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Of the 10 largest U.S. cities, Philadelphia is ranked as the poorest. It also has the highest rate of obesity among the nation’s largest cities, according to the city’s Deputy Mayor for Health and Opportunity and Health Commissioner Don Schwartz.
But with the addition of the sugar-sweetened beverage tax — that, if approved would levy a two-cent-per-ounce tax based on retailers’ annual sales of the beverages and would go into effect next April — the city hopes to reduce the intake of the drinks and use $20 million of the projected $77.2 million generated to offer healthy choices to all neighborhoods while using the remainder to close yet another budget gap.
Last week, residents of the South of South neighborhood were able to hear about the sugar-sweetened beverage tax, as well as the proposed trash fee, and direct questions directly to the health commissioner and Streets Commissioner Clarena Tolson.
The Mayor’s Office has orchestrated more than 20 intimate community meetings on the budget across the city since March, Lauren Vidas, coordinator of external affairs and public engagement in the Mayor’s Office of Legislative Affairs, said. Vidas, who also lives in the community, approached Andrew Dalzell, South of South Neighborhood Association’s program coordinator, about setting up a meeting. He immediately agreed.
“It’s not that often you can have the health commissioner, streets commissioner and someone from the revenue department right here to answer questions,” he said.
Even with a turnout of about 15 at the May 4 meeting held at the St. Charles Senior Community Center, 1941 Christian St., city officials addressed their concerns.
One resident asked why only beverages were being targeted and not unhealthy foods such as ice cream and candy.
“If someone drinks a 20-ounce bottle of water or a 20-ounce carton of milk or a 20-ounce sugar-sweetened beverage, none of them will fill them up more or less,” Schwartz said.
“In fact, if they drink 12 ounces or 8 ounces, they wont get any fuller, but solid food will [fill them up].”
Also due to the vast variety, taxing junk food is more complex, he added, although they city is willing to consider the possibility as states like Washington are taxing sugar-sweetened beverages and candy.
Phil Marchesani, senior manager of route sales for The Philadelphia Coca-Cola Bottling Co., was worried about his employees and the mom-and-pop stores that he distributes to in Center City and South Philly.
“They’re really nervous and worried about this income,” the native of 23rd Street and Snyder Avenue, who now resides in Delaware County, told Schwartz. “You just can’t start selling apples and oranges overnight.”
But the soda industries also make bottled water and fruit juices, which many may switch to if the tax goes into effect, Schwartz said.
“My hope is that what will happen both for small businesses and the bottlers and the people who work there is that people will continue to drink, but they’ll drink less,” he said.
While storeowners are still frantic, they have been relying on Marchesani to keep them in the loop on the latest with the proposed tax.
“The crazy thing about it is we don’t talk about family and sports,” he said after the meeting. “The first thing they ask is ‘what did you hear?’”
The deficit is nothing new to the city as it has been cutting and trimming its budget since November 2008 when the first $108 billion shortfall was discovered. In January ’09, Mayor Michael Nutter announced $1 billion deficit over the course of the five-year plan. To combat it, he proposed a temporary real estate and a sales tax hike. City Council did not approve the former, and the latter dragged through the General Assembly for passage as the state dealt with its own budget crisis. Plan C, which consisted of 3,000 layoffs including cuts to police and fire departments, was halted on Sept. 17, ’09 when the Senate approved the bill to allow the city to increase its sales tax by 1 percent and defer pension payments.
For the five-year plan for fiscal years ’11 to ’15, Nutter decided against cutting services — many of which are still hurting from cuts from the previous two years, Schwartz said. Even if the city closed recreation centers, libraries and health centers in addition to halting park maintenance, it would not be enough to close this year’s deficit of $130 to $150 million.
“The mayor looked at that and said, ‘if we’re going to have to future as a city, we need to have a different strategy. We have to figure this is a short-term problem. During this period of time, rather than cutting all the things like street services and other things that have been cut already, we need to find a way to have everyone pitch in and increase revenue,’” Schwartz said.
One program already factored into the budget is the tax amnesty program — launched May 3 and running through June 25 — that will give residents an opportunity to catch up on back taxes owed to the city.
Through the program, the penalties are waived and only half the interest is due, but it’s not a free pass, Marisa Waxman, director of policy planning and outreach for the Department of Revenue, said.
“Everyone still needs to pay all of their principal and half of the interest, but we do want to give folks a hand,” she said. “We also want to bring in as much revenue as we possibly can as quickly as we can.”
Through an application, individuals and businesses can apply for the city’s first amnesty program since 1986, which is expected to net $25 to $30 million in revenue, she said.
“Afterwards, we are stepping up the enforcement,” Waxman said. “We got some new tools and some fines and fees that Council approved, so if you don’t come in under this program, there’s a lot more severe consequences.”
Aside from the proposed sugar-sweetened beverage tax, the trash tax — or Keep Philly Clean service fee as the city has dubbed it — has been proposed to close the budget gap. It will not only pay for weekly trash pickup, but also other General Fund services in addition to bringing back mechanical leaf collection and citywide crews to help keep the neighborhoods clean. The fee will cost property owners $300 a year, which averages to $5.77 a week, or $450 for multi-dwelling units. The Real Estate Tax Installment program can offset the fees for low-income residents and Recycling Rewards Program, which kicked off in South Philly earlier this month, can compensate all residents.
“This fee as it is proposed will allow us to pay for trash so that the General Fund can instead be used for libraries, police, fire, prisons and other things,” Tolson said.
However, since the fee is not tax deductible, City Council is considering other options such as a real estate tax, Tony Radwanski, spokesman for City Council President Anna Verna, said Tuesday.
Tolson told residents the importance of recycling especially with the start of the rewards program. Trash costs the city $65 per ton while the city is being paid $25 for each ton of recyclables, Tolson said.
“Right now we spent approximately $45 million for the privilege of throwing trash in a hole and we don’t even own the hole,” she said.
But South Philly has become the best performing area when it comes to recycling beating neighborhoods like Chestnut Hill and the Northeast, she added.
“Some areas in South Philadelphia are doing over 25 percent,” she said. “That is great. We need everybody to be there.”
Contact Staff Writer Amanda Snyder at asnyder@southphillyreview.com or ext. 117.
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