Illinois Governor Recommends Changes to Carsharing Regulations Bill

Illinois Governor Bruce Rauner issued an amendatory veto to a Senate bill that would have regulated and taxed peer-to-peer (p2p) carhsaring services like traditional car rental companies.

Senate Bill 2641, which was passed in April, would have classified p2p groups such as Turo and Getaround as traditional car rental companies, making them subject to the same taxes and regulatory burdens included in the Automobile Renting Occupation and Use Tax Act. This includes a 5% tax from the state on the company and the individual renting.

When Senate Bill 2641 was originally introduced, it dealt with making changes to liability laws as they pertain to rental companies.

Rauner’s amendatory veto returns the Senate bill to the General Assembly with a “veto message” of recommended changes. While Rauner’s administration believes p2p carsharing should be regulated, the Governor’s office said that Senate Bill 2641, as it was passed and sent to the Governor’s desk, does not level the playing field.

“With his amendatory veto of Senate Bill 2641, Rauner rejected the idea of regulating and taxing car sharing out of business,” an announcement from the Governor’s office said.  “At the same time, however, he suggested that the new service be subject to certain taxes and insurance on par with existing rental car competitors. The governor believes the service has economic potential for the state. It could ultimately lessen pressure on public transit, ease parking inventory concerns, and help consumers more readily afford vehicle ownership.”

In his veto message, Rauner criticized the General Assembly for passing the bill in the final hours of the legislative season without “meaningful time for public input or debate.”

Rauner recommended a new provision, called the Illinois Peer-to-Peer Car Sharing Act, which includes regulations specific to carsharing, such as details on licensure, insurance, disclosure and liabilities.

The American Car Rental Association called Gov. Rauner's decision "ponderous." In a statement, the lobbying group said SB2641 would have extended safety measures designed to protect all consumers who rent vehicles in the state.

"Now, peer-to-peer car rental providers can define their business model however they choose, so as to avoid both safety laws as well as rental car tax obligations," the statement reads. "They are being allowed to proceed with impunity to rent cars that may be under an open safety recall, or that may not have been properly maintained. While we are disappointed in the short-sighted decision from the governor, we are confident the state legislature will take the necessary steps to ensure that all entities in the business of renting vehicles will be compelled to play by the laws that were enacted to protect consumers."

Now that SB 2641 has be returned to the General Assembly, a simple majority vote is needed to accept the governor's changes and send the bill back to his office for approval. The assembly may also override Rauner's veto with a three-fifths majority in both legislative bodies.