Council Members Exploring Soda Tax in Montgomery County

Proposal could help fund early-childhood education programs

Beverages on sale in a retail store Andrew Metcalf

This story was updated at 1 p.m. on Oct. 30 to correct a reference to pre-kindergarten programs in Philadelphia.

A "soda tax" is being discussed in Montgomery County.

County Council members Tom Hucker and Hans Riemer are exploring the idea to tax sweetened beverages as a way to raise money to fund early-childhood education programs, according to council colleagues.

In an interview Wednesday, Hucker said he’s trying to learn more about a potential beverage tax, although he wouldn’t say whether he supports the idea or whether he’s lobbied other council members to support the idea. He said he has met with advocates to talk about the potential benefits of such a tax, but said the meetings weren’t significant.

One advocate who has met with Montgomery County officials about the idea is Leah Marcus from Bloomberg Philanthropies, which has backed taxes on sugary drinks in several U.S. cities.

Council Vice President Hans Riemer confirmed that he met with Marcus to talk about the idea. He said he also met with opponents of the idea.

“I think we need to explore a variety of options to fund early-childhood and after-school programming,” he said.

However, he didn’t commit to supporting a tax if legislation came before the council.

Hucker said he has also met with sweetened beverage tax advocates and noted other colleagues on the council have as well.

“It’s Montgomery County, there’s a lot of advocates often kicking around ideas of how to raise money for unmet needs,” Hucker said. “From what I know, it’s well documented how much damage sugar does to public health. Whether we want to do anything about it is an open question.”

Jurisdictions such as Berkeley, California, and Philadelphia have approved a tax of 1 cent or more per ounce on beverages sweetened with added sugar.

Hucker said that if any proposal moves past a discussion phase, there would be a robust public process to determine the level of support.

Riemer said his focus is to help young children get access to quality care.

“At the moment, my interest is focused on the county budget and this upcoming budget year,” Riemer said. “I’m trying to get as much funding for early-childhood programs through the normal budget process. I think that’s where should focus our efforts.”

Council member Marc Elrich, who is running for county executive, said he would consider supporting a tax on sugary drinks if all of the revenue went to early-childhood education programs. He said many families, including those in the middle class, struggle to pay for pre-kindergarten child care programs that can cost $12,000 to $18,000 per year for one child.

So far, Elrich hasn’t seen a proposal that shows taxing sugary drinks could generate enough revenue to significantly bring down the cost of early-childhood education in the county, he said.

He added that he wouldn’t move forward with a new tax, unless there was support from the community.

“This is not something you’re going to do over people’s dead bodies,” Elrich said. “There needs to be a really full discussion as to what the benefits are and the intentions. If it’s not tied to early-childhood education, it’s not interesting to me.”

He said the soda industry, which has fought such tax proposals around the country, is “in denial that sugar causes problems.”

“They’re not credible, like the tobacco industry,” Elrich said. “Let’s get away from the make believe and determine, will people endure this extra tax for something worthwhile?”

Elrich said there’s not enough money in the county’s general fund to fund new initiatives such as expanding early-childhood education.

Patrick Lacefield, a spokesman for County Executive Ike Leggett, said Leggett has asked county departments to examine funding cuts and ways to be more efficient as he works on his fiscal 2019 budget proposal.

“We’ll see if that is necessary as we see how tight the budget is,” Lacefield said.

Council member George Leventhal, also a county executive candidate, said he would not support a tax on sweetened beverages.

“I think it would provoke a split within the Democratic Party and broader community,” Leventhal said. “The amount of political controversy it would invoke would probably outweigh the potential. I’m not sure there would be a real public health benefit.”

He said he hasn’t seen evidence that the tax could generate enough revenue for early-childhood education programs in the county. And he believes the county should wait for the Kirwan Commission to finish its evaluation of state education funding before the county considers funding early-childhood education programs. He suggested that the state might try to fund those programs.

“I don’t think we should volunteer to tax ourselves when the state is looking at a major statewide investment,” Leventhal said.

He said the public might perceive an additional tax, on a commonly purchased consumer item, as a nuisance.

Council member Nancy Floreen said she would not support a soda tax or similar policy. However, she said she had not been included in ongoing discussions about whether to propose the measure.

Beverage industry members are already fighting the proposal in Montgomery County.

Seth Goldman, the CEO of Bethesda-based Honest Tea, a subsidiary of Coca-Cola, and Ellen Valentino, the executive vice president of the Maryland-Delaware Beverage Association, have met with council members to discourage them from pursuing any type of tax on sugary beverages.

Goldman, who co-founded Honest Tea to bring more organic, low-sugar drinks to the marketplace 20 years ago, said he would oppose any tax or measure “that would seek to limit access to our products.”

He said he supports efforts to fund early childhood education, but doesn’t believe a sweetened beverage tax is the way to do it.

“This is such a targeted, discriminatory tax. It doesn’t feel like effective government,” Goldman said. “We’re also in an era where people are resentful of government getting involved in personal behavior.”

Valentino said Thursday that her association, which represents non-alcoholic beverage producers and distributors in the region, would strongly oppose a new tax on sugary beverages.

“Working families and small businesses are tired of the tax pile-on that is picking at their pocketbooks and now entering their refrigerator and grocery cart,” Valentino said.

Meanwhile, health advocates are pushing the council to put forth a measure to try to reduce the consumption of sugary drinks.

Stuart Berlow, the senior director of government relations for the American Heart Association in the Washington, D.C., region, said the organization is supporting efforts nationwide to tax sugary beverages that could help reduce consumption of sodas and sports drinks.

“Science tells us that the reduction of added sugar in your diet will have benefits for heart health and other diseases as well,” Berlow said Thursday. “Research shows that with many products, when you increase their price, you’re motivating people to make other choices.”

He noted that places that instituted such a tax—such as Berkeley—have seen a reduction in sugary drink consumption and an increase in water consumption.

Like tobacco use, he said, changing unhealthy consumer habits takes increased education and time.

“Our hope is that people will, for a variety of reasons, reduce the amount of sugary drinks they consume per day and per week,” Berlow said.

Public opposition to similar proposals was recently seen in Cook County, Illinois. The county, which includes Chicago, put in place a tax of 1 cent per ounce on the sale of all sweetened beverages in the county, which went into effect in August. Two months later, the same board that approved the measure repealed it due to public backlash.

The board had approved the tax to generate $200 million in revenue to balance its 2018 budget, according to the Chicago Tribune.

After it was repealed, the paper wrote in an editorial, “At a penny per ounce on beverages laced with sugar or artificial sweeteners, the tax has reached deep into consumers’ pockets. And they understand the tax wasn’t about protecting public health. It was about feeding county government with more revenue.”

Riemer said he followed the Cook County situation closely and understands that a tax on sugary drinks is “a very contentious issue.”

Hucker said he hasn’t followed the Cook County developments “at all.”

Berkeley, the first jurisdiction in the U.S. to pass a soda tax in 2014, saw a 21 percent decrease in sugary beverage consumption in low-income neighborhoods a year after it was approved, according to a study by the University of California at Berkeley.

Philadelphia was the second jurisdiction to pass a soda tax, a 1.5-cent-per-ounce levy. It went into effect at the beginning of this year.

The Philadelphia measure has since drawn the ire of The Wall Street Journal editorial board and in September, the city’s controller’s office announced it would survey businesses to determine the economic impact of the tax on sweetened drinks. A soda industry lawsuit against the tax is pending in Philadelphia Supreme Court.

Until there’s an outcome in the court challenge, the city is holding off on a further expansion of seats for pre-kindergarten programs to be funded with the new tax. The city of Philadelphia added about 2,000 seats to pre-kindergarten programs for low-income families since the tax was approved last year, but is putting off plans to increase that number to 6,500, spokesman Mike Dunn wrote in an email on Monday.