Controller counting chickens prematurely when it comes to soda tax

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The city’s 1.5-cents-an-ounce tax on soda and other sweetened beverages has produced $25.6 million in the first four months of the year, below projections.

City Controller Alan Butkovitz has decided to count the chickens before they are hatched.

Last week, Butkovitz announced that his office was going to do an audit on the city’s expanded pre-K program, even though the expansion has hardly begun. It started seven months ago.

The program is in its infancy and won’t be fully in place until five years from now. This will be long after Butkovitz leaves office, given that he was defeated for re-election in the May primary and will depart in January of next year.

Still, according to the controller, it is never too early to examine the pre-K expansion because it is being financed in part by the city’s 1.5-cent-per-ounce beverage tax.

And Butkovitz is on record numerous times as being opposed to the tax.

His said his motives in doing this pre-audit (pre-emptive audit?) are pure.

“Before the city spends hundreds of millions of dollars, we will be conducting a spot check on the first few million,” he said in his statement.

As much as we would like to take the Controller at his word, we cannot.  For one thing, information about quality pre-K providers,  as well as the number of seats available at those providers is readily available.  The city’s pre-K website  and the site for Great Philly Schools  list the criteria for high quality seats and the providers who offer them.   And the William Penn Foundation is funding research to measure the program’s effectiveness on preparing kids for kindergarten.

For another thing, Butkovitz has been a Big Soda guy from the beginning. The beverage industry is still furiously fighting against the tax fearing – rightly – that if it stands here, it will spread across the nation.

For now, all sides must await a decision by the state Supreme Court on whether it will consider an industry appeal of a lower court ruling upholding the city’s right to levy the tax.

Big Soda has been flummoxed by the fact that a lot of the soda tax money is going to expand pre-kindergarten for needy children. How can you oppose little kids? A critical audit from the controller would enable the well-financed and very loud opposition to say: It’s not helping kids! It’s being wasted!

Along those lines, a study was just released by a Florida-based marketing firm that said its review of sales data from franchised supermarkets and drug stores in the city dropped 55 percent when the tax went into effect this year, while sales at stores on the other side of the border rose 38 percent.

Catalina marketing said it had no dog in this fight and did the study as sort of a public service, though working with retailers in a big part of its business. It’s not surprising that soda sales would decline on one side of City Avenue and increase on the other because of higher prices in Philadelphia.

But, as the city pointed out, supermarkets account for less than half the beverage sales in Philadelphia. The Catalina study did not take into account restaurants, universities, hospitals and smaller markets.

Had overall sales declined by 55 percent, as the study suggested, the city would have collected $21 million from the tax during the first six months. Instead, it collected $39.3 million.

Much of it is going into the pre-K program, where the controller awaits, ready to pounce.

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