent control.”
That would apply to public housing, too, he says. And, he believes, public transit.
If the City Attorney disagrees with Preston’s interpretation of the law, he said he’ll consider writing legislation forbidding San Francisco public agencies from engaging in what he considers price-gouging.
Preston also admits that price hikes of less than 10 percent would not fall under the state statute. Muni’s forthcoming fare hike, set to take effect in November, would raise a one-way Clipper Card fare 30 cents, from $2.50 to $2.80. That’s 12 percent.
But a 24-cent fare hike, to $2.74, would fall just under 10 percent.
“That would be a cynical, but possible, approach,” Preston admitted.
Update, April 23, 11 a.m.: Muni spokeswoman Erica Kato sent the following rejoinder after learning of Preston’s contentions:
The fare increase approved by the MTA Board on Tuesday is not an “excessive or unjustified increase” designed to take advantage of the emergency. Rather, the SFMTA considered the proposed increase before the pandemic hit as part of a policy to increase fares based on an established indexing policy adopted years ago.
It’s important to us to pay our hard-working operators a living wage. As the cost of living increases in the Bay Area, so must our operator wages. If we can’t raise fares at the same rate as our labor costs, our only alternatives are to cut service or find new sources of ongoing revenue.
The approved budget includes an expansion of our low- or no-fare programs, allowing us to support the people that need our assistance the most.
The earliest these fare changes would go into effect is November 2020.