Board to consider new ‘soda tax’
by CYRYL JAKUBOWSKI
The Cook County Board of Commissioners is expected to vote Thursday, Nov. 10, on a controversial penny-per-ounce tax on beverages that contain sugar or artificial sweeteners in order to help close a $174.3 million shortfall in the county budget.
The ordinance would increase the price of a 2-liter bottle of soda by 68 cents and a 12-pack of soda by $1.44. The tax includes carbonated soft drinks, fruit beverages excluding 100 percent fruit juice, sports drinks and energy drinks.
Non-sweetened beverages such as water, various kinds of milk and baby formula would be exempt from the tax. The tax is expected to provide $74 million in revenue in fiscal year 2017 if it goes into effect on July 1, 2017.
While it appears that Cook County Board President Toni Preckwinkle will find enough votes to approve the tax, county Commissioner Peter Silvestri (R-9) said that he would vote against it.
"It’s a regressive tax and it will be hitting the consumers the most, and I don’t necessarily think that it will stop people from consuming less sugar, but you will create more transplant purchasers and people will go to DuPage to get their gas, their cigarettes and now their soda," Silvestri said.
"It creates a negative environment, and in a negative economic environment you lose jobs because people are shopping elsewhere and the local economies take a hit," Silvestri said. "It’s no accident that so many people are crossing the county line when they see ‘No County Taxes’ signs everywhere. Those other counties pick up our business."
Silvestri said that he would vote against the tax because he represents portions of the city as well as the suburbs where people are close to DuPage County.
However, county Commissioner Larry Suffredin (D-13) said that he does not oppose the new tax.
"She has proposed a soda pop tax, and I’m not opposed to the sugar tax, but I think they need to work out the definition because as it states now it would be any product that even uses sweetener would be taxed," Suffredin said. "If you substitute soda for alcohol or cigarettes, it still has the same dynamic argument. At this point, she might have the votes she needs, and if it will help to prevent diabetes or reduce sugar consumption, then we should see if it works."
Suffredin said that he had heard from soft drink manufactures that are opposed to the tax because it would hurt their sales. "The Red Bull people especially were calling all the time in large numbers, and I guess they just had too much energy," he said.
"McDonalds people are concerned, and they said that their beverage strategy is to sell $1 drinks of any size so they said that they would end up taking a hit on this and they would have to eat the tax," Suffredin said. Suffredin said that it would have to be worked out how refills at restaurants would fall under the tax and how it would be enforced.
"I don’t think that soda is a staple for every family, and I would be concerned if people were drinking soda all the time," Suffredin said. "This is not gasoline we’re talking about. It’s a consumption tax. It’s a specific product."
Preckwinkle released her $4.4 billion budget recommendation in October, including the beverage tax and spending reductions. She also separately proposed a $475.7 million capital budget to fund county infrastructure and equipment.
Preckwinkle said that if the beverage tax is approved, she would not seek to raise any other taxes for the next 2 years. Preckwinkle proposed increasing the sales tax to produce about $473 million a year to reduce the $479 million shortfall in pension payments last year. The county board approved the sales tax increase.
Under former board president Todd Stroger, the 17-member board voted in February of 2008 to increase the county sales tax from 0.75 percent to 1.75 percent, increasing the combined sales tax rate in Chicago to 10.25 percent. The board eventually overrode Stroger’s veto on a 12-5 vote and rolled back the sales tax from 1.75 percent to 1.25 percent.
Preckwinkle campaigned on repealing the remaining portion of the sales tax increase by reducing the tax by 0.25 percent in both 2012 and 2013.
Revenue obtained from the sweetened beverage tax will allow the county to double its spending on community-based anti-violence efforts and avoid public safety layoffs, according to a press release. Next year the county will allocate $6 million to programs that center on anti-violence, anti-recidivism and restorative justice initiatives.
"We will designate a significant portion of our funding to support collective impact initiatives that work to address violence in our most at-risk communities and allow us to strengthen the efforts of more community-based organizations working on the ground to support our larger effort to create safe and stable communities throughout Cook County," Preckwinkle said.
Preckwinkle’s proposed budget closes a $174.3 million shortfall that was projected in June, due to factors including the failure to pass a state budget, growing debt service costs, many flat or declining revenue streams and increased technology spending.
"I could put forth a proposal that would devastate our criminal justice system over the next 3 years and undermine the progress we are making in public health," Preckwinkle said. "It would mean more than 1,000 layoffs over the next 3 years, including prosecutors, public defenders, sheriff’s deputies and critical support staff.
"Instead of focusing on becoming more fair and effective, we would be focusing just on getting by. This budget, instead, calls not only for dedication to criminal justice reform, but a significant investment in public safety."
"’We’ve had to make a number of difficult decisions to create a balanced budget that provides essential public safety and public health services to county residents while being fiscally responsible," Preckwinkle said. "Over the last 6 years, we have made important strides toward stabilizing the county’s financial outlook by making these kinds of hard choices, including reducing our staff by nearly 10 percent."
As part of the budget, the county will lay off 300 workers. Added to previous reductions, the county’s workforce will be about 10 percent smaller since Preckwinkle took office in 2010.
As part of its expense reductions, The county is further decreasing the operating tax allocation to the Cook County Health and Hospitals System by $10 million to $111 million.