COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON LABOR AND CIVIL SERVICE Room 400, City Hall Philadelphia, Pennsylvania Monday, October 27, 2025 10:08 a.m. PRESENT: COUNCILMAN JIM HARRITY, CHAIR COUNCILMAN BRIAN J. O'NEILL, VICE-CHAIR COUNCILWOMAN NINA AHMAD COUNCILWOMAN KENDRA BROOKS COUNCILMAN CURTIS JONES, JR. COUNCILWOMAN RUE LANDAU COUNCILWOMAN QUETCY M. LOZADA
Good morning, everyone. We're going to bring this to order to get through here today. Good morning, everyone. This is the public hearing of the Committee on Labor and Civil Service regarding Resolution No. 250028. I note for the record that a quorum of the committee is present. This hearing is now called to order. Mr. Kunkel, will you please read the title of the resolution being considered today.
Resolution 18 No. 250028 titled, Authorizing the Committee on Labor to hold hearings exploring the Sugar-Sweetened Beverage Tax and its impact on Philadelphia businesses, trades and consumers.
Okay. I want to start off with my opening remarks. I wanted to talk about why I have introduced this resolution. I have been hearing firsthand from my community that the consequences of this tax have been more bad than good, particularly for our most vulnerable residents. I have heard from the labor community about significant job loss and layoffs that have put their members in bad financial situations. I have heard of large businesses and local mom-and-pop shops, many small businesses are facing an uphill battle with customers opting for alternatives outside of our city or cutting back on spending altogether. The result has been a ripple effect of closures and reduced economic activity, which hurts our communities. I cannot emphasize enough that the most concerning is how this tax is perceived as a strain on the most vulnerable and poorest communities living in food deserts. These neighborhoods lack access to fresh, affordable food. This added financial strain from the beverage tax has put an extra burden on our constituents. As they face a loss of the SNAP benefits due to federal shutdown and the ongoing PA budget crisis, our low-income residents need support, not more financial burdens. I also know that this tax is intended to curb childhood obesity and to fund the important public resource universal PreK. I wanted to make it clear I and this Council body recognize the critical need for funding for PreK education in our city. However, I would like to explore ways to secure funding and elevate more stable, equitable funding resources that do not harm our most vulnerable communities. That being said, I just want to make sure people know I do believe that we should be paying for PreK. It gives children a leg-up. What I'm trying to do is just figure out a more stable funding source because the funding source that we have right now with this soda tax will not be able to sustain it in any kind of a way just to keep the 5200 kids that we are serving now. A bunch of states have already gone to universal PreK: Florida, Iowa, Oklahoma, Vermont, West Virginia, Wisconsin as well as the District of Columbia, Washington, D.C. I believe the state should be funding it. But with what they have going on right now, they can't even pass a budget. So the bottom line is that we have to figure this out for ourselves because I don't believe anybody is going to come and help us. We're not going to get any help from the federal government. As a matter of fact, it's just going to put a bigger burden when they cut off everybody's SNAP benefits. For me, again this is about stable funding, being able to give our kids the education they deserve. PreK is no -- it's a leg-up for everyone. I think we need to look at who is actually getting the services of the PreK. Not everybody actually should be getting it. If you're making 150 a person in your house, two-family household, that's $300,000. You should not be getting this subsidy. But there are people getting this subsidy who are making more than we make right here on City Council. So that being said, I would like to turn it over to the co-sponsor of this bill, first Councilman O'Neill, if he has any opening statement.
Yes, I'll try to be brief. It's very difficult on this subject. This was a mistake from the get-go. Let's face it, it was aimed at the Teamsters, not the stores. It's regressive to the point of we couldn't find a more regressive tax. And just the other day, there was something introduced in Council and the Administration supported it because it was regressive. It was a 1 and this is 100 in terms of regressive. You can't get more regressive. And then you take the money from it, which is enormous. I represent the border of Bucks and Montgomery Counties to a large extent. Jobs are gone, Pepsi plant. Why are they going to keep those jobs in Philadelphia? Businesses react. But the stores that used to have a loss leader of a two-liter bottle, and almost every cart would have one in it, that's still the same way in Bucks County and Montgomery County. In Philadelphia, you need a second job if you're buying that two-liter bottle. So it was a mistake. PreK, everyone was for PreK. Had there been a suggestion of a tax increase for PreK, it would have passed unanimously 5 years ago or whenever this fiasco 6 started. It's a job killer. It's 7 regressive. It's the most 8 regressive tax you could imagine. 9 It hurts people that 10 don't have cars, that are homebound, people that are poor and it shifts a shopping trip out of Philadelphia to the surrounding counties. It doesn't -- people don't go there for soda. Once they make that trip, they're buying their weekly groceries. The big purpose of this was something that was made up, made up out of thin air. We're going to have these mega projects, and we'll hear more about this, I'm sure. But everyone in this Council that represents a district has a capital budget for their playgrounds. It's split evenly. It has been forever. And this program, Rebuild they call it, they didn't decide to bring playgrounds up to some minimum level where people over the years may not have spent their money well on their playgrounds, even though they were getting a fair amount. They decided to build Taj Mahals in many cases, money that was way beyond the entire capital budget for the city, one playground. You know what happens when you build a playground and spend tons of money on it and make it the envy of everyone, all the playgrounds around it look terrible by comparison, but you've only funded one. You've overfunded it. And I personally have had experience with the Rebuild program. It takes forever. There's more red tape. A job in Rebuild costs three times what we can do a job for with our capital budget. Don't ask me why. The bulk of this soda tax is what I consider a failed program. Rebuild is an unnecessary program. You stick with the focus on PreK and it becomes a manageable expense for the taxpayer. Rebuild is what makes it even worse than the regressive part, the job loss part, because we're wasting money that we borrow. So we have borrowing costs and issuance costs on the bonds. I voted against it. I would have voted 16 times if I could have. That's how bad this is. We're not going to fix it today, but hopefully it'll be some things that will come to light that may help us right the wrong. Thank you.
Thank you, Councilman. I'd also -- yep, hold on. We also have translation services available today for anyone who needs it. That being said, I would also like to recognize that we were joined by Councilwoman Ahmad and recognize Councilwoman Kendra Brooks for remarks.
Thank you, Councilmember. As a mother and education activist, I've always been a strong supporter of the Philadelphia PreK program. Investing in the care and education for young children is one of the most important things we can do to improve the quality of life for working families. Free PreK has been a major benefit across the board, improving outcomes and reducing disparities in areas of health to literacy to financial stability. When the city provides free PreK, it allows parents to go to work, go to school, which boosts household incomes and economic mobility. It gives children the foundation they need to succeed in school and puts them on a path to avoid crime and violence down the line. It also creates jobs, jobs for child care providers, which is one of our most important underpaid professions. Since 2017, over 20,000 of the city's 3- to 4-year-olds have attended preschool for free. And nearly all of the seats are at providers considered high quality under state standards. All of these issues are near and dear to my heart, which is why I cast my vote in support of free PreK, along with 80% of Philadelphia voters in 2015. It is a widely popular program supported by decades of research. The Philadelphia PreK program is only possible because of the revenue raised by sweetened beverage tax. And while I understand that some folks see the tax as a burden, I know for a fact that our free PreK program is lifting the burden for many others. Child care costs are through the roof. And for many parents, single parents and married parents, the costs will prevent them from getting the job or starting a degree. The same families who are paying an additional few dollars for soda are also saving thousands of dollars every year for child care costs because of our PreK program. When we provide child care, we open the door for parents, especially single parents, to leave home and earn a paycheck. As a single parent who raised four children here in Philadelphia, I know that free childcare would have been life-changing for me. And continuing that support for working parents is in the front line of my mind today. And also, when I think about Rebuild, my community benefited from a recreation center that was rebuilt through the Rebuild program. It's not a Taj Mahal. It's a quality recreation center in the middle of North Philadelphia. It does not have everything because I personally went and bought a refrigerator so the kids could have refrigeration for snacks. So the investments that we make in our city help the people in communities. (Applause.)
And I want to say that families in North Philadelphia, West Philadelphia and across the city, whether you're low income, moderate income or well-to-do deserve quality out-of-school-time places, parks and recreation centers that are available to them in their neighborhood, that aren't decrepit, smelling like piss, ceilings falling down and safe places for kids to play. (Applause.)
These are not Taj Mahals. These are quality investments in the communities where we live around the city, not just Northeast. I'm talking about North Philly, Southwest Philly and West Philadelphia. So I didn't want to debate that, but I can't agree to the fact that we're building Taj Mahals. Yes, they could be better. Yes, they're overpriced, but there's something that we need to prevent violence and provide safe spaces for our young people to thrive. So I can't go with the notion that we're building Taj Mahals. (Applause.)
Thank you, Councilwoman. Now, I'd like to recognize Councilwoman Nina Ahmad.
Thank you, Chair. Good morning, everyone. It is great to see our young visitors here. Welcome to all of you and thank you for being involved in our civic process to see how we safeguard your health and welfare. This hearing from my perspective is to reiterate that we are making sure you have a brighter future. We are making sure your health is well. We are making sure you have an educational start in life that is going to give you prosperity and wealth later on. So I thank you for all your teachers for bringing you here because it is a testament of how this beverage tax has benefited our communities. (Applause.)
Let me be clear, benefited our communities. This investment in our economic infrastructure has opened doors for small businesses, women-owned small businesses who had no ability prior to this to participate in the economic cycle of Philadelphia. (Applause.)
They are contributing to our revenue base every single day. And I want to thank them more than just the economics. They are changing lives. They are allowing parents to go to work with the clear conscience that their children are being taken care of. They are allowing parents to advance in different kinds of jobs that they wouldn't have considered but for this ability to have such extended PreK resources for them. So I want to thank this community who has stood up and used this opportunity in an excellent way to transform what the future looks for our children. This is also an anti-violence effort, right. And when you look at the actual economic impact, we have to count all of these things, all of these things. The fact that we are stopping gun violence, the fact that we don't have victims and perpetrators, the fact that those perpetrators don't have to go to jail, all of that costs money. So your work is causing us to have more revenue to give more services to the City of Philadelphia. So I thank you, and I want to underscore very clearly that big corporate structures know how to pivot and change their business model. You have to change. Things happen. You can absorb it and you can make sure that your workers are taken care of, right. (Applause.)
We want to make sure people understand that, that big corporate entities have the ability to pivot unlike our families who have no 24 opportunity to pivot if they want to go to work and put food on the table. So this is the pivot we have given Philadelphians, everyday Philadelphians. And let's talk about community schools. Those are the wraparound services that are needed. We need more community schools. We need to make sure those are the kinds of services that our families have to make sure they are co-located with services they can use when they go to drop off their children to school. That's an excellent model. We need to increase that. We need to make it for all schools to have community resources co-located with our schools. And then let's talk about Rebuild. I missed part of the testimony about it being Taj Mahals, right. Why not Taj Mahals for all our folks? Why not have the best quality, you know, best quality recreation centers so our children want to go there, our children want to spend time there, our children can do things there that everybody else in the developed world do. Why are we going to scrimp and cheat our children? We want to make sure our children have the very best. We live in the first world country and yet we are begging for scraps for our youngest citizens. We don't need to do that. So thank you all for being here, for giving a face to who is benefiting from this. Thank you, Chair. (Applause.)
Thank you so much. I don't want to take up more of our time because I want to get started here in this great hearing. But I too want to thank everybody who showed up, especially our little people, to make sure that we can see who is benefiting from this tax, to know that this is extremely important for the health and the welfare of our children and our communities. And sometimes we in a city that is our large size with our high poverty rate, we have to make tough decisions that will actually benefit the greater good, and that's what we did here. We made this decision to actually benefit our communities, our families, our little people, our children and they are going to grow up, whether it's just even watching here today or knowing that Philadelphia took a stand in order to better their lives. So I see the benefits. Thank you for bringing them here as Exhibit A as to what we're doing here. And thank you so much. I think it's going to be a great hearing. (Applause.)
Thank you, Councilwoman. Will the Clerk please call the first panel of witnesses to testify.
Before you state your name and get started, Mr. Dubow, I'm glad you're the first person to testify because this is about the money. 2023, $73.4 million; FY24, $69.6 million; FY 25, $65.7 million. What was the projected was $71.2 million, big difference there. FY26, $64.6 million. Just so you could see that the numbers are there. I like numbers. I looked at your testimony. Some of the numbers are different. I'd like to know why that is, so please begin.
Good morning, Chairperson Harrity, members of the committee. I'm Rob Dubow, Finance Director. Thank you for the opportunity to testify regarding Resolution 250028, authorizes the Committee on Labor and Civil Service to hold hearings exploring the sweetened beverage tax. I'm joined by representatives from various departments. They have provided written testimony and they're available to answer questions. And as has been discussed, the beverage tax funds invaluable programs, including Philly PreK, Community Schools and the Rebuild Initiative. The start of these programs predicated on the receipt of these funds. In the rest of my testimony, I'll give detail on how the tax works, how much revenue is generated and quick highlights of the programs that it funds. The tax is a tax on distribution of non-alcoholic beverage, syrup or other concentrate used for bare beverage that lists any form of caloric sugar-based sweetener or sugar substitute as an ingredient. Beginning in 2017, the tax is at 1.5 cents per ounce of sweetened beverage distributed for retail in Philadelphia. In FY18, the first full year the beverage tax was in effect, the tax generated about $77 million and as was projected when the tax was enacted, the beverage tax receipts have gradually decreased in most years since, but not all. The tax is estimated to have generated about 68 million in FY25. I think you had an earlier number. We've updated that as we got to the end of the year, and it's projected to generate 64 million FY26. The trend aligns with national patterns of reduced consumption of sweetened beverage. The FY26 to FY35 year plan projects continued modest annual decline in the tax. In the nine fiscal years since the beverage tax began, it's generated about $620 million in total revenues. Revenues from the tax help fund the following programs and we have talked about these: PreK, which increases access to quality early learning by offering free PreK programming to Philadelphia children who were and years old. Since the program's inception in 2017, PreK has served over 30,000 children. Community Schools, which is a partnership among the City of Philadelphia, the School District and school communities to remove barriers to learning and to support the success of each student. There are currently city-designated 14 community schools serving nearly 15 13,000 students, and the Rebuild 16 Initiative, which supports the 17 design and construction of critical 18 improvements to parks, libraries, 19 rec centers and other public spaces 20 through a combination of grants, partnerships with nonprofit organizations and direct city investment. To date, 41 neighborhood sites have received completed Rebuild projects, including 3 completed in '25 alone. That 4 represents a $90 million investment. And Rebuild expects to complete 14 additional projects by the end of FY26. The city's Capital Program Office, Parks & Rec, Free Library, Mayor's Office of Education, the Office of Children and Families and the Department of Public Health have all submitted written testimony and have representatives here to answer any questions. Thank you for the opportunity to testify and I'm happy to answer any questions or have the appropriate representatives to answer them.
Thank you, Mr. Dubow, for your testimony. Right off the bat I'd like to talk about the -- in your testimony, you have the tax estimated to have generated 68.2 million in FY25.
But the Controller's Office number is 66.7. Your projection was 71.2 million, but we actually only brought in 68 --
So you're saying -- the Controller's number you're saying is wrong?
The decline has been averaging looks here '23 to '24 and then '24 to '25 about to million every year. If we pick up -- if we continue that decline, right, before we know it we're going to be having to come up with a lot of money just to keep this program the same. From the inception, the city has allocated more money to the General Fund than to direct funding of PreK. The Controller, Christy Brady's, testimony suggests that for tracking and transparency that we allocate less to the General Fund and more to its intended beneficiaries. Why are we allocating so much to the General Fund? And do you agree that we should spend more of this money on the intended beneficiaries?
So when the program was first put in place, what we always said was that the programs were going to scale up, that our costs would scale up. That in the early years of the program, there would be more revenue coming in than the cost of those programs and that would eventually flip. FY24 was the year it flipped. So we actually spend more on these programs than is generated by the beverage tax. So right now, there is a General Fund component that's going in and that's always what we expected. And it's working out as we projected, in that way.
But that wasn't actually the question. The question is why are we allocating to the General Fund? And do you agree that we should be spending more money on intended beneficiaries? I just don't understand why it goes into the General Fund to then be paid out, when it would probably be easier to have a separate fund so we know exactly what's there and what's going to what.
How much is actually needed to pay for the 5200 kids that are enrolled in the child care right now?
So for the 5200 kids in FY26 we're estimating that the cost would be about 73 million. When you add in Community Schools and related costs, that takes the cost up to about 83 million. When you add --
Yep. And then when you add in Rebuild and related costs, it's up to about 110 million. So you can see the costs of the programs are more than what the tax is generating. So we're not taking --
-- beverage tax money to General Fund. It's going the other way really.
Yeah. We pay more for PreK than we do to actually educate our kids. (Background interruption.)
Well, we're paying on average about 9 to 11 to actually educate a child in the public school system and we pay about 23,000 a year for the PreK. That's just a statement. It's nothing to do with nothing. Is this tax a sustainable way to pay down the Rebuild bonds? Because this here, we got 83 million, right. 65 million to pay -- 67 million to pay for child care, right. So you're talking what, we're already at a deficit of money coming in. You're saying in the General Fund we need 83 million to pay, but we only are bringing in 66 million.
And as I said, this is what we always projected was going to happen, that eventually the General Fund would be paying for a portion of the cost. But without the beverage tax money, that would be over $60 million less a year and we wouldn't be able to afford the programs. It still is providing its intended resource.
It's going to be up to 20 million a year within the next six years by the time the Mayor is out of office. All I'm asking is how can we better fund this? This isn't stable. This tax isn't stable. Your own numbers show that.
So we're doing what we project we were going to do from the beginning, which is fund it with a combination of the new beverage tax money and other existing resources. And we would not have been able to fund these programs without that beverage tax money.
Well, that was fine and dandy when it was 73 million and we were bringing it in. But the actual fact of the matter is now that we're already getting towards -- this thing's not feasible. Within the next few years your own numbers show that we're going to end up putting in -- before the Mayor's out of her office, we're going to end up putting in at least $20 million. At that point what do we do? This isn't about the soda tax. This is about how do we fund these kids.
It's not going to be funded by soda tax. We're going to keep on putting more money out of the General Fund each year taken away from other programs. That's what I'm saying.
So our Five Year Plan includes these costs and shows how we fund them each year and maintain a balanced plan.
If we were in business and these numbers were the numbers of the business, we wouldn't be in business long.
Well, if we were a business, we'd be looking at all our revenues which is what we do.
Okay. I'm just trying to get to some real numbers here, is all I want, Rob. All I want to know is how do we fund this thing. All right.
The kids are the kids that live in my neighborhood and I want to be able to fund it, but with the costs keep going up and the take keeps going down more and more, we have to put out of the General Fund. As of right now, we're coming up out of the General Fund, what, $15 million already?
That's all I'm saying. I'm not trying to -- I want to know what we do.
We pay for it out of the General Fund, which is what we always anticipated we would do and we show how we pay for it over our Five Year Plan.
Yes. Thank you. Good to see you, Mr. Dubow. Do you have any sense of what the revenue generated from these small businesses that have sprung up since we invested in this space?
I do not. That's a good question. We can look at that and try to --
That would be very helpful to actually see what is the General Fund getting from having this ecosystem of small businesses spring up. And to the point of General Fund being used to give services, that's what we're supposed to do. And I think the City of Philadelphia is not a business. That is not how we operate. We look at the needs of our people and we find ways to underwrite those. And when we get to a place we don't need to do that, that's when we know things are working. We are still struggling to get there. So for us, we should not be operating as a business. Government is not equal to business. So let's be very clear that we invest in our people. That investment we want to see giving rise to revenue, which is the question I was asking you. And I think that should be true of everything we invest in, right, what is the impact. So I want in that revenue calculation how much violence has been impacted, how much parents are generating and giving taxes, paying in taxes because they're paying wage tax and they're paying, you know, taxes to support our revenue base when they go out and get jobs because they have daycare for their children. So we need an analysis that actually factors all those things in that tell us that this investment of, what, now 68 million, which is putting back the money we got and adding some to it is beneficial because at the end of the day we win. And lastly, we have not talked about this. Drinking pure sugar has reduced in the city of Philadelphia. That's what that says to me. (Applause.)
As the Chair of the Public Health Committee, that's not how this tax -- I used to be in the (inaudible) government when we worked very hard to pass this tax. So I feel very connected to this sweetened beverage tax because we worked very hard to pass it, understanding that we would benefit people, but there's also health benefit. The fact that we have reduced the revenue means people are not buying this to drink it. When I was little, soda was not in my refrigerator. It was a special dessert once in a blue moon I got, not every day to have with your meals. And we have a whole epidemic of health issues that comes with this. So we're not even touching that in this conversation. We're just talking numbers. But there's a benefit to that. And I would like you to calculate that benefit, that what is happening to our health outcomes because we have less of this and that has an economic value as well.
There are people from health here who can talk to that, if you'd like. They can come up now and talk to that.
And I would like a whole analysis to take all these factors in to see how this tax has benefited our revenue bottom line.
Rob, before we bring somebody else up, we have questions up here for you from the other people on this board. So if they want to come up and join you, we can go back to that.
I'm done. Thank you. Thank you, Chair. Thank you, Mr. Dubow.
A quick question. Rob, from your testimony soda tax doesn't cover PreK?
So it generated last year $68 million. So it generates not all the costs of the programs, but a part of the costs.
Well, as I said to Councilman Harrity, we are supplementing the beverage tax revenues with General Fund revenues and that's what we always thought we were going to do --
So we look at all the programs together. So you can slice and dice that --
Rob, I'm going to go real slow for me, not for you. 68 million comes in, 73, whatever, 83, the cost. So the beverage tax is not covering PreK, Community Schools entirely.
It's not covering the cost of the three programs entirely. The General Fund is supplementing.
Right, but clearly it's not paying for Rebuild unless you put Rebuild first and then we subsidize more.
But we're putting PreK first. You put it first. Everybody in this room 8 puts it first. So we actually have a Rebuild program that we're paying now out of the General Fund. I mean, you can call it what you want. You start with Rebuild, but $83 million is needed. Less than that comes in just for PreK and Community Schools and whatnot, on that end of things. Rebuild, no matter how you cut it, no matter what the Controller says, you say it doesn't matter. We are paying for Rebuild now that started as a soda tax program. That justified the soda tax program because PreK was a lot smaller in terms of what the projections were. And now, we're actually for a capital program in Parks and Recreation, we are paying for it borrowing like we do for the capital budget, but paying those bonds now as a subsidy with operating money. Now, isn't there a limit on how much we can borrow for the capital budget based on tax revenues or something like that?
There's a limit that's based on the 13-year average of its best value but --
Okay. So we could actually just move that over to capital. We're only doing the same thing, but we're using operating money. So the biggest part of this is that each Councilmember on the Recreation Department controls their own capital budget. Everybody gets 1/10. But when you take the Rebuild capital program now subsidized entirely by the -- paid for by the -- bonds being paid for by the operating revenues of the city, the Administration now has a fund for capital for playgrounds. So I think it opens a whole new area of discussion, not for today, but how the money is being spent by the Administration, and obviously this Administration hasn't had a lot of time in office to get involved with this but there was eight full years beforehand. And I think that's where we really have to go because we have a second capital budget here that is not called the capital budget. It's called the soda tax budget, but the soda tax isn't paying it. Because capital budget bonds get paid out of the General Fund. Now, Rebuild, those bonds are getting paid out of the General Fund. We're just calling it something else. It's capital budget. So I think it's another discussion for another time, but something's not looking right here.
So I just want to take a couple of things. One -- and there are people from Rebuild here. They can talk to you about how closely they work with Councilmembers on picking the projects. They're not doing that all on their own. So I don't think it's just the Administration figuring out where those dollars go. And again, yes, you can slice it and dice it to kind of label it however you want. But the key thing for us is that we are getting funding from the beverage tax that makes these things possible. And without it, over our Five Year Plan, for example, we'd have over $300 million less in revenue. We wouldn't be able to do the things that we're doing.
Okay. Could you do this for me, not when you go back to the office but within the next couple of days. Just get me a list of every project under Rebuild since the soda tax started that program. Project-by- project and cost. Okay?
Because we get under $2 million a year for capital budgets for our whole district. I think it would be interesting for Councilmembers to see what those numbers were, particularly in the previous administration.
Yep. And Rebuild provides regular reports so we can get you that.
I got Kendra. Then you will, Rue. Councilwoman Kendra Brooks.
I have one question. Can you tell us about the funding for programs like PreK, Rebuild or Community Schools prior to the establishment of the soda tax?
Yep. They didn't exist because we didn't have sufficient funding to pay for them.
So there were no such programs. None of these programs existed. And had we not had this, those slots for PreK wouldn't be available; am I correct?
And the rec centers that have been built with Rebuild funds would not be available; am I correct?
And the Community Schools, programs that I think we're up to, what, 11 around the city that are providing 12 extended out-of-school-time 13 program, educational programs for 14 young people around the city would 15 not exist? 16
23 Thank you. Just want to be clear 24 that these three initiatives of PreK, Community Schools and Rebuild playgrounds, these are all part of the Mayor's priorities, right?
And I think Councilmember Brooks just asked the most important question I was going to ask is, would we be able to fund this without the tax?
I do not think we would be able to. I would also suggest that more playgrounds are great for Philadelphia neighborhoods. But I want to underscore the important accounting that we want to see when you break down the actual cost for Councilmember O'Neill, that we really do want a holistic look at all of this; the reduction of violence, the reduction maybe in DHS placements in homeless shelters, the entire reduction and cost savings that we have from our police department and others that might be the benefit of having these programs. It's really important that we get the holistic approach and that we get to look at this all so we can see the cost- benefit analysis. Because I think the majority of us up here on this panel think this is a great investment. Thank you.
So what we'll do, if this works, is put together what we think the analysis should look like and then come back to the committee and make sure that we're capturing what people want to capture.
Thanks, Rob, for your testimony. I just have a question regarding something just numbers-wise. I just want to be very clear for the record, what percentage of the total beverage tax, revenue support, how many PreK seats are available as a result of the beverage tax and how many children directly benefit from these funds?
So there are 5250 slots. We wouldn't have those slots without the beverage tax.
Absolutely. And then how many more slots are needed to fully fund young people in the city of Philadelphia when it comes to PreK?
So that would be a question for the PreK folks who are here. So when questions are done with me, I'll also ask them to come up to answer that.
Yeah, I was wondering if they could. I'm not sure if they can answer that question.
Oh, okay. I thought they were with you. I don't think it's a panel. I think they're with the Administration. Thank you, Sean. Sean Perkins, he's with the PreK Department with the City.
Good morning, Councilman Phillips. My name is Sean Perkins. I am the City's Chief of Early Childhood Education. The question you asked I believe was how many children do we have in Philadelphia who are not in kindergarten. Every year Philadelphia has somewhere around 20,000 children born. That number has been decreasing rapidly. Like most metropolitan regions across the United States, that number has been decreasing. I think in 2025 it was somewhere around 17,000. So there were about 20,000 children born who are currently or years old each year. So there's about 40,000 3- and 4-year-olds.
We put up 5250. Federal Headstart seats is the other free preschool initiative that's funded by the federal government. They have about 6000 seats in Philadelphia. The Commonwealth of Pennsylvania puts up a program called PreK Counts. That's about 5200 seats as well. So we're at about 16,000 free full- day preschool options for families and we have about 40,000 3- and 4-year-olds. It gets a little bit more complicated, but I'll just stop right there. It's like free full-day preschool. The federal Headstart, you know, that has a financial requirement. You have to have a certain income threshold. It's at or below 110% of the federal poverty level.
We're using 20,000 for each age. So it's about 40,000 3- and 4-year-olds. PHL PreK, Headstart, PreK Counts, those all fund 3 and 4-year-olds.
So 16,000 slots between the federal government, state government and local government?
And there's about 40,000 altogether -- well, if you wanted to collectively pay for 3- and 4-year-olds.
We aren't even talking about infant, toddlers yet. And I think that's a very good discussion eventually to bring up, but right now we're just talking 3- and 4-year-olds.
Okay. Thank you. That's all I have. Thank you, Councilman.
We're going to bring back up -- but, Rob, what I'm saying you keep on saying it. This is like a play on words here, you understand. But the bottom line is the soda tax is not paying for child care. It's not paying for the Rebuild. The fact of the matter is that 83 million is what we need for child care. 67 million is what we took in this year. So already you got the numbers, you're the accountant. Within the next six years, we're going to be putting out over half of what we need just to pay for child care. And again, as my colleague Councilman O'Neill said, Rebuild, forget about it. That's all done with loans out of General Fund anyway. I don't even want to count Rebuild. Rebuild is Rebuild. We're doing that anyway because we're doing it with loans, we're doing it with bonds. None of this money pays for any of that. We barely make enough to pay for the child care. We need a more stable funding. Councilwoman Ahmad, who was it that was supposed to answer your last question?
I just want to say again that we would not be able to do these programs without that $60-something million a year we get.
But I'm saying is we need to find a more stable thing because it's 67 now. In six years, it's not going to be 67. It's going to be 40-something. And then what? Now, we're putting over half of the money that we need just for PreK. Forget about Rebuild. None of that's getting paid. That's coming out of the General Fund. That's all I'm saying and you keep on jumping all over the place. Bottom line is this is the numbers. The numbers are the numbers.
You keep on asking how it's funded and I'm keep on telling you. It's funded in our Five Year Plan. In the Five Year Plan we do project that the collections go down each year --
I get that, Rob. I get that. I get all the projections. I get all that stuff. What I'm saying is reality. Reality is that we have 67 million this year to put up towards the 83 million. Within six years, we're going to have to put up almost half of it. So at that point, what do we do, Rob? That's all I'm trying to get at. The money's not there. The program isn't working anymore. Look at the studies. You're a numbers guy. All the Pew studies say when you do something like this out of taxes, you get about two years out of it. We're almost 4 years in. And the fact of the 5 matter is the numbers show that we 6 cannot keep up with this. We're 7 going to end up paying for it 8 anyway. 9 So what is our recourse? 10 Are you guys thinking about how we get more stable funding? I don't want to mention stuff that's coming down the pike, but I believe we need to be ready for when some of these state laws get passed on different issues that we can go in and say, okay, that's a more stable way to fund this program. Because right now the way I see it, at some point we're going to have to make hard decisions. Now, granted I might not be here for those hard decisions. Okay. But I don't want to leave a burden for future of the City of Philadelphia. I want to find a way to pay for this program and expand the program. Right now we can't expand shit. I'm sorry. Thank you. (Background interruption.)
So two separate things there. One, how we pay for it, that's why we have a Five Year Plan, right, so we can show how we pay for things over time. Our Five Year Plan includes the cost of these programs going forward. If you're talking about the risk from the state and federal government, that's much larger than just this question.
That is something that does create enormous risk for us and that is beyond what we're talking about here.
Thank you, Mr. Chair. PreK, education spaces, safe places for our kids to be able to spend time with each other in community, jobs, you know, so I think for somebody like me having one of the manufacturers in my district is also important, right, because they hire and they employ from my district. So I'm just trying to figure out -- I guess my question is have we had a conversation with everyone at the table to discuss how do we protect and preserve PreK programs? How do we continue to invest in our recreation centers, many who across the city of Philadelphia but, you know, of course I'm going to focus on districts like mine where there has not been the necessary investment to be able to upkeep some of those spaces. And so, Rebuild was extremely important and continues to be an important program in districts like mine. And how do we protect and preserve the jobs in our city? How do we attract more jobs to our city? And I ask that question because sometimes the things that make the most sense, sometimes the things that are common sense are not the things that we do and I've experienced that in government. And so, my question is as soda tax continues to see a decrease in revenue have we had a conversation with both sides where we can figure out how we make up some of this money while still protecting the programs that are absolutely necessary because Councilmember Brooks just mentioned without this tax, these programs would not exist, right. And I have had the question with some of our manufacturing partners that say because of this tax we've lost jobs, right. And we are impacting some of the very same people that live in our communities that depend on some of these very same programs, right, because they don't qualify for things like CCIS or maybe we don't get the investment we need in certain neighborhoods because other people do qualify for CCIS. So has that conversation been had?
We're happy to have that conversation. I know there were lots of discussions about that at the time the tax was initially enacted. I don't think we've had those recently and we're happy to have them again.
So we have not had those conversations. You're saying, no, we have not had those --
Not in the last couple of years. When we talk about these programs during the budget process and they are part of what we fund in the budget. So I mean, we in essence have been making up that gap through our budget each year.
Okay. I'm going to ask, you know -- those conversations need to be had, right. I think that's part of our problem, is that we wait until we get into committee hearings, we wait until the problem is so severe before we do the basic, right, the basic thing, which is have a conversation with both sides. Let's figure it out. The City of Philadelphia has seen a lot of crime. We've lost a lot of young people as a result of violent crime in our city. I represent three of the five most violent crime police districts. And so, safe spaces, programs that allow for a safe place for young people to be able to play and grow and learn and be in community are extremely important to me. Manufacturers and jobs in my district are extremely important to me. And I don't understand how something as simple and as basic as a conversation with everybody at the table to figure out how do we balance this out and be able to respond to both has not been had. I think that that has to be prioritized, right. You're looking at the numbers. You're seeing the numbers go down, so I understand my colleagues, right. But you're also seeing the need -- because you've been in government for very long, you understand the need that we have here in the city of Philadelphia as it relates to young people and safe places. And so, I'm going to respectfully ask that a conversation between both sides be had, that it is prioritized because we can't do without either one of them.
Always happy to discuss it. I just want to emphasize again these programs are funded in our Five Year Plan. I want to make that clear. It's not like we're facing a cliff where we're going to stop funding these programs. They are all funded throughout our plan.
Just to piggyback on what my colleague said about these conversations, this is a private industry, right, who makes a beverage. So isn't it the responsibility on them when their business model has to change to see how they take care of the workers? So while it's great for the city to be part of the conversation and maybe other corporate sectors, philanthropic sector to get involved, but the onus is on the beverage industry to make sure their business model pivots when their product is having different kinds of outcomes in what they sell. So I just wanted to go on the record to say this is a private business and the private business has to figure out their business model because of these buffeting wins that they're facing. That's one. Two, what we fund in terms of services we don't look for revenue sources to fund cleaning of the streets. We pay for that. Those are services we pay for, right. Similarly, you have a model where it shows reducing revenue from beverage tax but still we're buttressing to make sure that we're fulfilling the need of our children. How is this different than our whole response to opioid crisis and making sure we're putting millions of dollars into addressing that? No one is asking a question how is that a revenue neutral, who's giving us money to do that. So all I'm saying is the City of Philadelphia is faced with issues for our communities, and this is a fundamental issue of making sure our children get a good start in life. That we know has dividends that pay across the board for generations, for generations, not just in our lifetime, right. So that's what we're investing in. We are telling the world that we value our children and we're investing in them. We had a revenue source coming from a soda tax. It is a declining revenue source. So we're going to build in and replenish that to make sure our children get their services they need. And you're going to get us the numbers of what that investment actually has produced in revenue so we can plug that number in to say the General Fund is receiving revenue from parents going to work, from businesses opening this, from teachers getting paid. All of that creates revenue for us. So I want that number. The police being used less, the incarceration is less so we don't have services to give there. All of that adds to revenue being generated to fill the gap that the soda tax is declining. That's the hypothesis we need to prove. I need those numbers from all of you. Thank you.
That's actually part of it too. Every department's budget has gone up, you understand what I'm saying. Councilwoman Anthony Phillips.
I just want to say that I couldn't agree more with Councilwoman Lozada. I think it is time. It's very important that we have people in this room who also -- they may be on the other side of like getting rid of the tax, but they also believe in universal PreK, they believe in the Community Schools, they believe in the rec centers and libraries. Yet it is troubling for them. And this is something in our district, about half of our district we shop at Fresh Grocer in Montgomery County and ShopRite in Montgomery County, Jeff Brown's, you know, stores. So in some ways it's like -- because it's at that border and it's close to us. But then there's a part of our district that has to shop in Philadelphia. And I get it in that capacity how that impacts us. Just like anyone, I don't think any of us here are willing to give up universal PreK and Rebuild, but I think that the analysis, the next step, level of conversation needs to happen is how can you work with the business owners and so forth, the union to help dive into the books and so forth to really decide upon what is feasible, what can be given, is there something that they can give, you know, is there a way to make this all work. So it's not as much of a -- but the idea of giving up PreK and all the other fabulous things, we can't have. But I do think that conversation needs to be had. It needs to be not just one little meeting. It needs to be ongoing until you solve the problem comprehensively. And I just don't think that's fair that we just shut them out like that. They're our neighbors too. Thank you.
Thank you for your testimony. I just wanted to reiterate this is about trying to find out how we find more stable funding to pay for these kids going to school. I'd like to see us expand this but right now we can't expand it. And the harsh reality is at some point we're going to have to start cutting things. It may not be the priority of this Mayor, but this is a program that's losing to million every year in the beverage tax. At the rates that we're going, we need to figure out how we come up with that money. I agree, if we got to take it out of the General Fund, take it out of the General Fund. The God's honest truth is we should be paying for all of it, right. It shouldn't have to be a tax. We need to make our priorities where those priorities need to be and pay for our kids. I'm for that. I don't want to get rid of PreK. I want to expand PreK. I want to see the City of Philadelphia paying more towards PreK and shifting some of our stuff. Like some of my colleagues said, things are happening and we need to move with the thing. This isn't about what we do right this second today about the soda tax. This is about how do we fund this program for our kids for the future. And that's all I'm trying to get to the bottom here. I'd like to see some of your answers that were supposed to give us in writing about the numbers and stuff like that. Thank you for your testimony here today. Mr. Kunkel, will you please call the next people to testify.
Leonard Purnell, John O'Rourke and Jeff Brown. (Witnesses approached witness table.)
Hello. Please state your name for the record and proceed with your testimony.
My name is Leonard Purnell. I'm the Southeastern Pennsylvania Division Director for UFCW Local 1776. Good morning, members of Philadelphia City Council. Our union is a statewide union throughout Pennsylvania and in small parts of West Virginia, Ohio and New York. We represent over 5000 members who live in the city of Philadelphia, with more workers who live outside the city and travel into Philadelphia for work. Our largest bargaining units in the city are the workers at Acme Markets, ShopRite, Fresh Grocer and Fine Wine and Good Spirit stores. Our interest in this hearing is the enactment of the sweetened beverage tax back in 2017 and the impact it has had on our members and the retail grocery industry. To be on record, our union did not take a position on this issue a number of years ago. We are also not here today to call for the full elimination of the beverage tax. In addition, we commend the City of Philadelphia in its advocacy to secure more funding from our state legislature for Philadelphia's public schools. Public School funding is something we have worked on with the entire labor movement in our state capital to support our teachers, students and our members who benefit from a strong public education system. We will always continue to fight that fight with you all and with our partners in labor. However, we do want to highlight the impact these types of broad taxes can have in a traditional low wage industry like retail, especially workers in our membership who receive higher wages, benefits and retirement in this industry compared to their non-union counterparts. When you evaluate total compensation packages for a majority of the workforce in the retail grocery industry, our members at Acme and ShopRite do much better than those in the non-union spaces. Due to the fact that many union employers carry higher labor costs than their competitors, taxes like these have a larger negative impact on their ability to absorb that cost. This in turn impacts their workforce, such as our members. The beverage tax has not only led to a slow-down in the hiring of our members in the city of Philadelphia, but also hours reductions, less access to full- time positions and in some instances, store closures. When you are a retail grocer in the same industry that isn't paying workers well, is not providing affordable benefits and does not have a healthy work environment, you can absorb that cost a lot better. Therefore, a uniform beverage tax creates an unlevel playing field. Your bad actor employers absorb the costs better due to their exploitation of those very same workers, while your good actor employers must make tougher decisions that are largely passed on to the workforce due to cut labor costs. We ask for a more strategic approach as the City Council examines the effectiveness of the beverage tax. We should be striving to lift up workers in low-wage industries that are able to secure good wages, benefits and working conditions. Uniform taxes such as the beverage tax create larger hurdles for those specific workforces, while employers who take advantage of their workforce reap the benefits of seeing a race to the bottom. Our union and members commit to work with City Council and all involved on a solution that can support secure funding for public education while also protecting family-sustaining jobs in impacted industries. We look forward to see what ideas this hearing will bring forth. Thank you.
Good morning. My name is Jeff Brown. I'm the founder, Executive Chairman of Brown Superstores. We operate food stores in the Philadelphia 11 area, majority of which are in the 12 city, although we do have some in 13 the suburbs right outside the city. 14 That includes 12 Shop Rites, 15 Fresh Grocers and 5 Di Bruno 16 Brothers. We're from Philadelphia. 17 I'm not from enough state or not 18 aware of what goes on here. 19 I live in the city with my wife Sandy and we're a union-run business. Our pay and benefits are much higher than most of my competitors. We're among the highest in the industry and we have people that have been with us a real long time. We just remodeled our Roxborough store and I have employees that have been with me close to 40 years, one single employer that watched after them, they watch after me and we serve our customers. I think our values are the values of Philadelphians. Stand up for workers, stand up for customers, even customers who struggle and we have not been on the sidelines. With my wife Sandy, we formed Uplift Solutions, which is the leading nonprofit to help returning citizens get trained and find good employment. We work behind the walls. We work when they get out in halfway houses. And our firm employs an incredible number of returning citizens that has helped them turn their lives around. I'm a believer in PreK. I was from the beginning. I never once said anything otherwise. When the pandemic hit and the PreK operators -- by the way, the operators are a key part of the strategy because they are a lot of small minority businesses. That's a value that we have here in Philadelphia. We want to help small minority businesses. I'm a believer in that strategy. When no one else was there, I raised money to help them and keep them in business. I talked to many of them. So it's not like I'm here trying to hurt PreK. I am for PreK and for those operators and for those young people because I'm their grocer, and we're going to sink or swim together and I know those young people need that education. I'm also an officer of pulse, because when people have a criminal record it's like a noose around their neck. And we're a nonprofit law firm and we fight to get those records expunged or get pardons for them so they could reach their full employment. So I am with this Council. I know this Council is from the neighborhoods and we all share values that I think should make this a lot easier because we know we got to do both things. Now, we put food stores in food deserts. Most people don't. It's hard. It's hard work to do it. We lost one food store and the beverage tax really hurt me there, because it was right on the borderline, on the Philly side. But I have a competitor on the suburban side. And a lot of my business went to my competitor because people, they're not rich here in Philly. They struggle to pay their bills and I understand that if it costs you $1 more for a two liter and you want that, it's your family's decision. They saved that dollar when they're there, they bought their groceries and it hurt me. We have two additional stores that have struggled ever since the enactment of the beverage tax. But let's say roughly they're break even stores. Now, this is not about the beverage tax. This is about the coming federal budget and how it impacts us. I don't know if people are getting any SNAP in November. It doesn't look like they're going to. I don't know what we are going to do, but I've been working with the philanthropic community. I don't have that kind of resources. That's a big number. The philanthropic community, the city and the state do not have the money to make up for the federal government. That is very much on my mind, what do we do for people. Are we going to let them starve during Thanksgiving. In the same token, if they get a little joy from drinking the soda, we are taxing the hell out of them, people who don't have it.
The average person who pays this tax, the people have a car leave. They go to the suburbs. It's not far away. Sometimes they go to my store in the suburbs to avoid the tax. The people left paying the tax are the people with no 20 cars. They're often on entitlements. They're about to lose their entitlements, but we're still taxing them. It's kind of ruthless. It kind of is. The people that have the money leave. So at this point, it started out as a regressive tax, but really almost all the money is paid by the poorest, most vulnerable families. And they're about to have a whole bunch of harm to them done from the federal budget, from losing their health insurance. Even if the federal budget is resolved, about 30% of the people who rely on SNAP are going to lose it because they're going to have new work requirements. Now, these are people that have tried to work, but they have a lot of challenges. They have criminal records often. They have sick family members. It's not so easy. A lot of them didn't graduate high school. We've been working with them. This is not going to turn around overnight. And these are the people we're taxing. And that's the part we had to reconcile. Now, we made a sacrifice for PreK, which I believe in PreK and that is a priority. I wouldn't sacrifice that. But I think during the federal budget that we have, I think we had to be a little sympathetic to the people. We really do. I think we really got to think about that because that's the one we're taxing. The lady who goes to Starbucks -- by the way, they closed all the Starbucks in my neighborhood so they don't care about us. But the lady that goes to Starbucks and puts the sugar in afterwards, she pays no tax. But the poor, underprivileged family that lives in North Philly and West Philly, they're the ones paying all this tax and they're going to lose their SNAP. And I care about them. I opened up these stores in food deserts for them to help them. I deal with them every day and their problems, watching them buy their order and then take items off because they can't afford to pay. We got to remember them too. Often they're invisible to most people. They don't hear their struggles. But because I serve them, I see it. So my conclusion is very similar to what you guys have said, let's be thoughtful about this. None of us want to lose anything in PreK or any of the other programs. Let's sit down and figure out a way to fund this differently. Now, my revenues, 20% of my revenues come from SNAP. So November is going to be a really tough month for me and a lot tougher for my customers that don't have that money. But if the federal budget gets resolved, 30% of them are going to lose their SNAP anyway because of the work requirements. Think about what that's going to do to the beverage tax. They're the ones paying the beverage tax. I would not be surprised if your tax revenue is down 10 million or million next year 12 because of the SNAP change. And so, I think a lot of the Councilpeople properly recognize this money's not going to be there either way. This is a smart time to rethink how we're going to fund this. And I don't understand why the things we pay for in the General Fund, like cleaning the streets but our children are not in the General Fund. I don't understand that at all. They're important. They should be just as much a priority as every other thing we pay for. Thank you. I'm glad to answer questions.
Good morning, Council. My name is John O'Rourke. I am the Vice-President of Teamsters Local Union No. 830 headquartered right here in Philadelphia. Thank you for convening these important Council hearings regarding the city's sweetened beverage tax. It is not a point of pride that Philadelphia continues to have the highest tax rate of any major city in the country. The need to reduce many of the city's onerous and outdated taxes is evident and long overdue. Perhaps the most unfair and regressive tax of them all is a sugar sweetened beverage tax or SSP, more commonly known as the soda tax. It also has been clarified that the sweetened beverage tax was misnamed as it all applies to all sweetened beverages, including artificially sweetened drinks as well as sugar sweetened drinks and beverages. At last count, the tax is levied on more than 4400 beverage products in grocery stores, corner markets, bodegas and gas stations. That even includes Pedialyte for infants. It's beyond ridiculous. The cost of the soda tax to consumers, the regional beverage industry, the city's small business owners and our union Teamsters Local Union 830 has been significant, to say the least. 5 cents per ounce on every beverage that contains sugar or artificial sweeteners. It impacts more beverages than most people even know exist. Sodas, iced teas, coffees, juices, mixers, sweetening agents, sports drinks, energy drinks, flavored milks, flavored waters and many more. Although the tax is levied on the distributor, the pain is passed on to the consumer in the form of higher retail prices. To make matters worse, the largest consumers of the sugar sweetened beverages in our city are low-income people of color, those who can least afford it. According to a series or, excuse me, according to a series of studies on Philadelphia Soda Tax published by Health Affairs Journal in July 2020, the passthrough of the tax from distributors to consumers ranges from 43% to 104%. S. 3%. 8% in the nation. Numerous other studies have proven that the soda tax also has failed to deliver the projected annual revenue totals and health benefits that it had been promised. Supporters of the tax have clung to the belief that the tax has at a minimum made the public more aware of the adverse health effects of excess sugar in one's diet. That, however, is a misrepresentation. I work closely with the member companies of the American Beverage Association, better known as the ABA, and know that they have made a concerted effort to educate the consumers on the health risks associated with sugary drinks. The effort is working. Today 60% of the beverages sold by the ABA companies are zero sugar products. The industry's tangible acknowledgement that it must play a role in protecting people's health is just another reason to end the soda tax that unfairly targets the beverage industry to the exclusion of all other categories. If reducing the people's consumption of sugar to improve their health is your primary goal, then why aren't we also taxing baked goods, candy, breakfast cereals and other sugary products? Teamsters Local Union 830 has felt the pain of the soda tax as much, if not more, than any of our beverage industry partners. When the brunt of the tax was first felt and the beverage sales bottomed out, approximately 1000 Local Union Member 830 members were laid off or reluctantly quit the union altogether due to the lack of beverage sales. The average salary of those 1000 lost Local 830 members was $55,000. Meaning, Teamsters Local Union 830 in membership salaries lost $55 million in members' salaries. The tax and its adverse effect on the members' personal financials took a mental toll on them as well as leading to marital problems, strife, home foreclosures, divorces, even suicides. Philadelphia sugar sweetened beverage tax is blatantly unfair. It punishes the citizens who can least afford it.
Those who can afford, evade it by driving to nearby suburbs or to New Jersey to make their purchases. It targets only one industry to the exclusion of many other products that contain real sugar and artificial sweeteners. The tax has also undelivered on its projected revenues. It's just one more reason that our hard-working citizens want to leave the city and an obstacle to those considering moving into town. On behalf of Teamsters Local Union 830, small business owners and everyday Philadelphians in need of a break, I respectfully ask that you use your vote and your influence to end or at least adjust the parameters on the onerous sugar sweetened beverage tax. Thank you for receiving my testimony.
Just to get started, I'm a union guy. I'm a union construction guy and we get laid off. We go down to the hall and they give us another job when one is available. What happens when your members get laid off from the supermarket since your union does not have a hiring hall like some of the other unions?
You bring up a great point. Typically, what we try to do is if there's a situation -- well, first of all let's back up. Jeff talked about how sales are impacted. Sales drive hours in our industry. So with less sales, there's less hours for our members, which unfortunately could lead to layoffs due to store closures, so on and so forth. But typically in our union, what we try to do is maybe try to find another employer that's somewhat located in their area to try to see if we can find them work in one of our other employers. Problem is, is that, as we talked about with this particular tax, like all our retail employers in the Philadelphia area are experiencing reductions as a result of this. So it does make it challenging for us to find work, but we do try to find work in some of the other companies that we represent.
What does the average retail supermarket worker make per year?
It varies, some of our contracts. I can tell you that typically in some of our stores anywhere between like 50,000 and 60,000 if they've been around for a while. I can tell you it's a lot more challenging in terms of hours with some of the part-timers. Because of the way the industry set up, it's part-time in nature so it becomes very, very challenging for those folks to get hours because of some of the things we're talking about here. And that includes not only the salary, but also that's full compensation. So that's not only wages, but benefits and pension.
Right. Okay. I know your union remained neutral in 2017 on the sweetened beverage tax. What, if anything, has changed in your opinion after almost 10 years of living with the tax for your union members?
As I mentioned in my testimony, it's the sales. The sales, as my colleague Jeff Brown just talked about, we've seen a reduction in sales. Sales drives hours. So with the cut in sales, it's a cut in hours for our members so it's had an economic impact on our members. And in some instances, people have to -- I think we had a location that may have closed in that time so it has created a hardship.
Do you have any kind of an estimate on how many jobs were actually not put into the job market? I don't want to say lost because of this, but any, you know, we all know averages. We hire so many people per year, per thing. How many people do you think this affected? How many jobs?
I don't have an exact number. I can get that for you, but I know that we've taken a hit in our local union. I don't know the exact number, but I know we've taken a hit. I can get those numbers for you.
Okay. Thank you. And, Mr. Brown, how much of your business depends on SNAP benefits? What effect do you think the loss of these benefits will have on your business? What stores and locations do you think the loss of SNAP will affect? And can you tell us how the tax has affected your hiring and labor staffing?
So in the city of Philadelphia, about 20% of our revenue is SNAP. So it's going to be a rough November if people don't get their SNAP. Now, that's short-term. Longer term of that 20%, Trump's plan or the Trump Administration's plan is to eliminate 30% of the cost. So if you do the math on that, it looks like long-term we're looking at a 6% reduction in sales after we settled the budget. And the problem is every store will have a harder burden, but two stores in particular that are just hanging on. This could be the nail in their coffin.
Yeah. In a non-food desert store, people don't use SNAP. It's a very small percentage. The lower the income, the more the SNAP penetration.
How about staffing and hiring, how has that been affected?