City Council President Darrell L. Clarke is floating an alternative to Mayor Kenney's sugary-drinks tax plan, several City Hall sources said Wednesday.
The proposal, among a handful being considered, slashes Kenney's 3-cents-per-ounce soda tax and instead considers what a 1-cent, three-quarters of a cent, or half-cent levy per ounce could pay for.
Clarke's plan dials back expenses and calls for revenue ranging from $29 million in the first year to $50 million at the end of 2021.
That is far short of the $95 million per year Kenney wants. Clarke's plan would still cover the creation of community schools and a plan to rebuild parks and recreation centers at about the level Kenney wants, according to a document outlining the options.
Money for pre-K, however, would decrease dramatically. Instead of $60 million a year to pay for 6,500 new seats over five years as Kenney wants, the Clarke proposal would raise $19 million a year toward 2,000 new seats.
Also missing from the option is the $26 million Kenney wants to take from tax revenue to put into the pension system, which has a $5.7 billion deficit.
A breakdown of the tax rates shows a 1-cent rate would bring in about $57 million a year, 0.75 cents $45 million a year, and 0.5 cents $31 million a year. Only the 1-cent rate fully covers the cost of Clarke's plan in the fifth year.
Clarke spokeswoman Jane Roh declined to comment.
Lauren Hitt, a spokeswoman for Kenney, called the proposal discouraging.
"A plan that leaves 20,000 children without quality, affordable pre-K is not what they want or need," Hitt said. "We have the ability to pay for three times as many children to attend quality pre-K. Why would we do anything less?"
All day Wednesday, Council held hearings on the sugary-drinks tax. During the hearings, Clarke did not sound like someone considering a drink tax of any amount.
He put up a map of low-income areas and the corner stores surrounding them, and asked Finance Director Rob Dubow how the tax could not disproportionately affect poor people.
"I want acknowledgment [that] consumption is primarily in low-income neighborhoods," Clarke said. "I don't know why it's that difficult to say."
Dubow conceded that consumption would drop off in areas where it is now highest.
Clarke also said comparing Philadelphia to Mexico, which enacted a soda tax last year, was like comparing "apples to trees."
Several alternative ideas came out of the hearing.
Councilwoman Blondell Reynolds Brown said her office was looking into whether a container tax could work. Baltimore has a 5-cent tax on bottles sold in the city.
Councilwoman Maria Quiñones-Sánchez questioned whether there wasn't money hidden in the current $4 billion budget to at least initiate Kenney's programs in the first year.
Councilman Allan Domb pointed to the millions owed in delinquent taxes and also asked if the city could increase courthouse fees, which he said had not been updated since the 1980s.
Domb suggested that including diet sodas in the tax would broaden the base of consumers affected.
Potential legal challenges to the tax also came up.
City Solicitor Sozi Tulante said the tax did not qualify as a "duplicate" sales tax on sugary drinks because it would be levied on distributors with no requirement that it be passed on to retailers.
Earlier in the hearing, however, Dubow acknowledged to Councilwoman Helen Gym that distributors had told the administration they would pass the tax on.
Gym made a point of emphasizing that was their choice.
"If wealthy distributors choose to pass on the tax, then it's their choice to avoid the obligation in that sense," she said.
Harold Honickman, owner of the Honickman Group, one of the nation's largest privately owned bottling and distribution organizations, has said he would have no choice but to pass the tax on. He attended the hearing and broke away briefly to meet with Clarke.
Tulante said a second legal challenge could be that the tax unjustly singles out sugary drinks. Tulante told Council members that was where the city would argue for the health benefits of a decrease in consumption of sugary beverages.