Correction: This post was updated on June 30, 2017 to correct the judge assigned to the case. It is Judge Daniel J. Kubasiak, not Judge Allen Walker.
After listening to roughly an hour of arguments from attorneys representing Cook County and retailers, Circuit Court Judge Daniel Kubasiak delayed his decision on whether to impose a temporary restraining order (TRO) against the county’s sweetened beverage tax, set to be collected on Saturday, July 1. His order will be delivered at 2:30 p.m. Friday in Room 2005 at the Daley Center. Arguments focused only on whether a TRO should be granted, not on whether it should be struck down entirely.
David Ruskin, the attorney for retailers, argued one of the “most compelling” reasons to grant the TRO was because there was no mechanism to refund consumers if the tax was ultimately struck down. He said “it will be impossible for the county” to estimate the number of consumers paying the tax and adequately refund them. Customers could then file a class action suit against retailers, demanding their money back. County attorneys said the county could simply remit collections back to retailers, and customers could bring in receipts.
Ruskin said it was also unlikely retailers could comply with the county’s tax by July 1, given the number of revisions the county has made since June 1 (that SNAP purchases would be exempt, guidelines for shelf tags and menus, and distributor registration regulations). “The penalties, your honor, are monumental” for non-compliance–$1000 per offense. “Those penalties will put retailers out of business.”
The tax is also likely to be struck down because it’s unconstitutional, violating the “uniformity clause of the Illinois Constitution”–because similar drinks aren’t taxed the same way. Ruskin’s example was a Starbucks frappuccino–a bottled one bought at a store is taxed, but one made by a barista isn’t.
Cook County Assistant State’s Attorneys Sisavanh Baker and James Beligratis said while the regulations have been tinkered with in recent weeks, on its face, the tax has not changed, is not “impermissibly vague,” as opponents have argued and “doesn’t have to be perfect.” The beverage tax is similar to existing taxes on tobacco, cigarettes, gasoline, and bottled water. All withstood legal challenge, she said.
But Judge Kubasiak pressed county attorneys on several issues, asking: orange juice has natural sugar–why isn’t it taxed? Why not go after salt or fat? If the tax is for health purposes, why aren’t those revenues going to the county’s health fund?
County attorneys argued that the harm to the county and its residents is much greater if the tax is stopped than it is to retailers if the tax is allowed to continue. She recited health statistics about the sugary beverages, and its disproportionate health impact in minority communities. The county’s budget is relying on $67 million in revenue from the tax to be collected this year alone, and 2,600 positions are at risk, she said.
“Don’t go there. Don’t try to make the argument that they’re all necessary,” Judge Kubasiak said. Baker said she was only trying to demonstrate that halting the tax would do more damage to the county than to retailers.
Noting he’d only received motions 24 hours earlier, Judge Kubasiak asked both sides to submit arguments and draft orders in writing, and said he would have his final decision on Friday.