Legislation passed by the State Senate last Friday night could clear the way for Mayor Michael Bloomberg to completely revamp taxi service in large swaths of the city through the introduction of a new class of vehicle authorized to pick up street hails only outside the Manhattan core. The improved service should make it easier to live car-free in the majority of New York City. It also would provide a small source of revenue to the MTA.

Under the plan, the city can issue 30,000 new permits to livery cabs, each of which will allow the holder to pick up street hails. In exchange, the permit holders will pay a $1,500 fee and submit to a slew of regulations intended to make the new class of livery vehicles more like yellow cabs.

Those regulations should be a boon to many riders: a uniform paint scheme and taxi lights so that the taxis can be identified without honking, a meter and rate card to eliminate the need to haggle over the price of a trip, credit card machines to enable more payment methods, and GPS tracking.

As taxis often serve as complements to public transit — especially true in outer-borough neighborhoods where many people live outside of walking distance to a subway station — improving their utility can advance progressive transportation policy. Taxis are already a major component of the city’s transportation system, with yellow cabs alone moving over 600,000 people a day.

So that the new borough taxis don’t simply join yellow cabs in the profitable center of Manhattan — 97 percent of yellow cab trips start there or at an airport, according to GPS data — their permits would only be valid for the other four boroughs and above E. 96th Street and W. 110th Street.

The plan was passed through the state legislature in an end-run around the yellow taxi industry’s decades-long sway over the City Council. In the Assembly, it passed by a wide margin of 110-28; the idea to take the vote to Albany instead of the council came from Assembly Speaker Sheldon Silver in addition to Bloomberg, according to the New York Times. In the Senate, the plan passed by 40-21, with a strange coalition of support that divided Democrats, Republicans, the New York City delegation, and the upstate delegation.

The bill still requires the signature of Governor Andrew Cuomo. Cuomo has yet to take a position on the plan, and as the Times’ Michael Grynbaum has reported, his father, former Governor Mario Cuomo, has close ties to the yellow cab industry.

Financially, this bill is an enormous boon to the city, with a small amount thrown in for transit riders. In addition to the $1,500 fee on each of the 30,000 new street hail permits, the plan allows the city to auction off another 1,500 yellow cab medallions for an expected return of around $1 billion.

At the same time, the 50-cent taxi ride surcharge passed as part of the 2009 MTA rescue package will apply to the new outer borough street hail rides as well. That surcharge raises around $41 million a year from the trips made by the more than 13,000 yellow cabs, according to Crain’s. In a scenario where 30,000 new vehicles are generating surcharges, the new livery system could raise twice that (though if the outer borough taxis make fewer trips per day or aren’t fully subscribed, those ambitions won’t be realized). Considering that last year’s service cuts saved only $77.6 million each year, that’s a significant revenue stream.

That said, it’s a revenue stream that could potentially cost more than it helps. Reports Crain’s: “By creating a new, dedicated revenue source for the MTA, Republican senators will strengthen their hand next year when they renew their push to repeal the payroll mobility tax, another MTA revenue source that has been criticized as unfair to suburbanites.” The payroll tax brings in $1.5 billion for the MTA, making any new taxi surcharges small change in comparison.

With the MTA in search of $10 billion in new revenue for its capital plan, moreover, the surcharge isn’t enough to forestall what could be major fare hikes or disastrous deferred maintenance.