During a closed-door budget briefing yesterday, top administration officials told City Council members that one idea they are pondering to generate cash is a tax on sugary drinks.
Several members who attended the session said that a tax on soda and sugary beverages had been floated only as a preliminary idea. Still, it shows that with another tough budget gap looming, Mayor Nutter and his team are searching for creative ways to boost revenues.
"That's a possibility," said Council President Anna Verna. "I think it's a penny on the ounce or some such thing. They're exploring it."
Finance Director Rob Dubow wouldn't confirm that such a tax was on the table, saying that it was too soon to talk specifics on any of the revenue ideas up for consideration.
"There are a number of things we're looking at," Dubow said. "Everything is very early."
The idea of a tax on soda and other sugary beverages has garnered significant attention nationally in recent months. The New England Journal of Medicine last fall published a paper that said that a sugary-drink tax could raise revenue and have a positive health impact.
Councilman Darrell Clarke said that he'd want to know that a soda tax would have a positive health impact.
"I think that any approach towards that should be dealing more with the health aspect, not simply us raising revenues," Clarke said.
Nutter is set to give his budget address on March 4. And the plan for fiscal year 2011, which starts July 1, is not going to be pretty. Several months ago, city officials put the deficit for this fiscal year at $31 million, but Dubow yesterday said that they expect it to be higher in the wake of disappointing tax revenues and the costly police-contract award.
"It's going to be another very rough budget year," Dubow said.
The budget is expected to include service cuts and possibly layoffs. As for boosting the city's revenues, it appears that the administration has limited options.
Hiking property tax seems to be off the table, given that assessments have been frozen until the current system is overhauled. Nutter has long opposed raising the wage and business taxes. And the city last year already temporarily raised the local sales tax.
So smaller revenue enhancements - like a sugary-drinks tax - may be among the city's only options. Because the discussion was so preliminary, it wasn't immediately clear yesterday if such a tax would require state enabling legislation.
Chicago taxes soda and some sugary snacks, but otherwise most drink taxes are levied by states, said Michael Jacobson, executive director of the Center for Science in the Public Interest, a group that has advocated such a tax on the federal level.
Jacobson said that about 25 states have some kind of tax on sugary drinks. New York Gov. David Patterson last month proposed a tax on soft drinks in his budget.
"No matter what the tax is, it would raise a significant amount of money," Jacobson said.