News Room

Mayor Kenney delivers first budget address

Mayor Jim Kenney’s first budget address, delivered before City Council on Thursday, featured a number of initiatives revolving around “five interlocking programs” that will deliver the core services the new mayor said Philadelphians are calling for.

Those programs include: universal pre–K; the creation of 25 community schools; a $350 million investment in community infrastructure; issuing $100 million in bonds to make energy efficient infrastructure improvements to branch libraries, police stations, fire houses and other city properties; and an additional $26 million investment in the city’s pension fund over the next five years.

Kenney’s budget will cost $4.17 billion — a $100 million increase from the budget proposed last year by his predecessor, Michael Nutter. The mayor’s budget also includes various business and individual tax breaks, and funding for storefront improvements in neighborhood shopping corridors.

To help make this work, Kenney proposed a 3–cents–per–ounce tax on sugary drinks, which he said would raise $400 million. That tax rate could increase the cost of a 1 liter bottle of soda by up to 40 percent.

“I am proposing to pay for this pension investment as well as for quality pre–K, community schools, and investments in community infrastructure and energy efficiency, by levying a 3–cent tax on sugary drink distributors,” he said. “The problem is that big soda charges our citizens, small businesses, and distributors much, much more than what it costs for them to make the soda. And then, they use some of those profits to fund lobbyists, who come here and say that a tax on sugary drinks will cost jobs and devastate small businesses.”

Kenney said when he voted against Nutter’s plan for a similar tax, it was because he fell victim to the beverage lobby’s “pretty persuasive” argument that instituting such a tax would hurt low–income and minority families.

The mayor said data has shown him the opposite to be true.

“The line that really got me four years ago was the claim that this tax would hurt low–income, minority communities,” Kenney said. “That’s a really concerning claim; but, the truth is that soda companies are the ones actually targeting their advertising at low–income, minority communities. A 2009 study found that lower–income African-American and Latino neighborhoods have far more outdoor ads for sugary drinks than higher income neighborhoods or white, low–income communities.

“Researchers at Yale also found that African–American youth see 80 to 90 percent more ads for sugary drinks than their white counterparts.”

An operator of a local store affiliated with the “No Philly Grocery Tax” campaign said in a statement he will have no choice but to pass on the tax to customers.

“Our market is a community anchor and operates on small margins,” said Enerolina Rodriguez, who owns the Rodriguez Grocery in North Philadelphia. “I will have to pass a soda tax on to my customers. Two bad things will happen: either they won’t be able to afford the high prices, or the higher prices will keep them from buying other products. My business won’t be able to absorb these losses. This tax is unfair to small businesses like mine and to the working families who shop with us.”

The coalition also noted Kenney’s proposal is 33-percent higher than Nutter’s failed 2-cents-per-ounce proposal.

Council President Darrell Clarke said he will “fully support expansion of quality pre–K programs in the most challenged neighborhoods” and upgrading recreation centers and parks, but the administration needed to be careful on how it gets there.

“I believe that the most basic theme of every budget season should be fairness: fairness in educational and employment opportunities, fairness in access to public amenities, fairness in housing quality and affordability, and fairness in the criminal justice system,” he said. “Since I was first elected Council President in 2012, Council has raised taxes every year in order to address state funding cuts to our state–controlled school district. State disinvestment in Philadelphia public schools, and local taxes Council raised to blunt the blow to our communities, were deeply unfair to local taxpayers.

“As we begin a public dialogue on Philadelphia’s present and future, we must be diligent in examining all funding paths in the context of prior tax increases and broad consensus on what basic fairness means,” Clarke added.

The Greater Philadelphia Chamber of Commerce said it supported the mayor’s commitment but didn’t specifically say it supported the drink tax.

“The Greater Philadelphia Chamber of Commerce supports Mayor Kenney’s commitment to restarting wage and business tax reductions to spur economic growth and job creation, as well as the promise in his proposed budget to expand access to quality pre–K education for Philadelphia children and to fund other education and community development activities,” a statement said. “These issues — supporting tax reform, economy building, and public education — are inextricably linked and that is why they have always been public policy priorities for the Chamber of Commerce and its members.”

Kenney’s proposed budget will also reduce wage taxes from 3.9 percent for residents to 3.7 percent, and for non–residents, from 3.348 percent to 3.33 percent by 2021. Kenney’s proposal also calls for an increase in workforce development efforts and more support for start–ups.

The education sector, too, seems to have bought into to the mayor’s vision.

Education Law Center–Pennsylvania Executive Director Deborah Gordon Klehr said Kenney’s proposal “will put Philadelphia on the path to providing pre-kindergarten opportunities to every child” in the city.

“Research clearly demonstrates that quality, inclusive pre–K programs set children on the trajectory to academic success and help our most at–risk children — particularly those with disabilities and those victimized by neglect and trauma — enter school ready to learn,” she said. “The city also has an important obligation to support basic K–12 education and ensure that all children have the support they need to be successful in the classroom.”

Philadelphia Federation of Teachers President Jerry Jordan said Kenney “showed his earnest commitment to his campaign promises of ensuring that all of our children have access to quality education,” and now it’s time for the residents to step up.

“The mayor today emphasized the urgency for education funding and concrete revenue streams to move an agenda of Pre–K and Community Schools forward. On behalf of the PFT, I express our utmost support for the mayor’s proposed modest soda tax, anticipated to generate $400 million over five years,” he said. “Within this significant revenue source, the mayor has committed to investing $256 million towards pre–K and $39 million towards community schools.

“With these revenues directed towards clearly tangible and pedagogically sound educational strategies, it is incumbent upon the citizens of Philadelphia to support the mayor’s proposals,” Jordan added.

Some members of Philadelphia’s faith–based community are on board with Kenney’s proposal.

“I support the mayor’s programs and the tax he’s raising to fund them,” said the Rev. James Hall, senior pastor of Triumph Baptist Church. “It’s just that simple. We need these programs in our communities.”

The Rev. Kevin Johnson, director of the Philadelphia Opportunities Industrialization Center and pastor of Dare to Imagine Church, said he, too, was in favor of Kenney’s plan, specifically the education–related items.

“Given the 26-percent poverty rate in Philadelphia and the need to give our children an educational head start, the $400 million investment of the sugar tax has the potential to educate children and create apprenticeship workforce programs in communities that need them the most,” he said.