Will Durkan’s High-Stakes Gamble With Soda Tax Revenues Pay Off?

On Monday, the city council is poised to pass legislation sponsored by council member Mike O’Brien that would require any unanticipated revenues from the sweetened beverage tax (SBT) to be spent on their intended purpose—increasing funding for healthy food programs in the low-income communities most impacted by the soda tax.

Mayor Jenny Durkan has portrayed the move as a “cut” to programs that have historically been funded through the city’s general fund, but which the mayor’s 2019 budget started funding with the new tax, allowing her to use the “excess” general fund money to pay for other things. After Durkan and her department heads contacted human services providers last week to let them know that their funding could be eliminated if they didn’t help defeat O’Brien’s legislation, dozens of organizations—and the city’s own soda tax advisory board—rebelled, sending emails to Durkan and the council denouncing the hardball move. UPDATE: As of Sunday night, the groups opposing Durkan’s position—and supporting the idea that soda tax revenues should be spent on new or expanded programs, not used to backfill funding for existing ones—included groups representing the city’s farmers markets, human service providers, advocates for equitable investment in South Seattle, the Sweetened Beverage Tax Community Advisory Board, and 27 food banks.

Council member Mike O’Brien proposed the legislation after Mayor Jenny Durkan balanced her budget last year by taking away $6 million in general-fund spending on healthy-food initiatives (like food banks, Fresh Bucks, and school-lunch-related programs) and replacing that money with soda tax revenues; Durkan’s budget switcheroo went against the intent of the soda tax by using soda tax revenues to fund the city’s existing healthy food programs rather than expanding them or creating new ones. Effectively, Durkan’s budgetary sleight-of-hand eliminated the race and social justice compromise embedded in the tax: Instead of reinvesting the tax in the hardest-hit communities, the new budget maintained those programs at existing levels. Put another way, a regressive tax with a race and social justice component became just a regressive tax. O’Brien’s legislation would prevent this from happening in the future, by stating that (as a council staff memo puts it) “no SBT revenues could be used to supplant (i.e. take the place of) General Fund (GF) monies or other funding sources.”

In a letter to human services providers urging them to testify against O’Brien’s legislation Monday, interim Human Services Department director Jason Johnson Johnson wrote, “Your contract is in jeopardy because of a recent Seattle Council legislative action.

Although O’Brien made clear a year ago that he planned to propose this legislation (giving the mayor’s office ample time to make their case against it), Durkan didn’t respond publicly until this week, when she sent out a blistering press release “denounc[ing]” and “condemn[ing]” the council for “a proposed plan … that would cut $6.3 million funding they had approved for critical programs that provide nutrition assistance, child care for struggling families, and nursing care for low-income pregnant women.” (Durkan’s public statement followed a letter her budget director, Ben Noble, sent to the council making many of the same points late last month.)

Durkan’s press release went on to enumerate some of the previously existing programs that the city, under her budget, began funding with soda-tax revenues instead of general fund dollars last year, including the Fresh Bucks food voucher program, food banks, child care assistance, and the Nurse Family Partnership. (The council approved the budget 8-1. Durkan’s letter cites this vote to suggest that the the council supported this specific aspect of the budget, which many of them did not).

Council members O’Brien, Lisa Herbold, Lorena Gonzalez, and Teresa Mosqueda responded with a letter of their own, arguing that the legislation merely codifies what the law already said—that new soda tax revenues should go toward new programs promoting healthy food, not be used to supplant general fund revenues used to fund existing programs. “Community advocates led the fight to ensure sweetened beverage tax revenue have a direct community benefit for the most impacted community by this regressive tax,” the council members wrote. “[T]he very programs the Mayor claims would be ‘cut’ should see increases in funding to expand those programs in the Mayor’s proposed 2020 Budget, assuming she does not chose to once again raid those funds for alternate priorities.”

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Durkan’s lobbying efforts didn’t stop at the council; her deputy mayor, Mike Fong, directed interim Human Services Department Director Jason Johnson and Department of Education and Early Learning director Dwane Chappelle to send letters to the agencies whose operations were funded by the tax last year informing them “that they should commence contin[g]ency planning as soon as possible” and urging them to show up and testify against the proposal during the council’s public comment period on Monday. In his letter to providers, Johnson wrote, “Your contract is in jeopardy because of a recent Seattle Council legislative action.” (Bolds in original.)

Johnson’s letter continued:

Last November, the adopted and endorsed 2019-2020 Biennium Budget, passed by an 8-1 vote and signed by the Mayor, allocated Sweetened Beverage Tax revenues to support food and education related assistance programs. The law currently permits soda tax revenues to be used for food and nutrition programs, education and child-based programs, job retraining and placement programs for workers adversely impacted by the tax. Unfortunately, the Council has now changed its mind and would rather have this $6.3M in revenue support unspecified new programs next year while providing no funding to back-fill the cuts to currently funded programs.

This legislation is scheduled for the vote of Full Council at its Monday, July 22 meeting, which starts at 2:00 p.m. Councilmembers will take public testimony on the legislation before final action.

The effort appears to have backfired. Instead of agreeing to show up and lobby on the mayor’s behalf, the Seattle Human Services Coalition and Got Green, an organization that fights displacement and promotes economic opportunity and equitable investment in South Seattle, wrote letters of their own denouncing the mayor’s tactics. UPDATE: Four more organizations representing farmers’ markets, including the Pike Place Market Foundation and the Seattle Farmers Market Association, have signed a separate letter condemning the mayor for blaming any future budget cuts by her office—which writes the budget—on the council. To do so, the groups wrote, “assumes that we are uninformed of the City’s budget process and the funding sources used to support the totality of our programs.”

“If the mayor does not propose funding in the 2020 budget from a source other than [Sweetened Beverage Tax], as your Council Bill would direct, it would be the mayor who is proposing the cut, not Council.” —Letter from the Seattle Human Services Coalition about Durkan’s response to the council’s soda tax legislation

The Human Services Coalition, which represents nonprofit human services providers, wrote that they are “disappointed by the communications from HSD, DEEL, and the Mayor’s Office to our organizations. … Characterizing this legislation and its impact as ‘jeopardizing’ 2020 contracts to current, successful services is at best misleading.

“It is the Mayor’s role in our three-branch system to implement policies which City Council legislates, and so up to the mayor if she will propose cutting the services instead of identifying an alternate fund source from the $6 billion annual revenue that comes into the City of Seattle.  If the mayor does not propose funding in the 2020 budget from a source other than SBT, as your Council Bill would direct, it would be the mayor who is proposing the cut, not Council.”

“It is entirely in the Mayor’s power, and in fact, is her responsibility, to find an appropriate, more stable funding source for the programs where SBT revenues were used to supplant general fund dollars.”—Letter from local farmers’ market organizations

Separately, Got Green urged its members and supporters to show up Monday to support the legislation and prevent Durkan from “pull[ing] millions of dollars that the council and previous mayor had promised for Food and Early Childhood Education programs and dump[ing] it in the general fund (where it becomes impossible to track and she can spend it on whatever she prioritizes.”

The email calls Johnson’s letter to providers an “ultimatum that organizations will have funding reduced unless they show up at a council meeting on Monday to provide public testimony against the ordinance to protect Food Security and Early Education Dollars.”

“Efforts to portray this legislation and its impact as causing funding cuts to organizations in POC and low income communities is not only misleading, but intentionally deceptive,” Got Green’s letter continues. “As community-based organizations working tirelessly to serve vulnerable Seattle residents, most are allied and will refuse to take your bait in attempting to pit our organizations and our issues against each other in the name of scarce funding and funding cuts.”

The farmers’ markets’ letter notes that the soda tax is an unpredictable funding source (increasing when soda consumption is up and decreasing when it is down) that should be used for one-time programs, not to fund ongoing needs that would ordinarily be paid for by the more stable general fund. “In order for programs to establish themselves, show impact, and grow to meet the rising need for food security in the City of Seattle, reliable and consistent sources of funding for these critical programs are needed,” their letter says. “It is entirely in the Mayor’s power, and in fact, is her responsibility, to find an appropriate, more stable funding source for the programs where SBT revenues were used to supplant general fund dollars.”

The mayor’s office has confirmed that she plans to veto the legislation, which means it will eventually need the support of a veto-proof six-member majority to override her veto even if it passes with just five votes on Monday. If the council does decide to call the mayor’s bluff, it will mark a major shift in council-mayor relations: Although this council has frequently fought with Durkan over spending, they’ve typically gone along in the end—voting, for example, to kill the controversial “head tax,” which Durkan opposed, after passing it last year. Lately, council members (particularly Gonzalez, Mosqueda, and Herbold) have been pushing back on Durkan more forcefully—including last week, when the three called on the mayor to reopen police contract negotiations in light of a judge’s finding that the city is partially out of compliance with federally mandated reforms.

The council’s soda tax legislation passed out of committee unanimously, with five votes, on July 10. I’m calling around to council offices and will update this post if I find out more about how the remaining council members plan to vote.

5 thoughts on “Will Durkan’s High-Stakes Gamble With Soda Tax Revenues Pay Off?”

  1. Both the sweetened beverage tax and the “congestion fees” discriminate against low-income people & people of color.

  2. One question I have, and it may have been answered somewhere else, but has the soda tax reduced the sales of soda? Also, so I guess I have two questions, if this tax is regressive, what about refunding (reducing) the tax.

    1. My guess would be it hasn’t reduced sales or consumption of soda considerably, especially since it’s generating more revenue than expected.

      Just like I would guess the eventual congestion tax will not reduce vehicle trips into downtown, but it will generate a lot of revenue for the “general fund.”

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