How Mayor Nutter's soda-tax proposal lost out to property tax

Posted: June 18, 2011

Philadelphians let out a collective gasp Thursday when, after weeks of proclaiming they wouldn't raise property taxes, City Council members did exactly that.

So why did homeowners get screwed? In the end, Council believed that the cash-strapped schools really did need more dough. But it just couldn't commit to Mayor Nutter's preferred soda-tax plan - likely due both to aggressive lobbying by the soda industry and Nutter's weak relationships with some Council members.

So they did what they do best. They made a deal - a deal for a temporary 3.85 percent property-tax increase, the second hike on real-estate taxes in two years. Combined with several other measures, the district will get $53 million in aid.

"I just think it evolved," said Councilman Bill Greenlee. "I couldn't justify doing nothing. I understand the concerns."

Getting to the deal, which received committee-level approval Thursday and is expected to receive final passage this coming Thursday, took a long day of backroom arm-twisting, personal pleas and more than a few choice expletives. Here's how Thursday unfolded.

When Council began its day at 9 a.m., it wasn't clear there were the nine votes needed to pass either of Nutter's funding proposals, a 2-cents-per-ounce tax on sugary drinks or a 10 percent property-tax hike. Members were suspicious of the school district's $100 million request and of Superintendent Arlene Ackerman's priorities.

Nutter badly wanted the soda tax, after failing to get it through Council last year, when it was billed as an anti-obesity effort. Some said that the mayor promised aid to supporters and bumpy times ahead to opponents. The administration declined to comment on private conversations.

Meanwhile, anti-soda-tax forces were lobbying just as hard, with a small army of executives, lobbyists and union leaders in Council chambers. Soda mogul Harold Honickman, owner of the Canada Dry Bottling Co., in Pennsauken, was seated in the waiting area of Council President Anna Verna's office before 9 a.m.

"The right decision is no soda tax," said Honickman, whose family has also been persuasive with its pocketbooks, contributing this year to the campaigns of Council members Greenlee, Bill Green, Maria Quinones-Sanchez, Darrell Clarke and Jannie Blackwell, as well as to Nutter.

Council's opinions fluctuated wildly throughout the day, but about 1:30 p.m., there were nine votes for a temporary 1-cent-per- ounce soda tax.

"When we had the nine votes; the mayor had texted me, saying what was going on. I texted him and said we had nine for soda," said Councilman Frank DiCicco, adding that he then briefly left Verna's office where talks were held. "When I walked back in, there were no longer nine votes. I wrote him back and said, 'They're off the soda; it looks like property.' "

What happened? DiCicco said he wasn't sure. But the anti-soda- tax lobbying was intense, with threats of jobs leaving the city. Some Council members didn't like the way the tax was structured, or that one year the tax was about obesity and the next just revenue. And some were always more sympathetic to the property-tax plan, like Quinones-Sanchez, who has a Coca-Cola bottling operation in her district, as well as bodega owners.

"I've always said property was my preference," Quinones-Sanchez said Thursday. "I was working to find a resolution."

Deals were made, too. Greenlee agreed to back property taxes, in part in exchange for Councilman Green's support for his sick-leave legislation.

As Council switched gears, Nutter holed up in Councilman Curtis Jones Jr.'s office for much of the afternoon, calling in members one by one, to get his tax proposals back on track.

By about 5 p.m., a 3.85 percent one-year property tax, which would provide $37 million in funding, appeared to have a majority. But Nutter wasn't happy. According to Council members, he asked for a 5 percent hike instead, saying he needed more money. Most members took a position that Nutter should be happy with what he gets.

At 8:20 p.m., Council voted the 3.85 percent property tax out of committee. Shortly afterward, the mayor declared victory, but insiders said he was fuming.

Critics said Nutter's lack of strong allies in Council may have impeded his efforts.

"You have to spend 3 1/2 years putting nine votes together before you start muscling people," said one Council member.

Nutter's staff said he was foiled by the soda industry, but argued that getting the schools money was a win. Still, former Managing Director Phil Goldsmith said that Nutter will feel a sting.

"On the one hand I applaud him for taking on the fight," said Goldsmith. "On the other hand, if you take on the fight and don't win it, in politics your opponents will take it as weakness."

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