Ald. George Cardenas’ (12) says penny-an-ounce tax on sugary drinks he is proposing still has a chance to make it into Mayor Emanuel’s proposed budget scheduled to be unveiled next week, even though there was no vote on the ordinance after a lengthy two-hour hearing on the subject.

Members Present: Chairman George Cardenas (12), Vice Chairman Harry Osterman (48),  Brian Hopkins (2), Walter Burnett Jr. (27), Ariel Reboyras (30), Deb Mell (33), Tom Tunney (44).
Non-members: Emma Mitts (13), Raymond Lopez (15), Gregory Mitchell (17), Derrick Curtis (18), Ricardo Munoz (22).
Start Time: 10:17am

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Beverage industry reps clad in branded polos packed the City Council Chambers Wednesday morning, as health experts and beverage industry lobbyists sparred over whether the proposed tax on sugary drinks would lead to healthier Chicagoans or reduced profits for city grocers.

Ald. Cardenas’ so-called “Chicago Sweetened-Beverage Tax” broadens his original proposal from 2013 to include a tax on sugary powders and syrups. A 12-pack of of soda would cost an additional $1.44 under the plan. Milk, liquor, coffee, tea-based beverages, as well as any drink with less than 5 grams of caloric sweetener for every 12 ounces would be exempt. The tax could bring an estimated $134 million in new revenue to the city’s coffers.

But before Aldermen can vote on the proposal, it needs an okay from the City’s Law Department, which could take about week or more, according to Ald. Cardenas. If Cardenas gets the green light from the City’s lawyers, he could schedule a last-minute vote before the City Council meets at the end of the month. There’s also the possibility Mayor Rahm Emanuel could stick it straight in the budget, he says.

Mara Georges, a lawyer with Daley and Georges and former corporation counsel for Mayor Richard M. Daley, brought up the potential illegality of the new tax when she testified on behalf of the American Beverage Association. She said she expects the ordinance would fail in a court challenge, because soft drinks are already taxed twice to the cap–3% for cans or bottles bought in retail stores, and 9% on syrup used in fountain drinks, and the city could not exceed either.

There was little questioning or testimony from aldermen in attendance at yesterday’s hearing, with the exception of Ald. Tom Tunney (44), who has owned Lakeview staple restaurant Ann Sather since his mid-20s. He came out in opposition to the tax, questioning the accuracy of Ald. Cardenas’ data, and said business owners have been squeezed enough. “I just really feel that we’re really pricing ourselves out of the middle class,” Tunney said, claiming Chicagoans are already heading across the Indiana border for gasoline, tobacco, and a lower sales tax.

Tanya Triche, with the Illinois Restaurant Merchant’s Association, lauded Ald. Cardenas’ intent, but said grocers on the city’s fringe would at risk of shutting down if the tax goes through. “Why would anyone near borders buy here when they could go a couple blocks away?” she asked. She said the tax would nearly double the price of a two liter. “At some point it becomes too much.”

But Ald. Cardenas and health officials who testified kept pulling the debate away from business and toward the obesity and diabetes epidemic. Money from the tax would establish the Chicago Wellness Fund and an oversight committee to manage it. 98% of revenue would go toward the fund, with 75% earmarked for health education and fitness programs at Chicago Public Schools. The Chicago Department of Public Health would pick up the other 2% of anticipated revenue for administrative costs for the rollout of the tax.

Malik Nevels with the Illinois African American Coalition for Prevention says minority Chicagoans already face several barriers to living a healthy life from targeted marketing by beverage companies to poor physical activity infrastructure in minority neighborhoods. He sees the ordinance as a way to support health initiatives in communities, rather than squeezing families’ spending, “[The Chicago Coalition Against Beverage Taxes] can’t say it hurts low income communities.”

Like most other revenue-raising options aldermen have come up with, Mayor Emanuel was non-committal in a separate event Wednesday. “The notion of a sugar tax is all about curbing behavior,” he told reporters. “Changing people’s behavior can be a big savings financially as well as improve healthcare outcomes, so I am encouraging all the aldermen to come up with ideas.”

Speaking to Aldertrack after the hearing, Ald. Cardenas said he was encouraged and optimistic that his co-chair, Ald. Harry Osterman (48), sounded open to the ordinance. At Wednesday’s hearing, Osterman said everything is on the table going into the budget process. “Taxing policies put on tobacco products I think has had a significant impact,” he said. “Maybe the taxing is not where it needs to be to get people to choose healthier choices.”