Suit leaves pre-K future in limbo

Mayor Kenney is betting big on a courtroom victory this winter.

As a judge weighs whether to uphold Philadelphia's sweetened-beverage tax, the city has already spent nearly $12 million on a prekindergarten program that the levy is designed to support. Hundreds of families have signed up to send kids to classrooms in January, coinciding with the tax's debut.

About 50 providers, including small, family-owned pre-K centers as well as larger operations, have started expanding and upgrading facilities in preparation for 2,000 more children.

City officials - previously mum on what happens if the tax is struck down - said this week that the first group of children would enroll next year with or without the tax. The future of the program beyond spring 2017 is unclear.

"If the American Beverage Association somehow succeeded in their efforts to invalidate the tax, the loss of anticipated revenue would seriously jeopardize the long-term implementation of the city's programs," city spokeswoman Lauren Hitt said, referring to the one of the lead opponents of the tax. "As of today, the city has no existing streams of revenue to replace the anticipated funding."

Since the tax was passed in June, the city has hired pre-K staff, advertised on subways and in mailers, and signed six-month contracts with providers.

Tax revenue, projected to be about $92 million per year, would more than cover those start-up costs, Hitt said.

Critics of the tax say launching the program before the revenue source is a sure thing is deceiving. The beverage association, along with several small businesses and residents, filed a lawsuit against the city in September. The judge has said he would rule by Jan. 1.

"The city administration said pre-K is dependent on the tax, period. Starting with seat number one, not seat number 2,001," said Shanin Specter, one of the attorneys representing the association in its lawsuit against the city. "They said, we don't have the money for any pre-K."

Clarence Morris, CEO of Amazing Kidz Academy LLC, which has locations in West Oak Lane and Juniata Park, signed a contract with the city that includes a clause that further funding is contingent on a revenue stream. Morris needs his classrooms to be ready by Jan. 4 and has hired four new teachers in anticipation of 40 additional city-funded seats.

One of his pre-K classrooms is undergoing a redesign to accommodate the larger numbers.

"If some sort of repeal was to occur, I think it would be devastating," he said. "There are a lot of people involved, a lot of work that's been done, and a lot of money that's been spent." In addition to the $12 million in pre-K costs, the city has spent $1.5 million to hire 25 community school coordinators as part of a community schools plan.

Hitt said she does not know if layoffs would be necessary should the tax get struck down.

"Everything ultimately depends on the final disposition of the case," she said.

With three legal challenges pending before Common Pleas Court Judge Gary S. Glazer, the ruling could be more complicated than an affirmation or veto of the levy. Both sides could also appeal.

In November, Boulder, Colo., and San Francisco and two other Bay Area cities passed soda taxes via referendum. The association has not mounted any legal challenges in those cities.

A spokeswoman for the ABA said she could not comment on legal strategies.

jterruso@phillynews.com

215-854-5506@juliaterruso