Council raises soda-tax questions

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The 3-cents-per-ounce sugary drinks tax, known as the "soda tax," was proposed by Mayor Kenney to City Council in his first budget.

Mayor Kenney's proposed soda tax dominated the city's first budget hearing Tuesday, with discussions of whom the levy would impact and whether a lower tax was possible.

Kenney has proposed a 3-cent-per-ounce sugary-drink tax to bring in $96 million annually over five years. The revenue would fund universal pre-K, community schools, and improvements to parks and libraries.

Lower the tax by 1 cent, however, and revenue only drops to $88 million annually, according to administration figures. That's because of an assumed higher rate of consumption if the tax is lower.

"So really, the extra penny from 2 to 3 cents gives us very little revenue," said Councilman Allan Domb, who broached the topic at the hearing.

A 1-cent-per-ounce tax would bring in $57 million annually over five years, according to the administration. That would nearly cover the cost of Kenney's prekindergarten plan, but nothing else in his proposal.

Finance director Rob Dubow said the 3-cent levy is needed if the administration is to fund all of its initiatives.

Council members have thus far been mum on whether they will support the tax. A similar proposal twice failed under Mayor Michael Nutter.

"We agree with the administration in terms of pre-K and fixing up neighborhood recreation centers and all the other good things," said Council President Darrell L. Clarke. "But the devil's in the details."

Clarke pushed back on the idea that the tax - levied on distributors - might not be passed on to consumers.

"Fundamentally, I don't believe that," Clarke said. "At the end of the day, they're going to pass that on."

Councilwoman Cindy Bass asked for an analysis of how the tax could affect communities and small businesses. Dubow conceded that sugary drinks are mostly purchased in poorer areas where soda companies do their heaviest marketing.

"What it sounds like we're saying is, OK, we're going to make sure we get the resources our young people desperately need, but also what we're saying is the population that's primarily going to pay for it is our most vulnerable populations," Bass said.

Administration officials said they would consider whether the city could tax other sugary items, including powdered drinks.

And if the tax doesn't generate the revenue the city predicts it will?

"The plan would be to look at the revenue to see what it would support and go from there," Dubow said.

Councilwoman Jannie Blackwell said she's uncomfortable supporting the tax without more information on the pre-K program it would fund.

"What neighborhoods will they come from? Which children will be picked?" she asked. ". . . We've got to have details about this pre-K program if we're expected to vote for it."

Also Tuesday, Council members complained about delays in property value reassessments. A new system won't be up and running until 2019.

"We're leaving money on the table," Councilman Derek S. Green said.

Several Council members also voiced frustration over the lack of minority and female-owned businesses with city contracts and local participation in development projects.

"Every time a new program comes up, the conversation and the proposed remedy to participation is always after the fact," Clarke said. "The reality is this was discussed during the last administration last year. At what point, as you pull together a program, is the participation part at the front side of the conversation?"

Budget hearings run through mid-May.

jterruso@phillynews.com

215-854-5506@juliaterruso

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