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Philly’s controller says only 30% of soda tax revenue has been spent. She wants more transparency.

City Controller Rebecca Rhynhart is calling for the city to keep the beverage tax revenue in a separate account.

A customer reaches into a beverage cooler. Philadelphia has a 1.5 cents-per-ounce tax on soda and other sweetened beverages.
A customer reaches into a beverage cooler. Philadelphia has a 1.5 cents-per-ounce tax on soda and other sweetened beverages.Read moreElaine Thompson / AP

Philadelphia’s tax on soda and other sweetened beverages raised $193.8 million between January 2017 and the end of the last fiscal year in June, but only $59.2 million or 30.5%, of that revenue has been spent, according to data released Wednesday by City Controller Rebecca Rhynhart.

The remaining $134.6 million is in the city’s general fund.

Rhynhart has called for the Kenney administration to keep the beverage tax revenue in its own separate account, because the tax was implemented to pay for pre-K, community schools, and the Rebuild program to improve parks, recreation centers, and libraries. She renewed that call Wednesday.

“I know that the mayor’s office has said that it will eventually spend on those things,” Rhynhart said, “and I continue to push for them to segregate this money to make sure that the revenue’s spent only on what was promised to voters.”

Mike Dunn, a spokesperson for Kenney, said that the administration appreciated Rhynhart’s commitment to transparency, but that he hoped she was not trying to perpetuate the beverage industry’s claims that the money from the tax is being diverted for other purposes.

“We have always said that revenue would outpace spending in the early years of the program, but that after the programs ramped up, spending would eventually be greater than the amount of revenue generated by the tax,” Dunn said in a statement.

Ongoing battles over the legality of the tax kept much of the revenue on hold. After the Pennsylvania Supreme Court upheld the tax in July 2018, city officials said they would begin to spend the money that had been reserved in the general fund.

The data Rhynhart released Wednesday, part of an ongoing effort to release quarterly updates on beverage tax revenue, showed the tax pays for all salaries in the Mayor’s Office of Education. Rhynhart called that a sign that it may not be being used solely for the programs it was intended to fund.

“It definitely seems from looking at it that they’re moving costs off of other revenue sources just to be covered by the soda tax instead of just using the soda tax specifically just for the three programs that it’s supposed to,” she said.

Dunn said the Mayor’s Office of Education exists to administer the pre-K and community schools programs, so “it is entirely appropriate that those salaries are funded by the tax.”

Some critics of the 1.5 cent-per-ounce tax expressed concern, when City Council voted in 2016 to enact it, that the revenue would not be reserved solely for pre-K, community schools, and the Rebuild program. Without a separate account for the tax revenue, she said, that suspicion will continue.

“Moving it to a segregated account would go a long way,” Rhynhart said.

Anthony Campisi, a spokesperson for the Ax the Philly Bev Tax coalition, said the controller’s latest data show that the tax “was not necessary to fund critical programs like pre-K and Rebuild.”

Dunn, meanwhile, said Rhynhart’s suggestion of a segregated reserve account is “a red herring that plays into the beverage industry’s attempt to portray the use of the general fund as something nefarious.” The city is still tracking and reserving funds to assure they are spent as planned, he said.

The data released by Rhynhart’s office also conflict with spending figures that the administration gave to The Inquirer in August showing nearly $9 million more in expenditures. The administration’s numbers were higher because they included money known as encumbered funds, meaning they were dedicated to certain contracts or projects but not yet paid from the city’s accounts.

Dunn said that encumbered funds account for money that the city is obligated to pay, and that it would be deceptive to exclude them.