District taxi riders are a big step closer to enjoying cabs with mandatory credit card readers, satellite navigation systems and a uniform paint color after the D.C. Council on Tuesday gave initial approval to sweeping reform legislation.

Funding the proposal remains complicated, and some council members are pushing to attach to the bill a controversial measure to strictly limit the number of city taxicabs. Still, nine of the council’s 13 members voted to back the reform package assembled by Mary M. Cheh (D-Ward 3), chairman of the transportation committee.

“We are a world-class city,” Tommy Wells (D-Ward 6) said, speaking in support of the bill. “We do not have a world-class taxicab system.”

The bill, which is likely to face a final vote this month, would also greatly increase the number of taxi inspectors, add hundreds of handicapped-accessible cabs to city streets, mandate new training for drivers and explicitly legalize hybrid taxi-limo sedan services such as Uber.

But several council members, including Vincent B. Orange (D-At Large) and Marion Barry (D-Ward 8), questioned whether the proposal was workable unless it included a medallion system that capped the number of taxis operating in the city.

Taxis line up at Union Station. (Michael Williamson/THE WASHINGTON POST)

“Our city has a second-rate taxicab system because we have an open-entry taxicab system,” said Orange, who argued that the value of scarce medallions could finance service improvements without spending taxpayer funds or imposing a rider surcharge.

The idea of limiting the city cab fleet has emerged several times in recent years, pushed largely by major taxi companies. But independent cab operators, who make up the bulk of the 6,500-taxi fleet, have decried medallions as a money grab by the big players.

Previous draft legislation would have offered discount medallions to veteran drivers, but after the initial sale, the medallions would trade on the open market. In most cab markets with a taxi cap, medallions are owned or financed by a small group of large players and sell for sums that often reach into the hundreds of thousands of dollars.

Phil Mendelson (D-At Large) rejected the suggestion that a medallion system is necessary, calling it a “privilege for a few corporate interests.” At multiple points during Tuesday’s debate, Orange made reference to Jerry Schaeffer, perhaps the city’s most prominent taxi businessman, who has hired former D.C. Council member John L. Ray to lobby in favor of a medallion system.

The medallion debate was overlaid with concerns that the Cheh bill does not do enough to increase the number of handicapped-accessible cabs. D.C. Council Chairman Kwame R. Brown (D) said he was “embarrassed” that the bill didn’t go farther along those lines.

“We put people who are disabled, who are in wheelchairs, in a back seat,” said Brown, who voted against the bill. “They are Americans. They are District residents. They deserve a fair share.”

It remains unclear how the improvements will be funded. Cheh’s bill authorizes a 50-cent-per-ride surcharge to fund the installation of standardized consoles that would include all the major functions, but city finance officials have placed matters in a Catch-22: They will not certify significant revenue from the surcharge until the city has a better way of tracking its collections — a concern that would be addressed by the consoles.

Cheh said Tuesday that she would approach Mayor Vincent C. Gray (D) about identifying funding for the initial installation.

In other business, the D.C. Council put the final touches on a $9.4 billion budget set to go into effect Oct. 1. In the most contentious change made Tuesday, council members voted to back off new curbs on welfare payments to city residents — delaying for a year a recent move to stop payments to long-term welfare recipients.

Legislators also put to rest a long-running debate on what to do with about $79 million in additional revenue expected in the current fiscal year. The council voted to use about $22 million to repay city employees for four furlough days it had ordered in 2010.