Kenney: Soda tax will help children in long run

Mayor meeting: Pam Henshall, executive director with the Greater Northeast Philadelphia Chamber of Commerce, talks with Mayor Jim Kenney last Friday after he addressed the chamber during its meeting in Torresdale. MARIA YOUNG / TIMES PHOTO

With some of the most skeptical critics of his proposed sugary drinks tax in the audience at a Greater Northeast Philadelphia Chamber of Commerce luncheon last Friday, Mayor Jim Kenney touted the city’s dire need of alternative funding for early education, community schools, libraries, recreation centers and parks.

An official from the city’s Coca-Cola bottling and distribution facility and City Councilman Al Taubenberger, the former president of the Northeast Chamber, were among dozens of business leaders and government officials on hand at the Union League Golf Club at Torresdale.

Kenney unveiled his proposed fiscal year 2017 budget last month. A three cents per ounce tax on the retail sale of sugar-sweetened drinks has been the most controversial component of the annual spending plan. The mayor projects that the new tax would generate $96 million a year for pre-kindergarten programs as well as upgrades to community institutions that serve children. But opponents including the soft drink industry, retailers and Teamsters say that the tax will prompt higher prices, declining sales and the loss of jobs.

The mayor did not utter the words “soda,” “sugar” or “tax” for the first 14 minutes of his 25-minute Chamber speech, opting instead to focus on the good stuff that added revenue could bring. But even he could not circumvent the elephant in the room indefinitely.

“We’ve attached these initiatives to this money so people understand where it’s going to go,” Kenney said.

In pitching the soda tax publicly, the administration has made a conscious decision not to try to sell folks on the potential health benefits of reducing their sugary drink consumption. Mayor Nutter tried that angle when he twice proposed his own versions of a soda tax. Both efforts failed. Kenney figures that the mere suggestion of legislating a “nanny state” turns off most consumers. Conversely, people seem very interested in projects and programs that will help educate children, keep them off the streets and keep them out of prison.

Philadelphia has the highest poverty rate, 26 percent, among the nation’s largest cities. It also has the highest rate of imprisonment, with more than 7,500 inmates as of last week. The city spends $120 to $130 a day per inmate to house them on State Road. Most are awaiting trial for non-violent crimes. And the only thing keeping most of them behind bars is poverty, that is their inability to pay bail.

It’s a costly cycle that affects all taxpayers.

“The biggest problem that we face is education. And there are a bunch of different levels of this issue,” Kenney said.

Part of the problem is in Harrisburg, where lawmakers have cut education funding while requiring public school districts to fund charter schools. Kenney argues that public schools should not bear the financial burden of charter schools, which, he said, have also “destroyed” Catholic schools. After all, charter schools are more attractive to parents who would rather not pay parochial school tuitions.

Locally, the money crunch means that schools must look for alternative funding sources. That need ties into Kenney’s community schools concept. On a trip to Cincinnati, he visited a high school in impoverished “urban Appalachia” where students have access to a variety of social services under the same roof as their high school. They can get dental and optical care in school and buy clothing in the school store using credits earned in school. Public health programs fund some of the services, while community partners give additional support.

Another Kenney priority is expansion of pre-K programs. The point is to give children a head start on kindergarten and first grade so that they’re up to speed academically in third and fourth grade.

“Some people can’t raise their own children and when we ignore that and allow things to progress, we’re going to have to take care of them at some point in time in a prison or in social services,” Kenney said. “I know it’s difficult to understand or accept at times, but we’re all in this together.”

The mayor’s parks, recreation and libraries objectives are intended to impact every area of the city. Kenney claims that home values improve where communities invest in those facilities. Public safety can also improve. In Hunting Park, for instance, the city spent $5 million on improvements and has seen an 89-percent reduction in crime over the last three years.

“We have wonderful libraries and wonderful recreation centers and parks. Some of them are 80 years old and haven’t seen any renovations in 40 years,” Kenney said.

Despite the promise of community benefits, the mayor faces stiff opposition to the soda tax on multiple fronts. City Councilman Brian O’Neill, a Republican representing the Far Northeast and the longest-tenured council member, has said he would never vote for the tax. Taubenberger, an at-large Republican from the Northeast, has said that he opposes targeting a specific industry for a tax increase.

Kenney said on Friday that critics said the same thing years ago when the city imposed a tax on alcoholic beverages. Even he, as a council member, voted against that one. But the critics were wrong, he now claims.

Opponents said “we were never going to have another bar or restaurant (open) in the city. All of them were going to close. But we have five times the number of bars and restaurants in the city than we did when we imposed the liquor tax,” Kenney said.

The mayor views the tax as a “choice.” Consumers can choose to buy soda and pay the tax or to buy non-sugary beverages like diet soda and water. Companies like Coke, Pepsi and Canada Dry profit from those products, too.

Some critics argue that soda sales would decline to the point that the city won’t be able to collect the revenue that it expects. Kenney disagrees. His analysts have figured a 55-percent sales decline into their projections.

“It’s never going to be near 55 percent,” he said. “But with a 55-percent dropoff, we still collect $96 million a year to pay for those programs.”

The mayor also doubts that the tax would result in astronomical soda prices. Instead, distributors and retailers could spread the cost over other products that they sell.

Some opponents suggest that the administration should instead seek property tax, business tax or wage tax hikes to fund its priorities. The mayor again disagrees, noting that the city has seen four property tax increases in the last five years and that the city has spent the last 20 years trying to reduce its wage and business taxes.

“So I don’t think there’s anyplace else to go,” he said. ••