A penny-an-ounce tax on sugary soft drinks would generate $134 million-a-year, about the same as a suburban-style garbage collection fee, but it’s a far “better option,” an influential alderman argued Tuesday on the eve of a pivotal public hearing.
“This is a good option — a better option” than charging homeowners $11 or $12 a month for garbage collection that’s supposed to be covered by their property tax bill, said Health Committee Chairman George Cardenas (12th), chief sponsor of the proposed sugar tax.
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“Both raise about the same amount. But the sugar tax helps combat a huge problem we have in the city. It combats diabetes and obesity. That’s a big thing I’m trying to accomplish as Health Committee chairman.”
Still, Cardenas declared his intention to take testimony, but no vote on the proposal during Wednesday’s Health Committee hearing that’s expected to pit health advocates against retailers and union leaders.
Victor Reyes, former chieftain of the now-defunct Hispanic Democratic Organization at the center of the city hiring scandal, is a lobbyist for the American Beverage Association. Mike Kasper, the clout-heavy attorney who helped Mayor Rahm Emanuel avoid a 2011 residency challenge, is a lobbyist for hospitality and restaurant giant Delaware North.
“I’ve spoken to a lot of my members. They’re very open-minded because of what’s going on and the budget mess that we’re in. But I am not planning on taking a vote — just taking a temperature of how things could work,” said Cardenas, chairman of the City Council’s Hispanic Caucus.
“If we rushed it through, we would get criticized for not having enough hearings and not informing people. It’s possible to take a vote and hold it in committee. I’m exploring various options as chairman and using parliamentary moves to keep this thing alive.”
Tanya Triche, vice president and general counsel for the Illinois Retail Merchants Association, said substituting a tax on sugar-sweetened beverages for an “equally unpopular” garbage fee could leave the city with a budget gap even bigger than the one it’s trying to fill.
“It picks on an ingredient in one category of product. And you have to assume that people are going to continue to purchase sugar-sweetened beverages at the rate they do today with a new tax being in place. We don’t think you can assume that,” Triche said.
“Under this tax, a two liter bottle would nearly double in price. The cost of a 12-pack of pop would rise by $1.50. If you put that big of a tax on that product, people will purchase it elsewhere. That’s less revenue to the city. How, then, have you filled the gap? More importantly, people aren’t just going to cross the border to make that purchase elsewhere. When you add this tax to the tax on bottled water and gasoline, it gives people an incentive to travel elsewhere do all of their grocery shopping.”
Last week, Cardenas disclosed that Emanuel had asked him to hold a hearing on the sugar tax before the Sept. 22 unveiling of the mayor’s 2016 budget.
Cardenas further claimed that Emanuel was “supportive of my efforts to have the hearing and see the tax approved. He’s supportive of the fact that this makes sense from a health standpoint and from a budgetary standpoint. Taxing soda saves lives. We all agree on that.”
The mayor’s office confirmed that Emanuel had given Cardenas the go-ahead to hold a hearing, but refused to say whether the tax on sugary soft drinks would be included in the mayor’s tax package.
Minutes later, Cardenas called back to say that he had over-stated the case.
“The mayor told me, ‘Go do your thing.’ Does that mean he’s supportive of the tax? No. It doesn’t mean that. It means I’m going to try to convince my colleagues that this is a good thing,” he said.
On Tuesday, a top mayoral aide remained non-committal.
“Everything’s on the table. We’ll see what happens [Wednesday when] aldermen get to weigh in on it,” said the Emanuel aide, who asked to remain anonymous.
The Chicago Sun-Times has disclosed that Emanuel is poised to raise property taxes by a record $500 million property tax increase for police and fire pensions and school construction and impose a garbage collection fee, a tax on smokeless tobacco products and a $1-a-ride surcharge on Uber and other ride-hailing services.
Now, Cardenas is billing the sugar tax as an alternative to the garbage collection fee, which he vehemently opposes.
“Soda is easy to avoid. Just don’t drink the soda. But, the garbage fee is something you can’t avoid. If you do the math, it’s a better solution,” the alderman said.
Referring to a $500 million property tax hike and a garbage collection fee, Cardenas said, “It’s gonna be very difficult to do both. People know they’re already paying a property tax that’s supposed to cover garbage. Giving them two bills for the same thing, as a resident put it, `It’s an insult that you would think I’m that stupid.’ “
If Emanuel decides to get behind the sugar tax, it will mark a dramatic turnaround.
For four years, the mayor has steered clear of taxes, bans and other punitive measures.
Instead, he has pressured the Coca-Cola Co. to bankroll health, wellness and recycling programs in Chicago that promote what the mayor likes to call “personal responsibility.”
In 2011, Coca-Cola and other beverage giants offered Chicago a $5 million carrot for a wellness competition between city employees and San Antonio — along with calorie counts on vending machines — to avoid the stick: a tax on sugary beverages or a New York-style ban on oversized beverages.
One month later, Cola-Cola agreed to bankroll a Chicago Park District program to offer nutrition education and exercise classes run by U.S. veterans to combat obesity and diabetes.
The next year, Coca-Cola and its philanthropic foundation gave Chicago an Earth Day gift of $2.6 million — enough to buy 50,000 blue carts over the next five years. In exchange for the $2.6 million grant, images of Coke products appeared on the 50,000 blue carts to show Chicago homeowners what items need to be recycled.
“I believe firmly in personal responsibility,” Emanuel told reporters at the time. “I believe in competition, and I believe in cash rewards for people that actually make progress in managing their health care.”
Three years ago, Cardenas held a marathon public hearing on the so-called “Sweetened Beverage Tax,” then dropped the idea like a hot potato, in part, because Emanuel preferred the carrot to the stick.
This time, Cardenas has billed the sugar tax as a vehicle to shore up the city budget and bankroll school fitness and health education programs.
It comes at a time when CPS has already made $200 million in budget cuts that include coaching stipends for elementary school sports and warned of more drastic cuts in mid-school year if CPS doesn’t get $480 million in pension help from Springfield.