Commissioners discuss repeal of beverage tax

by KEVIN GROSS

Northwest Side county commissioners discussed the repeal of the unpopular penny-per-ounce sweetened beverage tax, which will end on Dec. 1.

The Cook County Board of Commissioners at its meeting Oct. 11 voted 15-2 to repeal the tax on sweetened beverages which include sodas, diet sodas, juices, energy drinks and others. The Finance Committee, which features all of the commissioners, voted 15-1 at its meeting on Oct. 10 to repeal the tax.

Northwest Side commissioners who voted for the repeal are Peter Silvestri (R-9), Luis Arroyo Jr. (D-8), Bridget Gainer (D-10) and John Fritchey (D-12). Commissioner Larry Sufredin (D-13) voted against the repeal.

"Today the board exercised its collective will and set in motion a repeal of the sweetened beverage tax we approved last year," Cook County Board President Toni Preckwinkle said in a statement after the 15-1 vote on Oct. 10. "As I outlined last week, it is up to the commissioners to choose our direction on revenue, and I respect their authority to do so. Now, together, we must chart a new course toward the eighth consecutive balanced budget of my tenure as board president,"

Preckwinkle said that she was disappointed in the outcome.

"As I noted last month, the difficult fight for this revenue has focused me on what matters most: doing the hard work necessary to build a healthier, safer and more efficient Cook County. That work continues," she said.

The repeal of the tax was met with approval of many groups and organizations that fought to end the tax. An August poll funded by the Illinois Manufacturers Association reported that 87 percent of Cook County residents disapproved of the tax. Former New York mayor Michael Bloomberg funded commercials in Illinois touting that the tax would help fight childhood obesity. Opponents of the tax argued in commercials that it was "a cash grab."

"I originally voted against the tax even before public opinion was worked up," Silvestri said. "I thought the tax was regressive and counterproductive, because people will buy it less and you don’t really reduce consumption, you only change the location of purchase. People don’t want to be nickel and dimed forever."

Gainer cited similar reservations to the tax.

"You must have heard that people were traveling to Indiana or Will County to buy soda," Gainer said. "Enough commissioners heard that and knew it wasn’t working as a tax."

Fritchey said that the purpose of the tax was presented in a misleading fashion.

"We can all agree about the problems of sugary drinks," Fritchey said. "However, in my opinion, the tax never was about health, it was about revenue. Nothing in the tax dedicated funds to health programs."

Arroyo Jr., who originally voted in support of the tax a year ago and voted against the tax this year, did not respond to requests for an interview.

Preckwinkle released her $5.36 billion budget recommendation on Oct. 5, with figures accounting for $200.6 million in expected beverage tax revenue. The tax had previously brought in about $16 million to county coffers since its activation on Aug. 2, according to a past statement from Preckwinkle’s spokesman Frank Shuftan.

The budget recommendation closes a $115.3 million shortfall. Since 2010, Cook County’s full-time workforce has shrunk by more than 10 percent and the county’s indebtedness has been reduced by 10.3 percent, according to a county news release.

Preckwinkle said that the repeal of the tax could jeopardize services including a $27 million reduction to the hospitals system that could result in the closure of community health centers and a reduction of services or closure of Provident Hospital or downgrading of the Level One Trauma Center at Stroger Hospital.

Without those projected funds, Preckwinkle said that there could be as much as 11 percent across-the-board budget cuts, adversely impacting services such as the county’s public defender’s office.

"Taking away this revenue could result in a reversal in the government efficiencies we have championed over the past seven years," Preckwinkle said. "We all should be proud of the progress we are making in turning the county into a safer, healthier and more efficient place to live and work," Preckwinkle said in a press release.

"The cuts that Preckwinkle proposed are like doomsday cuts, obviously we would all like to avoid that and find better things to cut or ways to raise revenue," Gainer said.

Officials are scrambling to account for the budget shortfall through various other ways, with the final cutoff date for next year’s spending plan coming on Thursday, Nov. 30.

Fritchey said that some money-saving measures are needed due to "the responsibility to taxpayers to run as efficiently as we can," citing his previous measure to merge the Cook County offices of the clerk and recorder as an example.

Silvestri agreed, saying that "the county has 91 bureaus and agencies, so we need to figure out if there are ways to reduce that."

Gainer said that "we might need to look at (employee) furlough days, nothing is off the table at this point. We just got the budget proposal a few days ago, we’re pouring through it line-by-line."

Additional tax hikes in other areas remain a possibility as well. The beverage tax was originally approved with an ordinance that froze county property and sales tax rates during the effect of the beverage tax, which Fritchey previously pushed for. It is currently unclear whether the ordinance is invalidated or not, raising the possibility of such tax hikes.

"There are definitely differing interpretations whether or not the freeze remains in effect. I believe it does, and I hope that the board respects that concept in any event," Fritchey said. "If there are legal merits to the concept that the freeze ordinance is no longer in effect, I would hope my colleagues would still support not raising either rate at the county level, out of respect for citizens’ tax fatigue."

"One big argument against the repeal is that we may just replace the soda tax with other taxes, so we need to be mindful that they aren’t needlessly raised elsewhere," Silvestri said.

Fritchey discussed the possibility of legalizing, regulating and taxing marijuana as a future revenue stream, although any such development would occur later than the upcoming budget deadline.

"There is presently a bill pending in both Illinois House and Senate to accomplish this goal, sponsored by (Representative Kelly) Cassidy (D-18) and (Senator) Heather Steans (D-7)," Fritchey said. "The experiences of other states have shown that not only will the sky not fall, but that there are significant dollars to be gained."

In a statement, Suffredin said that he "voted to keep the Sweetened Beverage Tax because it was a tax on a small number of people rather than a general sales or property tax on all.

"This tax had a twofold purpose, first it provided enough revenue to balance our 2017 budget without gimmicks; and secondly, it helped us fight the increase in heart disease, diabetes, obesity and osteoporosis and the high cost of treatment," he said.

He also said that "after the imposition of the tax on August 2nd, both opponents and supporters of the tax started a barrage of TV, radio and print ads and mail. Unfortunately, the messaging created many misunderstandings about the tax."

"Finally, the will of the board changed on this tax. It was repealed. I voted to keep the tax because it was a reasonable tax with prohibition on further tax increases; and it is bad policy to change taxes outside the budget process."