A few months after issuing a temporary restraining order against the Taxi & Limousine Commission’s street hail proposal, a New York State Judge put a stop to the program entirely on Friday afternoon. Justice Arthur F. Engoron declared the law granting the Mayor the right to award 1800 street hail licenses and 2000 medallions invalid on home rule grounds, and while the monied medallion industry is claiming victory, city officials plan to appeal. For now, though, the ruling puts a serious dent into a plan to improve taxi access outside of Manhattan and the city budget as well.

The decision — a bit of a rambling 34-page opus on the history of taxis in New York — essentially boils the whole thing down to a home rule issue. Taxis are an inherently local concern, and despite the push and pull of the taxi medallion owners, the Mayor cannot bypass the City Council to get what he wants. (Read the subtleties right here.) So while the overwhelmingly vast majority of taxi rides are airport-based or start in Manhattan south of 96th St., the rest of the city is left with illegal street hails and haggling over the price.

Dana Rubinstein has some choice excerpts from the decision:

“If every cross-border transaction or out of town trip to the theater district created a substantial State interest, the borders might as well be abolished, and the State can just run everything. Occasional trips across the periphery of New York City cannot justify the State Legislature in driving a stake through the heart of home rule.” “The contents of the subject legislation are all New York City ‘stuff,'” Engoron continued. “The new medallioned taxicabs and [borough taxis] would be picking up passengers, and almost always dropping them off, in New York City. The Mayor, the TLC, the City Council, are all components of New York City government. The new medallions and licenses would be auctioned or sold by the City, for the City’s financial benefit. The City is up to the task of regulating its own taxicabs.”

Afterwards, the various stakeholders pushing the law pledged to keep up the fight. “We are deeply disappointed by the Court’s decision, and will be filing an immediate appeal,” Michael Cardozo, a lawyer for the city, said. “We are confident that the appellate court will uphold the state law authorizing two important transportation initiatives: providing safe and reliable hail service by liveries in areas of the City rarely served by yellow taxicabs, and providing 2,000 more wheelchair-accessible yellow taxicabs for disabled passengers. The irrational fear of lost profits by medallion owners and lenders should not be permitted to derail these important programs.”

David Yassky, the Taxi and Limousine Commission, said the city will appeal the decision, but for now, the money from medallion sales and, more importantly, the taxis won’t materialize.

Not everyone though was upset with the ruling. The Greater New York Taxi Association, an industry group of very wealthy and powerful medallion owners, hilarious called the ruling “a win for democracy, due process of law and the right of New Yorkers to decide how their own city works.” It’s a win for an organization that has successfully used its influence in City Hall to stymie any effort to cut into their government-granted monopoly. Whether it is otherwise a win for proponents remains to be seen.

So negotiations will continue, and this effort may stretch beyond the Bloomberg mayoralty. Scott Stringer has voiced his support for the project, and other 2013 candidates may yet chime in. Hopefully, an agreement can be reached because this is one transportation initiative that should see the light of day.