Mayor Kirk Caldwell’s veto Tuesday of a City Council bill to cap how much Uber, Lyft and other ride-hailing services can charge during peak hours reframes the dilemma of how to meld old-school taxi regulations with new smartphone apps.

Caldwell said at a news conference that rather than require ride-hailing drivers to abide by long-held taxi rules, cabbies should be freed from their constraints and allowed to operate like their Uber and Lyft counterparts.

A new bill that’s being drafted by Corporation Counsel Donna Leong will be forwarded to the Council by the end of the week, the mayor said. Passengers will be able to choose either a per-mile fare system now used by cab companies or a pricing system that discloses upfront how much will be paid, as is used by the Uber and Lyft models.

The new bill “will level the playing field and allow transportation companies to do whatever they want as long as there’s (upfront price) disclosure and as long as the public’s protected,” Caldwell said. “The consumer determines what model they want to adopt and what vehicle they want to get into.”

The fight over the vetoed bill, which would make Honolulu the first municipality in the U.S. to require limits on surge pricing, is far from over. The focus now switches back to the Council, which voted 6-3 on June 6 to approve Bill 35.

Uber, Lyft and other ride-hailing companies opposed Bill 35 as too arduous, while taxi companies said it’s needed to ensure a level playing field among all private transportation operators.

Six votes are needed to override the mayor’s veto and make the bill a law, so Caldwell needs at least one of the six Council members who voted for the bill to change direction and go against it for the veto to stand.

Of the six who voted yes, Ikaika Anderson and Trevor Ozawa said they were doing so with reservations. The others who supported the bill were Carol Fukunaga, Ann Kobayashi, Ernie Martin and Kymberly Pine. The three “no” votes came from Brandon Elefante, Joey Manahan and Ron Menor.

Anderson said he wants to review Caldwell’s veto message before making a decision.

No one had contacted him about a possible override vote, Anderson said. He has already been working on his own plan to ease regulations on taxi companies, he said.

Pine, who had been among the most vocal critics of ride-hailing companies, characterized Caldwell’s new plan as “promotion of Trump-style capitalism that promotes profits over people.”

Pine said her main concern has been the exorbitant rates that some passengers, military personnel in particular, were forced to pay for their rides during surge pricing. To now allow taxi drivers to employ the same tactics is unacceptable, she said.

Martin said he was disappointed but not surprised by Caldwell’s veto. He said he will leave it up to Council members whether to hold an override vote or “introduce alternative legislation on the matter.”

Customer Services Director Sheri Kajiwara said that under the new bill the city would continue to require driver background checks and vehicles safety and compliance checks. Vehicles under both models would also have to display clearly marked company identification.

New technology now allows transportation companies to communicate to potential passengers how much a ride would cost, she said.

“The public has a way to accept it or decline it,” Kajiwara said. “Government should not dictate private enterprise; we should support it.”

The new bill would still allow cabdrivers to to use traditional taxi meters with rates based on time in the taxi and miles driven, a system that would not require a smartphone application, she said. But they would be allowed to institute surge pricing as well, provided they tell passengers upfront.

Caldwell said he’s OK with surge pricing. “At the end of the day, you have surge pricing because you want to get more people to drive, and it’s a time where you want to be taken home,” he said. “I’m willing to pay more if a driver shows up quickly, but if I don’t want to do that, I can wait the 45 minutes for another type of transportation company to take me home.”

Uber driver Lynda Kernaghan waited outside the mayor’s Honolulu Hale press conference to get the news, and she was ecstatic with Caldwell’s decision. Other Uber drivers were celebrating at an airport area parking lot, she said.

Kernaghan, who’s been driving for two years, said she applauds the idea of freeing up taxis from their regulations. “We’re not against them; we’re against the bill,” she said. “We’re all doing the same exact thing.”

Tabatha Chow, Uber’s Hawaii senior operations manager, said in a statement, “Mayor Caldwell’s veto protects consumer choice and earning opportunities on Oahu. We look forward to continuing to serve our community.”

David Jung, owner of the taxi company EcoCab, was also outside the mayor’s office when he signed the veto message. Caldwell “seems to have found libertarianism,” he said.

Jung said he’s always viewed taxis an extension of the public transportation system, where everyone pays the same regardless of their income level. Eliminating price caps allows the rich to get rides when they want while the poor need to wait for what they can afford. “The mayor has just altered our transportation system from being the great equalizer,” he said.

Jung said Caldwell may also have sped up the demise of taxi companies in Hawaii. “The taxi companies will not be able to survive in what continues to be an unlevel playing field,” he said.

Dale Evans, Charley’s Taxi chief executive, said in a statement that her company “will continue to compete on safety first, quality, reliability and no surge pricing.”

The qualifications and standards for all public transportation drivers should be raised, Evans said.