Why cost of soda could surge in Cook County

Soda drinkers in Cook County will feel a pop in their wallets if a penny-per-ounce tax on "sweetened beverages" is approved by the county board.

The new tax is the centerpiece of County Board President Toni Preckwinkle's 2017 budget. The tax is expected to generate $74 million next year and help close an anticipated $174 million budget shortfall. Preckwinkle expects to cut costs by $78.5 million more through a series of cost and personnel reductions, which includes 300 layoffs. Layoff notices have already gone out to the affected employees, she added.

The new tax would be on bottled and fountain sodas and on any other drinks that contain sugar or artificial sweeteners, like lemonade or most energy drinks. Milk and baby formula would not be subject to the tax, county officials said. If approved, it will go into effect in July. The anticipated revenue is only four months' worth of collection, county officials said.

A two-liter bottle of soda would generate 68 cents of new tax revenue. Consumers would pay a total of 77 cents in taxes when the 10 percent sales tax is included, bringing the total cost of a two-liter bottle of soda from 89 cents (the sale price Thursday at Jewel-Osco) up to $1.66.

It would take sales of 108.8 million two-liter bottles to add up to the $74 million target revenue.

Opponents of the new tax, mainly retailers and distributors, said families who are already facing increased property taxes, water fees and the county's own sales tax hike last year shouldn't be subject to a new "grocery tax."

"Now is not the time for Illinois families to endure a tax on their groceries," said Illinois Beverage Association Acting Executive Director Claudia Rodriguez. "Enough is enough."

Last month, the American Beverage Association filed a lawsuit against the city of Philadelphia after a similar tax was instituted there. The group claims the tax is unconstitutional.

Preckwinkle said she isn't going to let the potential threat of a lawsuit guide public policy.

The money generated from the new tax will go toward public safety initiatives and stave off more layoffs, officials said.

"We will designate a significant portion of our funding to support collective impact initiatives that work to address violence in our most at-risk communities, and allow us to strengthen the efforts of more community-based organizations working on the ground to support our larger effort to create safe and stable communities throughout Cook County," Preckwinkle said in a prepared statement released shortly before the budget document was made public Thursday.

Preckwinkle pledged not to raise taxes for three years if the new tax is approved.

She added that tax is also expected to improve public health by reducing the sweetened-drink consumption, much like increased taxes on tobacco products have reduced the number of smokers. She called the tax a "disincentive" to "pop" drinkers.

Similar initiatives are up for public vote in California.

Preckwinkle is no stranger to controversial tax proposals. She proposed a 5-cent bullet tax a few years ago, abandoned it and then brought it back this year.

This will be the second year in a row that Preckwinkle has proposed a significant tax increase to cover county costs. Last year, she persuaded the county board to approve a 1 percentage point increase to the county's sales tax rate to help cover pension costs. However, Preckwinkle's proposed 2017 budget shows that revenue from that increase didn't come in quite as high as expected.

At the start of the budget process last year, the county anticipated $663.5 million in sales tax revenue. Now, they are projecting $642.5 million, a difference of $21 million or a 3.2 percent decline from the original budget amount.

The board is expected to take a vote on the measure in mid-November.

"I think we'll get the nine votes we need," Preckwinkle said.