In upholding Philadelphia's sweetened beverage tax Wednesday, the state Supreme Court did something even more important – it upheld the city's ability to determine its own destiny.
Philadelphia passed a 1.5-cents-an-ounce beverage tax in 2016 for revenue to address some of its most pressing problems — by providing prekindergarten to thousands of children and fixing up its long-neglected parks, recreation centers, and libraries.
Opponents, including bottlers and grocers, argued that the city had no legal right to pass the tax, but the court determined that the tax complies with the Sterling Act, which allows Philadelphia to impose taxes on items not already taxed by the state. With other cities eyeing similar taxes on sugary beverages, though not necessarily for the same reasons, this decision is likely to have wide impact.
Improving education alone is a good reason to support the tax, but it also will finance the Rebuild program, an ambitious plan to fix libraries, playgrounds, and parks in every neighborhood in Philadelphia. That's a powerful investment in the people of the city.
The beverage industry says it is still going to fight the tax and argues that constituents don't like paying more for soda and that jobs could be lost because the tax reduces profit margins at food stores as well as for distributors, who bear the burden for the tax. The industry is supporting a bill to kill the soda tax in Harrisburg, but it's unclear whether this court decision will have an impact on future attempts at such laws. For example, a recent law passed in California stopped local governments from passing any new beverage taxes for 12 years.
The city's best response to what it knows will be an ongoing attack is to take responsibility for ensuring it works effectively. That includes relentless monitoring of how the money is spent, maintaining the quality of pre-K programs, and ensuring that the massive construction projects of Rebuild give all residents a chance to participate.
Opponents also point to the fact that collections of the sweetened beverage tax have not kept pace with projections; in March the city lowered its sights. Instead of seating 6,500 children in pre-K programs by 2023, it said it would seat 5,500. And, it cut the number of community schools it would fund from 25 to 20. Also, it is planning to cut back its infrastructure program, which was initially said to cost about $500 million, which includes a $100 million grant from the William Penn Foundation. The final cost is unknown and on Wednesday, the city said how much it borrows will depend on market conditions when it sells bonds. The fact remains, though, that the tax has generated $110 million — a not insignificant sum.