Calling it a “difficult but necessary choice,” Cook County Board President Toni Preckwinkle on Thursday proposed a “moderate” tax on sweetened soft drinks as part of her $4.4 billion 2017 county operating budget.
Preckwinkle said the one-penny-per-ounce tax is necessary to help avoid devastating layoffs and close a $174.3 million budget shortfall for next year.
“I do want to be clear that I didn’t come to this decision lightly,” Preckwinkle said, addressing her fellow Cook County Board members. “The proposal put before you represents months of effort — working with business and labor leaders, our criminal justice stakeholders, our public health team and my fellow elected officials.”
The tax — which the beverage industry strongly opposes — would go into effect on July 1, 2017. If approved, the cost of a 99-cent can of soda would increase to $1.11; a 20-ounce bottle, from $2.19 to $2.39.
“Many Cook County taxpayers have faced a massive property tax increase, along with a sales tax increase and new taxes on water and sewer services,” said Claudia Rodriguez, acting executive director of the Illinois Beverage Association. “Now is not the time for Illinois families to endure a tax on their groceries. Enough is enough. Nearly 90,000 jobs in restaurants, grocery stores, convenience stores, movie theaters and more rely on the industry – all of which could be hurt by a proposed tax.”
The soft-drink tax is part of a plan, Preckwinkle said, to avoid more than 1,000 layoffs over the next three years, including “prosecutors, public defenders, sheriff’s deputies and critical support staff, programs and services.”
That tax, first reported in the Sun-Times, would cover carbonated soft drinks (whether sweetened with sugar or a substitute, such as aspartame), sports drinks and energy drinks. Fruit drinks also would be taxed, but 100-percent fruit juice is exempt.
Preckwinkle also touted the health benefits of the tax, noting that in Berkeley, Calif., which passed a similar tax in 2015, soda consumption has dropped 20 percent “in some neighborhoods.”
In recent weeks, after word of the proposed tax leaked out, merchant groups called it bad for business growth in Illinois and one that would hurt cash-strapped families. Ads slamming the tax have aired.
Even with the additional revenue, Preckwinkle said she is planning to lay off about 300 county employees in 2017.
Last month, Preckwinkle approached labor leaders and enlisted their help in lobbying for the penny-an-ounce tax on sweetened drinks. That infuriated Chicago Federation of Labor President Jorge Ramirez, who helped Preckwinkle reinstate the penny sales tax increase she had campaigned against. That tax passed with no votes to spare on the promise that future budgets would not harm workers.
On Thursday, Ramirez was even more enraged after Preckwinkle’s budget included both the “fat tax” as well as 300 layoffs.
“From the beginning of this budget, she’s said there’s gonna have to be layoffs. We reject that. The commitment we had from Toni and her folks was that, if we assisted and pushed for the sales tax increase to go back up, there would be no layoffs in any future budgets,” Ramirez said.
“This whole notion of potential layoffs is not fair. It’s not the agreement that we had and it’s not how you treat a partner.”
Ramirez noted that organized labor has identified $80 million in potential savings and efficiencies in Cook County government that could “put a huge dent” in the $174.3 million shortfall Preckwinkle is trying to close.
“We’re doing our part to assist. We helped pass every budget at the county. When President Preckwinkle got rid of the sales tax the first time, I and others asked her not to do it until she had the problems solved. She chose not to listen. Then, she had to pass it again,” Ramirez said.
“It’s very difficult for us to put our brains around a potential layoff. Period. She should have kept the sales tax and gotten rid of it to the same tune that she found efficiencies. Whatever happened is happening on the backs of working men and women. That’s not acceptable to us.”
Preckwinkle told the board Thursday that the county has been hampered in raising revenue by: the gridlock in Springfield; increasing debt service costs; and the “historic neglect” of the county’s “antiquated” information systems.
As part of the soft-drink tax hike, Preckwinkle said she has committed to a policy of no new taxes for the next three fiscal years.
The new tax is expected to provide about $74 million in revenue. The county would use the money raised to double its investment in “community-based anti-violence efforts and avoid layoffs in the public safety arena,” county officials said.
Preckwinkle, a vocal proponent of judicial reform, noted her efforts to reduce the jail population in the last three years — by about 25 percent, she said. And because of that, Preckwinkle said she’s working with Cook County Sheriff Tom Dart to demolish three divisions of the jail. The 30-year-old Division Three, which houses minimum and medium security inmates, is scheduled for demolition in November, she said.
Preckwinkle said the plan is to reduce the jail campus by about 568,000 square feet during the next two years, avoiding about $172 million in capital improvement costs and saving $3 million a year in operating costs. The county also will close one of its three warehouses in the next year, she said.
Contributing: Fran Spielman