SAN FRANCISCO'S SYSTEM of regulating taxi permits, established in 1978 through then-supervisor Quentin Kopp's Proposition K, is still a national model: it allows working drivers, not corporations, to hold the permits to operate cabs. It allocates those permits on the basis of a waiting list and ensures that they remain the property of the city and can't be sold, traded, or given away. There are problems with the program – among other things, the system doesn't make any allowance for drivers who become disabled on the job – and, prodded by the permit holders, Sup. Matt Gonzalez is proposing some changes.

It's fine to keep the dialogue on this issue open, and Prop. K can clearly be improved – but any final solution has to maintain the basic philosophical groundwork of the Kopp measure: taxi permits belong to the city and should be allocated, at little or no charge, to working drivers and only to working drivers.

• • •

The reason this issue keeps coming up (it was on the ballot in November) is that taxi permits, also called medallions, are quite valuable. Permit holders are required to drive several shifts a week, but the medallion is valid 24 hours a day. So when the medallion holder isn't in the car, he or she can rent it out to another driver. The rental fees bring in perhaps $30,000 a year. And permit holders pay lower "gate fees" to the cab companies, so they make more income from driving.

In theory, that's perfectly fair: someone who waits patiently for 15 years, driving a cab every day, should get the benefits. And those benefits should accrue only as long as the medallion holder is still actually driving a cab.

But permit holders point out that the drivers who become disabled, and are unable to fulfill the driving requirement, can lose their medallions – and medallion holders who are past the age when they ought to retire and stop piloting a motor vehicle filled with passengers around city streets hang on and on, perhaps endangering public safety, because they want to keep the extra permit income.

Gonzalez is trying to come up with a workable answer to the disability issue. A compromise deal could, for example, allow disabled permit holders to keep their medallions for a limited period (say, half the time they've held it) to allow them to transition to another line of work. But the permit holders want more: they want to be able to keep earning that income after they retire. Others want the right to sell the medallions or pass them along to family members when they die. That's a terrible idea: the permits are city property and were never designed to be an entitlement or a retirement plan. Taxi drivers are independent contractors, just like freelance writers, musicians, business consultants, and a lot of other San Franciscans. There's no reason the city has to allow them to use public property to fund their retirement.

And selling the medallions on the open market would be a travesty: the city would make a little money on the first sales, but without strict safeguards, most of the future revenue would go to people who trade them like pork bellies. Eventually, a handful of big cab companies would probably figure out a way to control all the permits, and every driver and passenger in the city would suffer.

Gonzalez tells us he's still tweaking the measure to avoid such corporate control and to use medallion revenues to provide needed health services to drivers. That's progress, but we need to remember that the essence of Prop. K was, and is, fair. Preserving that blueprint – and making sure medallions stay in the public sector and are used in the public interest – has to be at the heart of any reform.