We do have a lower head count than we historically had. And some of my peers have kind of given up. I mean, we bought out the Ammons family this year. He sort of gave up on Philadelphia. He said he can't handle it anymore. And so, we were loyal to the city so we sucked that up and we acquired them. But I hear other peers in the business saying that they don't know about the future. Now, you can't blame this on the beverage taxes. It's been in existence. It's SNAP that's one of the problems. But if we didn't have a beverage tax, over time some of that volume would come back. It may give a little relief to the industry.
Thank you. And, Mr. O'Rourke, how has the beverage tax impacted health benefits and other support services for your members? Has the tax affected the financial stability of the union? And how has the beverage tax influenced your bargaining power and negotiating with employers?
Okay. Health and welfare, as you know, go hand-in-hand with union membership. Health-fare(sic) being your benefits -- welfare being your benefits. A moment ago I spoke to the members lost in their salaries, that's benefit and their resulting troubles due to lack of benefits. By lack of benefits, I mean once the member withdraws, once they lose their job, they have no health and welfare. They have no medical. They have no psychiatric. They have none of that. Once they withdraw their membership and go away, they're gone. 1000 went away.
1000 of them, that was my next question. Your estimate is 1000 jobs were lost?
And just like UFCW, you guys really don't have a hiring hall. Once somebody loses their job, you either have to try to find a spot for them some place else or they just lose their job; is that correct?
That's correct, Councilman. The membership has not recovered that 1000. And to be quite frank, it'd be very difficult to do so because our companies are all umbrella under this soda tax.
Got it. All right. Thank you. Anthony Phillips and Kendra Brooks.
Thank you, Chairman. So thank you all for attending today. I just had a couple of questions regarding the beverage tax impact on your business. I want to know what adjustments have you had to make in pricing, staffing or sourcing to remain competitive, Mr. Brown?
So when the beverage tax was first implemented, we had one store that really got clobbered and that store closed. Basically, we have passed on the cost of the tax to the consumer. So that's why that two liter soda is so much more expensive or all the products are more expensive. Whatever it costs, we passed that exact amount on. And we have stores that lost 20% of their volume. The store that closed lost 30% of its volume because it's not the beverages. The beverages were never the problem. When they leave the city to shop for the beverages in the suburbs, they also buy their grocery order there. That was the problem. And that is -- in your own life it's convenient. We're time-pressed, so you won't shop in two stores if you could shop in one store. And we have adjusted to it. So I'm not here initiating this effort because we have adjusted to it, except for the two stores that are still hanging on. But it's the added federal cuts really putting a lot more pressure on us. It hasn't yet, but it's about to. And I'm worried about the two stores. And, yeah, there will be a -- we have a big loss in revenue. Like the union said, the hours go by the revenue. It's a formula. So if there's a loss in revenue, there's a loss of hours or positions. And then if a store is losing a lot of money, then there's a loss of the store. And now, those are all likely things to occur from the SNAP cuts. And so, the one thing that's interesting about the beverage tax, if we were to tax a different way and got rid of the beverage tax, over time some of the lost volume would come back, which might give a little relief under these circumstances, and that is a good reason to consider it.
And I just also want to add based off -- and thank you so much. You said something earlier about how can we find ways to add to the General Fund, you know, support for PreK and Rebuild issues and so forth. That perspective was intriguing enough for me to say, you know, what do you think is a more balanced, equitable solution for this problem in a city that supports both small business survival and early childhood education, Mr. Brown?
And when the PreK people come up, you could ask them about how it works. But prior to this PreK program, when our residents filled out an application to get funded PreK, the application will go through the state first to see what they would pay for. And my understanding is when we implemented this new PreK, they stopped that process. And so, I do believe that we should try to get the money from the state first. And I do believe because a lot of our residents are low-income, our residents would qualify. And then what our money should be used for on the city are for the things that the state or federal government won't pay for. I do think we should take another look at that. And in taxing, if you pick a particular thing and you tax it, you kill it and you lose the business and you lose the tax. General taxes, they're better for the city because they get spread out over a much wider base.
So, yeah, I believe that this task was very particular, because as you know, we have yet to get the full funds that we need from the state of Pennsylvania. And similarly, we're going to be dealing with school facilities in a way where we have to take care of our own problem because we don't have the funds in the state of Pennsylvania. And so, yeah, I think this is to help us solve our own problem again, which is an issue. Last question I have for the Union Teamsters and you, Mr. Brown. What conversations have you and the City of Philadelphia had about really preserving, finding ways to mitigate this tax or coming up with new solutions around this issue? Have you worked with the city since 2017 in a working group or ongoingly about this?
Okay. Prior to that, we were in active roles with the then mayor talking with him over issues to try to resolve it and keep it at bay and not go down that path. They did, however, go down that path and elect it in. At that point, it has been a fight.
So I appreciate this. I appreciate hearing the testimony today. So I'm an individual that if someone has a different opinion of me, I don't just run away from it. I try to have a conversation, to understand, empathize where that person is coming from and come to a healthy balance. I've always been that way. I can't help myself. I was never like that fighter person. So what I would love to see is a working group between the Administration, labor business as well as the child advocate organizations to figure out how do we come into a happy medium, because this conversation is going to be continuing to divide our city in a way that it doesn't need to be hostile. I don't think it needs to be hostile. Because what I am hearing, which is different, is that you all are interested in sustaining these programs somehow in the city, but I think there may be a way to do that where it's not harmful to anyone.
So to jump on that again, Councilman, I agree with you. Okay. I am a lifelong Philadelphian, 61 years. My children live here. My grandchildren live here. They go to school. Some of them go to public. Some of them go to parochial school. Not against PreK. We're all for PreK, all for kids. Okay. Our membership, we say the children are our future. Our seniors are our past and the children are our future. We are more than willing and able and have been and have talked to different Councilpeople over the years to try to resolve this issue. And a lot of the Councilpeople have been on our picket lines when we needed them and we will be there for you when you need us. So we would like to see something happen here, an adjustment. Something needs to change.
Thank you so much, Councilmember. I have a bunch of questions. He's shaking -- Jeff, you already knew I was going to have a bunch of questions. I just want to start off, so before I was elected into office, I was a community organizer and activist. My project was the soda tax as an activist organizer, so I'm coming from that perspective. But also since I've been in office, I'm very pragmatic. I believe in having this conversation and not being excluded because people think I'm going to be an automatic no, so let's start there. And also, I'm happy that you guys are open for a conversation because the conversation and the work has to be done before elimination. I think our Council body as a whole, and I'm not speaking for everyone, but what I'm hearing is we're not against a negotiation towards something new. We're against X-ing out this program without having something in place to sustain PreK, Rebuild and Community Schools or some iteration of that. And some of where my questions are coming from, I'm kind of going off script so my staff can just know that I'm not seeing any of that. One of my questions is around -- earlier someone said this is about supporting small business. And I just want to remind that child care facilities and child care is a small business. It's primarily women ran and in Philadelphia in general, a minority women-ran industry where they're gaining money and they just took a huge hit off of our business, $100,000 tax exempting thing with our business cuts in the city. So our child care providers are getting ready to be slapped in the face at the end of this year anyway because they have to pay taxes on the first $100,000 of their income. That's one thing. So they need to be a part of the conversation. And they're also not unionized, so we can't exclude them from that conversation. So we're thinking about this, all of these things should be included. And then also, I was wondering for the union members, do you know how many of your union members benefit from any of these programs that we're talking about eliminating before a conversation? How many benefit from whether it's Philadelphia PreK or ELRC program, which is the state program that you mentioned that you can qualify, especially if -- I'm not sure about your members, but your members make $50,000 to $60,000, so some of them, depending on how many children in their family size, still will qualify for the state program. However, once you hit the threshold, Philadelphia PreK has expanded it to include folks that might have one child at $60,000 a year. That $250 a week on that income is a huge hit regardless if you're working or unemployed. So that's one of my questions. Do you know that number and how many people did it affect? That should be a part of the conversation that you're having, not just with the government, but in union negotiation because union members have children and child care too. It has a huge impact. And my other thing is around, yes, the union negotiation around child care because women are usually the sole caretakers or worrying about that, so if there are women within your industry, child care hugely impacts them so that can't be off the table. And some of these child care programs will still be impacted or available to them if they're unemployed once your services that -- I don't know what you said, you go and look for a job and check in?
Union Hall, whatever. In order to go to the Union Hall, somebody has to watch the kids for you to do that, right. In order for you to go to an employment office, someone has to watch your children to do that. So child care has to be in place. And I would love if in the negotiation conversation we're not excluding the reality that child care makes everything else work. That's the root of everything else. (Applause.)
And I have these notes all over. I've been taking it down as you spoke. The other thing, I'm really concerned about, you know, we all are concerned about the cuts that our current President, his whole insight on things. And if we're talking about the negotiation about expanding the sugar tax because I'm not -- you mentioned cakes and cookies. I don't care what it is. I know that we need to pay for child care, right. We can expand the sugar tax, increase the sugar tax decrease the percentage, expand the percentage. We can figure that out in negotiation. But my fear is he's talking about eliminating you from being able to buy any of this stuff on SNAP. So I think that's part of the conversation but not the only conversation, because the reality is we don't know what food stamps is even going to look like over the next three years, whether we're talking about SNAP benefits or someone's paying out of pocket. So I think that has to be factored into the conversation because our current President is unstable and kind of randomly makes decisions that affects all of us. And that's why this conversation, it can't just be about business industry, it can't just be about union. It has to include the people. Because at the end of the day, we're all collateral damage to him. And I think if we don't include everyone in this conversation, the elimination of food stamp benefits is huge. We see it coming in November. Even if he does reinstate it, he's talking about eliminating you being able to buy sugary products in general, which is still going to impact your bottom line, which is still going to impact union membership. So we can't just allow this to be the conversation. (Applause.)
It has to be all inclusive of all the things that are coming down the pike. And I know it was a bunch of questions and a bunch of thoughts, but these are the things that I'm walking away from this hearing with, because I'm going to have to run off to a picket line, but the reality is all of these things have to be taken in consideration. And I don't want us to feel that we can eliminate certain members from this conversation just because you know that they're going to be not silent like -- I'm good for a good confrontation. I can go back and forth all day when some of my members won't. However, this is how we get good legislation, right, and then we want it to be better than what we created back in 2017. You said 2017 was the year, right? We need to make sure everyone is at the table and being realistic of all of the impacts we see coming down the pike, from the federal government to the loss of education benefits across the board. And we're talking about the state is going to fund it. The state can't even set a budget. The federal government is talking about cutting education in general. So we're at the brink of a crisis and the people who are going to be hit most are our poor folks and our children. So I would love for this conversation to continue, but we can't start with the elimination of the soda tax. We have to start with a conversation of all these other intricate issues that can get us to a good place where our industry and economy could grow, and the industry people that keep you making money and keep the industry growing are able to take care of their families at the same time. Thank you. (Applause.)
Councilwoman, before you leave I don't think anyone expects any changes unless we figure out a better way to do it because that wouldn't make any sense. We don't want PreK to fall apart. I understand that. I think everyone understands that. It's about a conversation of how could we do this in a better way, a more sustainable way, so I agree with you there. The problem with the city taxing items is the suburbs, if they don't tax the same items we're driving our consumers outside the city. So a broad-based tax, which makes it very small and a lot of things, is more palatable where you don't kill an individual industry. I think whatever we do probably has to be more broad- based. And I wanted to mention that a lot of my employees couldn't work without their kids being in PreK or daycare, and it's been probably 40 years as part of our contract with Local 1776 we do have day care benefits, so a lot of my employees have included in their contract paid for, paid for by us, administered by the union, that they could -- especially in Philadelphia, a lot of my employees take advantage of that. So you're right about that. Other unions should do it as well.
Thank you. I'm glad you guys are doing that. That's very important.
And I'm glad, Jeff, that you brought up about different options and maybe stretching it across other stuff that may help or maybe doing this, but that's what this is about. This is figuring out how again we make it sustainable. None of us want to get rid of PreK. Let's make that absolutely, positively clear. PreK is a must, especially in neighborhoods like where I come from and the rest of our Councilpeople come from. We need it. It's not a thing. I, myself, believe we should be paying for it as a city. I would also like to see us expand it. But that is a conversation on how we do this. Because the bottom line is within a few years, the soda tax is not going to be feasible. We're already putting up a lot of money to just get the status quo. That's not advancing this any further. That's not including more kids, because we have more kids that need it in Philadelphia. Maybe that also is looking at some of the parameters that we have set up already for the income levels and stuff like that. And I know that part of that reason we didn't have the income levels is because we wanted to make up for what the state and feds were not covering. So I'm glad to see that people are willing to have the conversation. That's what this is about, trying to put some people in a room from both sides to say this isn't working anymore, what do we do to move forward in order to keep child care at least where it's at, more importantly, to expand it. And that's all that is. And there's a lot of different ways we could do that. There's some big companies here, you know, that might want a tax deduction or just making a donation. A donation for them is probably cheaper than the tax, you understand. So maybe we can get some of these big companies to throw up some money also in order to cut the burden of this. Is there any more questions? Councilwoman, anyone, no?
I'm sorry. I don't think it makes sense for us to continue to be repetitive, right. I think everyone has said it. There needs to be a conversation as a legislative body. Councilmember Minority Leader Brooks and I were just having a conversation about the need for us to create a working group within the legislative body to be able to look at this and create some type of analysis and partner with all of you to be able to bring in your expertise, right. And how do we figure out, you know, the last thing we want to do is impact members or the workforce around removing programs that impact them, right, because then they can't work. But to me, I'm extremely frustrated because we've been looking at this since 2017, right. There's no reason why we haven't brought you to the table to have a conversation about how this is impacting business, families and children, right. There's just no reason for that. And so, I would like to consider myself a commonsense type of individual and we shouldn't get here without having had all of those conversations, without talking to Chamber, any of our Chamber of Commerces that represent businesses, without talking to anyone in the industry, without talking to unions about how is this tax impacting us in every single industry and in government and then get here to have conversations about what do we do and what are the options, right. And so, I'm hoping that as a result of this hearing we are able to work with everyone to figure out how do we make this better. I don't want my bodegas to close because they hire local. I don't want the manufacturers to figure out how they take their roots to other places because we lose revenue here, right. And so, I think that a conversation needs to be prioritized. We need to prioritize this conversation before we move forward, right. And it doesn't have to be a toxic type of a conversation. We don't have to fight with one another. We don't have to fight with the Admin. We need to figure out respectfully how do we protect and preserve programs and how do we protect and preserve jobs.
Thank you, Councilwoman. Thank you, everyone. Does anyone else have any questions for this panel? (No response.)
Thank you for coming in today and giving us your views of what's going on here and thank you for the willingness to actually get back into a room and try to work this out. Again, I think that bringing everybody together to come up with a plan, especially Coca-Cola and Pepsi and people like that, that actually can help us. The fact of the matter is that the loss of their business -- on top of the soda tax with the loss of the business, we need to figure out how we keep our stores, how we keep the kids in child care because that's important for their growth for expanding. We need to figure out how we expand it. And if that is partnering with some people in the philanthropy sector to try to come up with a plan that involves everything, not only a soda tax or whatever it is, whether we stretch it across all the products, whether we -- but how do we come up with this money to pay for these kids. And I think there is a way there. I think negotiations work. Business people know how to negotiate. They know that if them donating money and getting a tax deduction is going to be less than what their business is going to lose, I think that they'd be willing to do that. It just makes sense. So maybe we need to get everybody in the room. And I'm with my Council colleagues, that maybe we need -- maybe that's the legislation that comes next, the working group to put you and our people and day care and all in a room together on the PreK and work this stuff out. Whether it's a combination of some form of a tax, plus some philanthropical efforts, then we know what to do. One thing I know about the City of Philadelphia and the people and a lot of our big businesses, they step up when they have to step up. They step up when it's the right thing to do. And I think if we combine everything and all those things and look at all of it, I think we can come up with a better plan. And that's what it's about, keeping the program without adding more of a burden on everything that's going to come down the pike. Because the bottom line is we don't know what's coming down the pike. He may cut everything in the federal government and who knows when we're going to get a budget in the state, so there's no 23 question that we need to pay for it. The question is where the money comes from. Thank you for your testimony.
Mr. Kunkel, will you please call the next panel to testify.
Christina Roberto, UPenn Center for Food and Nutrition Policy. (Witness approached witness table.)
Hi, everyone. My name is Christina Roberto. I'm the Professor of Health Policy at the Perelman School of Medicine at the University of Pennsylvania. Sorry for the mouthful. Thank you so much for allowing me to testify today. The reason I'm here is that I've studied food and nutrition policies for nearly 20 years and I have been studying the Philadelphia beverage tax since it started in 2017, publishing multiple papers on its effects. I'm just going to talk about two points that my research can speak deeply to. There's obviously many other positive benefits of the tax, but I'm going to talk about what we know in terms of the economic impact. I'm going to talk about the health impact. My research team did a study after the tax went into effect where we looked at changes in unemployment claim filings in Philadelphia versus other counties in the state that don't have a tax. We looked one year before the tax, we looked one year after. We saw absolutely no evidence of change in unemployment claim filings in industries directly affected by the tax, like supermarkets or soda companies. So we don't have anecdotes about what's happening with these businesses, but I can tell you from the data that we looked at and published there was no evidence of that negative impact. Researchers at the University of Illinois, Chicago then did an even more comprehensive study looking at the economic impacts of the tax in terms of changes in employment counts. That was two-and-a-half years after the tax. They published that paper they see no changes in unemployment counts in Philadelphia that they can attribute to the tax. So I do think it's important to make sure that we're systematically bringing data to bear on these economic questions. Companies have many reasons for layoffs and changes in policies. They can be attributed to lots of things. We don't want to jump to assume it's the soda tax that's causing it. Number two, what are the health impacts. We're taxing sugary drinks in part. We're focused on sugary drinks in part because they're making us sick. They contribute to Type 2 diabetes. They contribute to obesity. They contribute to heart disease. They contribute to oral problems, right, cavities. These drinks have no 15 nutritional value. They're liquid sugar. Even a Snickers has some nuts, right, and it'll keep you fuller longer than liquid sugar. The highest consumption of these drinks is in the lowest-income communities who are suffering the most from these problems. So what we wanted to understand is what are the health impacts of this tax. We took millions of transactions from chain retailer data, from pharmacies, supermarkets, mass merchandisers in Philly. We do see a dramatic 35% reduction in the sale of these tax beverages that persisted for two years after up to when we had data from, and that was netting out some of this cross-border shopping that is happening, which we fully acknowledge is happening. We still get a 35% decline in these drinks, which is actually incredible from a health perspective. We then look at electronic health record data, dental data, data from CHOP, data from the health system at UPenn. We look in Philly. We need comparison sites so we look outside of the city. We saw a 30% reduction in cavities among children, a 22% reduction among adults. Not in the overall sample. In the Medicaid population only. It's our lowest-income people. We then see a small but meaningful reduction in the obesity prevalence in Philadelphia that we can attribute to this tax that we don't see in similar places not impacted by the tax. I was actually shocked because a policy like this that is targeting one harmful but (inaudible) category, I did not actually expect to produce health effects. As a scientist, as a researcher that studied this for a long time, it's actually incredible that it does.
And when you look around the world where now dozens and dozens of countries have implemented these taxes, when you look at the eight other cities in this country that have done it, the research is becoming more clear. They're also seeing reductions in obesity. We're seeing reductions in gestational diabetes from other data around this country. And that's why more cities and states are suggesting to do these taxes. In fact, one way to fund SNAP is do a tax at the state level, right. And, sure, if you want to expand it to candy because you need more revenue, great. These are products that are making us sick and we're seeing the benefits in multiple ways of this tax. I think it would be a grave mistake to repeal it. )
Thank you for your testimony, Doctor. I kind of would like to know where some of your numbers came from because they're telling us 1000 Teamster jobs were lost in correlation to the soda tax and 1000 UFC jobs were lost because of the soda tax. But you say that's not the case.
Yeah. So you could use publicly available unemployment claims filing data. What I'm trying to convince you of is, you know, I can share that --
Excuse me. I'm sorry. So I can look at the unemployment data, right. But that's taken into effect everybody. Did you look at directly the United Food and Commercial Workers and the Teamsters and the other union shops that may have something to do with this? Because of course if you look in general, it's going to look like it didn't do much. But if you target the businesses that it affected, that's something different. So could you explain that to me.
So that's what we're looking at. We're looking within industries that would be directly affected by the tax. So I can tell you, hey, this is what's happening for soda companies. This is what's happening for supermarkets. So they would all be captured in those very specific categories.
So you're not seeing the fact that the Teamsters went down 1000 employees and the UFC went down 1000 employees?
So I'm telling you we looked at this for the year before and the year after the tax and there was not evidence of any major impacts in terms of unemployment claim filings. You will see in the data, for example -
-- leading up to it when a store closes, which we are not observing in our data, you will see a big spike in the data. The data will pick up changes in unemployment claim filings and we don't have evidence of that in our data. Now, if five years out and it's job losses in this industry, they can really say anything. They can say it's because of the tax. There are all sorts of dynamic forces happening. What's --
Well, that goes the same way for you though. You can say the same thing.
Well, no, because what's unique about what we're doing that they're not is we are carefully selecting comparison areas that don't have a tax as opposed to providing here's what happened to my business. We can then look at that comparison to say, here's what would have happened if there wasn't a tax, here's what happened when there is. Without that comparison, you can't causally link the tax to changes in unemployment claim volume. (Applause.)
But we're still short 2000 jobs. All right. I'm good with that. The resource suggests that a link between the beverage tax and lower obesity rates, but considering sugar is consumed through countless other products, baked goods, cereal, snacks. How can we isolate that impact to be sure it's not overstating the effect of the tax?
So maybe it's helpful to explain. So part of the way that we're able to causally say the tax had this impact is the kind of study design we use and hopefully it's intuitive. So we basically look at changes in health, let's say obesity prevalence several years leading up to the tax and then we look at it after. But we look at comparison areas that don't have the tax during that very same time period. There's a moment in time when the tax goes into effect and we statistically model the trend of what's happening to obesity prevalence relative to places that are very similar but don't have the tax. And that's what helps us say, oh, the cause of this is the tax as opposed to all the different things that are otherwise happening.
My question is that you did the survey the year before and the year after it started, right. They're the numbers you're using to say that this is the case. We've had eight more years after that which you're not taking into account or effect, which is what we need to know now. I would imagine that what you're saying is true. They didn't lose any jobs before the tax because there was no tax. They lost a minimum after because that was the snowball going down, going down, going down, going down, going down. That's what I'm saying. I appreciate the study. I appreciate the time frame that you gave us, the two years. But we need to know now what those numbers are. This is 10 years in. So you're taking only two years, a year before the tax even started and the year after it started where the loss of jobs doesn't happen right away. Things like this are gradual. As the funds start to decrease, then the jobs start to decrease. So I'm not saying anything is wrong with your study or anything like that. I'm asking if we can expand your study, how's that, to include these eight years that you're not taking into account where we know jobs were lost.
But think about it, right. So if you look at my graph, which I don't have so I'll draw it for you, we see the impacts of the tax in terms of sugary drink sales drop immediately. And then in our data -- and that study is for two years after -- it just stays constant. And so, there's no reason to think that all of a sudden five or six years later there's some big change that companies have to make to start laying off workers, because the tax effects were immediate and they've basically been sustained for those two years. You're right, I don't have data five years out. But there hasn't been huge or dramatic changes.
13 Ma'am, you need the data five years 14 out because, Doctor, you can't tell 15 from the data from two years from 16 when it didn't start to when it did 17 start. That's all I'm saying. And 18 -- 19
In 22 those five years you would see a 23 steady decline from those 24 businesses and the number of employees that they hire. That's it. So all I'm asking is that maybe you guys expand your study to include the years in the thing because I personally don't get it. You got two years. One of which wasn't even included. There was no soda tax. And one that there was soda tax but it's the first year when it just started. We know that in the first couple months of the sugar tax, our estimated revenues were through the roof. We tripled what they thought we were going to bring in. But then what happened was the third month came and people figured out where they were going to get their groceries. My thing is I would just like to see the study expanded. And in order to see those years after the sugar tax was implemented because those are the years that are actually going to show you something. The year before and the year after ain't going to show you anything except what is there. It's not going to show you the year after they dropped a couple hundred jobs. The year after they dropped a couple other hundred more jobs, until we're at the present right now which is their numbers are 1000 Teamster jobs have gone out the window and 1000 UFC jobs have gone out the window. That's what we're trying to get to. No one's arguing the benefits either way. The health benefits, forget about it. It's great. And I love the fact that we're going down in obesity. I don't know if we can actually say that's just because of the sugar tax when sugar is still on the menu. You get candy bars, cereal, sugars and everything. We're only taxing one part of it, which is one thing. But my thing is that those numbers, for me they really don't mean anything because they're not from anything that counts. These are the years that count, after it was enacted. So I'll give you the first year. But I want to know what happened to the second year, the third year, the fourth year, the fifth year, the sixth year, the seventh year, the eighth year, the ninth year and the 10th year. We're 10 years in and it's not the same as when we first started. It's not even close to the same when we first started. So it's not really a question. I'm just saying that I don't understand where you're coming from with this stuff because there's nothing in there that has to do with what's going on right now in the City of Philadelphia with the tax, with the loss of income, the loss of jobs and things like that.
So my job -- can I just say my job -- can I just say my job is to make you skeptical, right. So the industry was making these claims. Jeff Brown was making these claims in that one year after and we were able to look at data. The same claims --
I'm sorry. I didn't hear Jeff Brown quote any jobs lost. I heard the Teamsters and --
The same claims are being made now. So I just want you to bring some skepticism to say, whoa, whoa, whoa, how do you know this is attributed to the tax. A lot of time has gone by. And I absolutely take your point. It's well-taken --
I would if you had the other years to coincide with and then I would be like, okay, great, we got some information here and something to go on. That's all I'm saying. Your numbers are not real. They're not right. Unless you're going to actually do the years that we've been paying into the soda tax and give us that information and the numbers, those two years, that's not -- do any of my colleagues have any questions? Dr. Nina Ahmad.
Professor Roberto, thank you so much for your testimony. I wanted to piggyback on the facts that you presented the impact on health, gestational diabetes. And of course, this is the only source that is unlike, say, the Snickers bar with peanuts, this is pure sugar with no health benefit whatsoever, correct? That is a fact that soda does nothing -- not only does it have the sugar, it also has carbonation which wears away at our dentition. Bicarbonic acid, which is what carbon dioxide is when it's dissolved in solution is causing our dental health to also in addition to the sugar get depleted. So I just wanted to highlight that as well. I wanted to see, have you had an ability or time to gauge the economic model that comes from this improvement in health? What cost-benefit analysis is there, might be there? Can we do it to really drive home the point about this?
Yeah. Thank you for the question. And so, I feel like important questions are being raised. It is data that we can look at, right. So we can look at some of these unemployment claims further out and my team can tackle that and then we can try to do some of this health modeling to think about. Right now I don't have numbers for you. I haven't modeled it, but we do know that there are higher rates of Type 2 diabetes, obesity, dental issues in lower- income communities, right. And so, we also know they have higher consumption -- before the tax they had higher consumption of sugary drinks. And so, when you're talking about a regressive tax, well, these diseases are regressive. They're disproportionately impacting low-income communities in Philadelphia. And so, if they have higher rates of sugary drink intake, that intake goes down because of the tax. They stand to benefit the most, especially in the long term and have more money in their pockets because they have health care savings. Now, that's how we think this ought to work and I don't have modeling data to present, but there's every reason to think those communities would benefit the most from it.
And also, just in general about scientific studies, they're always lagging because it takes time to collect information, to analyze and then present. So I just want to also across the board make that point, that it is easier said than done to be able to get all that data and make the analysis and then make a correlation, if there is one, to the point that my colleague was making about the impact post the time that you did that analysis. So it might be useful at this point to have a study, which again will be lagging. So it'll take time. It won't be available tomorrow. It will take a considerable amount of time to gather the data and then to analyze it and then present it. So that's like a two-year potential time frame we're talking about to have real evidence one way or the other to address what's being said. So I think that's a good path. We've all talked about doing more analysis. But what is immutable is that it has helped in the spaces that we wanted it to help, whether it's PreK, whether it's Community Schools, whether it's better rec centers and libraries as well as health benefits, we are seeing that. So that's what I would like you to testify to. That impact is not in debate.
Well, right. To me it's a win-win, because you're (inaudible) PreK, which in and of itself as you've all said and wonderfully articulated has these amazing health benefits, right, and has this incredible return on investment. And then it's also accomplishing this other goal, which I understand was secondary, but it's incredibly important which is improving the health of Philadelphians, particularly low-income ones.
Yeah. And to that point, there was no such thing as Community Schools before this tax was enacted. So there's a lot of things that didn't happen before because we just didn't do it. We had no resources to do it. So even though this is a receding tax, meaning it's going to go down as more people don't drink soda, right, that's how that'll happen. That was built into the model, right. And in the meantime, you would replace that potentially with the Administration to think of how we create a new model to fund all of this when there is a reducing amount coming from the soda tax. So that was built into the projection. And so, this is not something we're taken by surprise. I just wanted to also go on the record to say that, that this was the model we already projected would happen and would be successful if the soda tax amount went down because that meant less people were drinking soda in Philadelphia. Just wanted to go on the record to make sure people understand that this was just not some fly-by-night thinking, oh, we can do this and see what happens. No, there was actually projections made that Rob Dubow actually spoke to during that time that went on and that is bearing fruit now. We are understanding that, yes, are there some changes in actual amounts? Of course, there are because you can't predict that much into the future. However, the trend, which is what we look for in data, the trend is showing that this is working. I just wanted to make that point as well. So thank you for your testimony.
The only other question I have is how do you disseminate? So, for instance, we know that the obesity is going down, right. You're saying because we have the soda tax, that's a correlation to that because people are not buying the soda that they used to buy or whatever. But that's not actually the case. People are still buying soda. They're just not doing it in Philadelphia. So how do we know that the obesity is directly correlated to our actual...
Yeah. So our health outcomes, this is always a challenge in science to try to figure out cause-and-effect. And so, we think a lot about methods to be able to say it's actually this thing causing it, not just a correlation. It's causing it. And so, when you look at a health outcome like weight gain, obesity or dental caries, if you're buying soda outside of Philly and drinking it in Philly, it's not going to show up in your electronic health record if you see a drop in obesity prevalence that's captured, right. Everything you're eating is translating to your health. So we don't have to worry about that kind of bias in these data because if you're still drinking it, then we're not going to see a drop in obesity prevalence. If you're going outside the city and still drinking it, we're not going to see a reduction in dental caries. That's --
How do we know that? That's the question. How do you come up with these numbers? Because like I said, people are still drinking soda all over the place. Now, obesity went down. I get that. That's great. But how do you directly -- you understand what I'm saying?
Yeah, yeah, like how do you draw this causal conclusion. So basically, we have data from clinics inside Philadelphia for several years leading up to when the tax goes into effect. We need to compare those data to clinics that are just outside Philadelphia, right, still in Pennsylvania bordering Philadelphia, right. During that same period of time they don't have a tax, we have a tax, right. And so, then we're tracking what is happening to weight in these places and we're making statistical adjustments to make these populations look similar and we're following. And all of a sudden when the tax goes into effect, you start to model the trend. And this is a longer-term study because we don't expect changes in weight to happen until at least one to two years after the tax. So these are data that we have beyond two years, you look to see what happens to obesity in Philly. And actually, obesity in Philly is going up. It's going up because of the tax at a slower rate than the counties that are surrounding Philadelphia. Because we have that comparison, that's what allows us to say this tax is driving and causing these effects.
That's what I was trying to get. You can see the numbers in the county of obesity and Philadelphia. That's where the comparison is?
Yeah. And it's not just on a county level. We have electronic health record data. So it's on an individual level, many, many thousands of people and we can track at it. We can track individuals over time.
Okay. Now, that makes sense to me. So you're comparing the numbers from the counties on obesity with our numbers since the inception of the soda tax?
Yeah, and same thing for dental caries. If it's helpful to clarify when I say there's a 35% drop in sales, so that is actually compared to Baltimore, which is a demographically similar city but does not border Philly, because we don't want to have this issue of potential cross-border shopping contaminating that comparison.
And then one other question, because you said that obesity is going up, just not as fast as it was?
Okay. So it didn't actually get rid of obesity. It just slowed it down.
Well, of course. No one policy would ever do that, right. No one in this room thinks that
I'm trying to figure out where this information comes from and how we disseminate the information?
Yeah. So think about it, we have a huge health crisis in this city, in this country, right. And so, we're going to need many, multiple policies to tackle it. That's why taking a policy that's actually made a little bit of a dent and taking it away feels like a step backwards.
How much did the percentage drop between the county and Philadelphia?
Yeah. So a .4 percentage point change between Philly versus the counties.
But if you look at that in the context of health outcomes and our ability to impact obesity, almost nothing works. So even a small change on a public health scale makes a huge difference. Look at COVID, right. You might say 1% of the population is affected. That's millions of deaths. So you have to think in a public health lens. .4%, that's huge on a public health scale.
You gave us some good information. Mr. Kunkel, will you please call the next panel to testify please.
Rosanna Matos, First Up; Dr. Charles, Co-Executive Director of Incredible Kids Learning Center; and Zakiyyah Boone, Wonderspring. (Witnesses approached witness table.)
Hello. This is Rosanna Matos. Good morning and thank you for the opportunity -- wait. Good afternoon and thank you for the opportunity to testify today regarding Resolution No. 13 250028, introduced by Councilmember Harrity. My name is Rosanna and I come before you in a dual role. I'm a proud advocate with First Up, but I'm also a grandmom. First Up is an organization that supports early childhood education. A lot of the teachers and children that you saw here this morning, we support them. And a lot of them do host Philly PreK. As a grandmom to my first granddaughter Alianna, who will soon turn 3 years old, our family is counting on Philly PreK to provide her with the high- quality early education she deserves. Philly PreK's inclusive enrollment model gives my family and many other families the opportunity for early learning to be accessible for them. Alianna deserves to grow academically, build a strong social, emotional foundation and receive individualized instruction for a well-prepared, experienced teacher, just like the more than 5000 children that are currently enrolled in Philly PreK across our city. This program is more about just education. It's about stability, it's about equity and it's a lifesaver. It's about enabling the 5000 families to participate in the workforce because they have reliable, affordable, safe care for their children. It's about ensuring our youngest Philadelphians are ready for kindergarten and beyond. This is not a difficult decision. Philly PreK is a no-brainer. We must continue to invest in our children and support working families. At a time where so many programs that are for the people are under threat, I urge the City of Philadelphia and the people in this room to be brave and continue to do good for Philadelphia children, for my Alianna. This city has big homework and, that is, to look for access to high-quality child care, not for just the 5000 and more Philly PreK children and families, but for the more than 20,000 children that are not getting any funded that do qualify in the city. Now, speaking as an advocate, I want to highlight the broader impact of Philly PreK in our local economy. First Up works with small business owners, early education providers. It's ironic that we were under the Children and Families panel, but we can also fit in the Business panel and the Labor panel, Health and Administration. We cover all sectors. Early childhood education is a holistic opportunity for support for a child, a family and a community. These families rely on Philly PreK and these families include SEPTA workers, hospital staff, police officers and, yes, the single moms and single dads as well. The very people who keep our city running and safe, without stable funding these providers face devastating choices, closing classrooms. You heard about 1000 union workers that lost their jobs. Think about the teachers who have lost their jobs and the families that can't get to work because they don't have child care. They're also losing their jobs without stable education, without an opportunity for families to go to work. This city is not going to thrive. This city needs the support now more than ever. If we lose Philly PreK, we risk losing the infrastructure that supports our children, our families and our workforce. So I ask what's more important, where I buy my soda or whether our children have access to safe high-quality education. Can we really compare the cost of a sugary drink to a lifelong value of early learning? Let's be clear I like me a Diet Coke, but the sugar sweetened beverage tax is not just a revenue stream. It's a lifeline. It funds the program that transformed life. I urge you to protect this tax. In doing so, protecting PreK, our children, our families and our city's future. 0 to 5 education is a different type of care. It's human care. It's purpose care. It's care that comes from your heart. It's different than K-12.
K-12 also is needed, but the 0 to 5 sector, that care is totally different than what K-12 provides. Thank you.
I'm Dr. Charles Coe, MD, the Executive Director and founder of the Incredible Kids Learning Center organization. Thank you for the opportunity to provide testimonies today regarding Resolution No. 3 250028. I definitely want to first start off by saying that as a physician and practitioner, 0 to 5 is the most instrumental time of any child's life. The child care facility is the one that will help determine or sort of kind of can identify if child has a disability. If a child is past 5 years old and entering into the Philadelphia School District System, they're lost. That's how instrumental an ECE program is. My program Keystone (inaudible) I'm Philadelphia born and raised and also want to say I'm the first African American, Hispanic Coca-Cola scholar in this state. My goal today is to see more Coca-Cola scholars that look like me and you. I wouldn't even be where I am today. Nobody in this room would be where they are today without a good education. I am nobody without a great teacher, 100%. My organization single- handedly has educated 16,000 kids in this city for the past years. 9 While we're talking about this, I 10 can tell you what we're doing right 11 now. We're figuring out how to 12 feed 3800 families in my community 13 when November 1st occurs. That's 14 what I'm concerned about. I'm concerned about will these kids have an opportunity to eat, will they have an opportunity to learn. And guess where they're going to get their meals from when they do not have SNAP benefits? Programs like mines. They don't have food, buy food and you can't buy it in the store. Your center, your community center is going to feed you and your family. The reason I know this is because during the pandemic I fed 6000 families. I worked two full-time jobs to make sure that every person in my community not only were their business thriving because folks didn't know how to get grants, we showed them how to get grants. Every year we take 65 families out of the shelter. Because in a shelter system, your child is separated from your mother and your father so at least more stress on the parent. And we take them out because we know what the need is in Philadelphia. We take them out of those shelter systems. We put them in fully-furnished homes and help them become homeowners. We have the luxury to go back to a house. Most families don't. The beverage tax has been such a blessing, not just for my children as well as our community. For our city, when this developed, understood that there was a need and Philadelphia sprung into action to realize that the youngest members of our society mattered. In other states, kids don't matter. In other states, specifically sometimes even in Philadelphia, there's a price tag on how valuable the Brown child is versus a child in a suburban community. I created Incredible Kids to make sure that the same private school education -- preschool education, when you go to a preschool center in the county, the kids are well-prepared. You come into the city, there was a lack of structure. Programs like Roseanna's Children First, First Up are the ones who help quality -- they bring quality to the city. It's disheartening to say, my child, your child, your child or even your child shouldn't be entitled to a high-quality education. If we do not have the program, that is going to be the root cause. No high- quality education for anyone. I can tell you right now as a physician the hardest conversation I have and as a trauma specialist is when I have to go and have a patient sitting in front of me whose child is taken from them because they don't have a resource or a community center. Have that conversation with the parent who's lost their child. There's nothing you can say. Our programs save kids. Our programs feed families. Our programs create jobs. Our programs beautify the community. We have beautiful community centers because the PHLPreK programs enable you to have funding to beautify your space, to beautify your community.
I shouldn't take my child to a different community in the suburbs because the park that we have sucks or they don't have a high-quality education so they leave the community to take their child to a different community, so that in lacking our community suffers. Therefore, if our community is suffering, we don't have high-quality programming so that's another win for the suburban area, not our city. I'm born and raised Philadelphia. Proud to be a Philadelphian. My goal is to make sure that not only was I able to become the first scholar in the city and state, but that my young brothers and sisters and all in between have the same unique opportunity to do so. PHL PreK is educating more than 5200 children by giving them high-quality early childhood development within their community. When we talked about people losing jobs, PHL PreK, PreK in general created 1400 jobs. 1400 leaders in the city. Our city is based and built on leaders. We educate them from 0 to 5 to make sure that they can get a position. You, me, you and my counterpart to the left of me, they would not have that if it wasn't for these investments in these programs. We've also had the opportunity to develop Community 20 Schools serving over 10,000 students. So when we think of the essence of how many kids are in the city, 15,000 children citywide went to these PreK programs. My concern is when we go to have a conversation with the big business leaders, can we also make sure that the ECE community has a seat at that table? Because during the pandemic I cannot tell you, 912 programs closed because there was no funding. During the pandemic, we were almost ready to lose all of our PreK programs. In this economy that we're in now, if we do not have the support in these programs, there will be no child care. I guarantee you everyone that works in City Hall who depends on child care, they will not be able to show up to work. We discovered that during the pandemic. I heard the gentleman say $50,000 to $60,000 was the income for someone that can work at a store. Teachers typically makes 30. I know that for a fact. I served years for Jevs Human Service in the Frankford area and half of my case roster for social workers in the 19124 zip code, half of those people that were teachers were getting government assistance because they could not make it. over the income threshold, so 50,000 to 60,000 is a blessing for some people. When you're typically making 30 if you do not qualify for subsidy, you cannot take your family out of poverty into promise. That income threshold is a nightmare. So you cannot -- how do you excel. We don't want folks leaving the community. If anything, we want to educate our people. We want to bring more resources in the community because in essence, that's how the community wins. I'm a community guy. It's nothing no one can tell me about what goes on in the community because I work there and I stay there. My programs are there. I have more teachers who were Welfare-to-Work recipients at the Northeast Earn Center in Frankford Avenue, where I so proudly serve, that are now Bachelor's and Master's degreed individuals winning through that education. And guess how that education was paid for? PHL PreK pays for those teachers for free through the Teach program. That is a blessing, that you can live in our city and state and get a free, high-quality, not even just a PreK education, a college education. Where college right now is not even in the reach of any person that we know of. That means that family is now winning. That child is going to win. That child has a resource. Do you know how many cases I have from DHS and trauma- informed cases in my center, I lost count when I got to 200. Trauma- informed care, early intervention, all that starts at the PreK level. The teacher is the therapist, the cheerleader, the coach, the mascot, hell, the second parent. They're the ally. )
Parents don't have enough resources. I am with you. Parents need more resources. You know who has the hardest job in the world? The damn single mom who can't take a promotion, who's a domestic abuse survivor. I know because I had a conversation with one of them this morning who came from the shelter system. And guess how she united with her kids because we fed her and her kids. When you walk around with a size 9 blueprint of a Timberland boot on 10 the side of your face, but your 11 kids come to us to get a good 12 education. Child care centers are the safe haven and the essential backbone of the city and state. None of us will be able to be functioning the way we function today without high-quality PreK. When we talk about solutions, ECE or the practitioners are never part of that conversation. Decisions are made for educators, keyword, educators who can educate other people but they're never part of that conversation. That's the hardest part. The most MVP people in this city and state is an educator who does not have a voice. I get to have a voice as a male. You know, I can become an ECE provider, I can become a trauma advocate and I can become a physician. All three of those roles is attributed to the strongest woman I know who's no 13 longer here and who was an educator herself. So I look at the priority that I have to have and the weight of the world on my shoulders, making sure that the ECE community continues to thrive, that we have the appropriate resources. That means adequate funding. If you ask any teacher within the PreK setting when was the last time they received a raise, they'll sit there and they'll look at you and they'll say they do not know. They receive $10 to $13 in a salary that keeps them below the poverty line. But we can have someone making $50,000 to $60,000 and a teacher makes 25, 30 if she's lucky with a Bachelor's degree. Let alone a Master's, if she's lucky she can count on 45. Lucky, that's the key word. We were sitting there thinking, okay, maybe we can give teachers an extra $1,000, an extra (inaudible) whose lights about to get shut off. It will mean something. We have a community center that could potentially open in a community that has an available space, but there's no 21 funding. I, myself, would educate 16,000. I want to educate even more. It breaks my heart to see programs closed during the pandemic and they have not reopened. If we continue on the path, you will have several more. Are we saying that our kids do not matter, should not matter and will never matter? That's what we're saying. What we have to figure out is how to make sure that they know that they matter, show them that they matter. The best way we show them is by showing up for them. Our children don't need anyone to keep talking. We need champions in education, champions for women, champion for rights. We need champion for people to say I believe in you, I believe in your community, so we work together to figure out how to strengthen this community so we don't be in a position where every year we continue to lose. Because every year we continue to lose every dollar -- I'll break it down to you in layman's terms. Every dollar we lose, that's a child that doesn't have an education. Every dollar that we use, that's a person that cannot go to work. Unemployment, let's talk about how many teachers were unemployed. I know for a fact we support the local grocery stores. Our ECE programs single-handedly create ecosystems within the community to make them thrive. It's the only reason somebody can work at a supermarket. I know that because I have more supermarket employees in my program than anywhere else, and we're at the Northeast Corridor. The only reason somebody can go to work for SEPTA or to clean these streets or to be security at a Walmart or at a supermarket where everything's locked up, is because they have adequate childcare. There are also preschool providers that exclusively provide childcare for unionized workers.
That means they can get the work. So if they don't have a program, would they be able to work. We have programs where because of exclusive contracts within the union, their kids get a high-quality education. Because at $50,000 and $60,000 a year, they're over the income threshold. They do not qualify for it. So strip away child care and let you keep your 50 to $60,000 a year salary. And now, factor in $2,400 for an infant, $1850 for a preschooler. That's not even including a child with a disability. Your rate doubles because you now need double staff, and they're not even staff. They're specialists. I ask and I urge everyone not to take away, but to contribute to. C. level because I was just there last week, so I know what that's like. I want to make sure that our programs not only continue to thrive, but our children in our city no longer lose. You go to other cities and states and the children are winning. There should be no reason why our Philadelphia child should not win. It's everybody's job in this room to make sure that they win, not to take from them. What are you taking from a child who doesn't have anything? What do you take from the families who don't have anything? (Inaudible) supporting your help? How do we help them is the bigger question. In conclusion, the real question is not why we take something away that is working, but rather how can we build upon its success. We must identify ways to strengthen funding through additional initiatives, which I love, that ensuring greater access to these vital programs while setting the standard for higher education are valued and treated within a PreK system. Every day our teachers show up on a wavering dedication to nurture and inspire our children. I do believe it's about time that we show up for the same level of commitment, respect for them. Once again, none of us will be here without great teachers. Thank you for your time. )
Please state your name and begin with your testimony.
Good morning, afternoon now. My name is Zakiyyah Boone. I am the Chief Executive Officer at Wonderspring Early Education, a nonprofit provider of quality early learning programs for the past 60 years. Thank you for the opportunity to provide testimony today regarding Resolution No. 250028, introduced by Councilmember Harrity. As has been previously said, no one here is discounting the importance of PreK. What I am going to say, before I even dig into the impact on our youngest learners, is my phone number is 610-733-1857 for the record. I am more than happy to convene all parties to find stable funding to increase PreK in the City of Philadelphia. Let me tell you why this matters. This tax links accountability to opportunity. We've heard it. No one is saying PreK doesn't matter. No one is saying out-of-school-time programs don't matter. What we need to decide -- and thank you so much, Councilwoman, for your statement -- is that we need an across-the-board way that we can agree upon to sustain this funding. Let's make that happen. Number one, repealing or even reducing the funded tax risk destabilizing the funding stream at a time when, as we just heard, with federal funding in jeopardy, so much is unstable. We need to expand, build upon what we already have. In the words of our beautiful, illustrious Mayor, One Philly, A United City. Let's come to one table. Let's not point fingers at whose jobs are more important. Teacher jobs are important. Union jobs are important. Everyone has a family to feed. Let's not dispute data and facts about the positive impacts on health. I heard 30% reduction in cavities. That's a win all day long. No matter where the funding comes from, I would ask, urge, implore City Council to bring together educators such as myself, advocates such as myself, business persons such as myself. I failed to mention Zakiyyah Boone, MBA. Parents such as myself -- in fact, I gave birth to a teacher who is now teaching 3rd grade because I believe that much in the power of education, I am willing to work. But take away something that is already working, that is already served children, senseless. I encourage that conversation where we put our heads together, One Philly, A United City. I'm going to say it again. Let's be smart enough because our children are counting on us. Thank you. (Applause.)
Thank you for your testimony and thank you very much because you're the first person that actually made a comment that actually seems like you're getting what we're trying to do here. This isn't about getting rid of anything. This is about how do we again make this thing sustainable and expand it, because right now it's not sustainable, first off, and we cannot expand it. Where do we go from here. That's what it's about. Nobody is arguing or debating the benefits. That's why none of us -- you haven't heard any of us say anything about getting rid of anything because this isn't about that. This is about how do we get this to be able to go for kids in the future. It's about more kids. It's about setting it up so that this goes into the future, because this is what we should be doing. We should be paying for it. It shouldn't be from a tax that's hurting poor people, the same people we're trying to help. But we can't get rid of a tax unless we figure out where the money is going to come from to make up for the program. The bottom line is my mentor John Street always said, in a budget the size of ours, $6.9 billion, anything under 100 million is an accounting error. We need to get our priorities straight. If we have to move money around, we have to move money around. But we need to figure out how we pay for this program in the future. We don't have to worry about it right now. This year we're only going to have to put up a couple of dollars. That's no big deal. Next year the same thing, we're only going to have to put up an extra $4 million. But then the next year it's 7. And the next year it snowballs from there. Then what do we do right now. We're already at half the cost. That's what we're bringing in. It's 83 million for everything and that's not counting Rebuild now. Rebuild, that's a whole other animal. We're doing that with loans and bond deals. anyway. That's already coming. That's not being paid by the soda tax. They could say and make it switch words around and make it sound however the hell they want to make it sound. But the bottom line is that this tax is not doing what it was supposed to do and we need to get a handle on this now. This isn't something we're going to fix. This is something that we have to make sure that the money's there. And right now the money isn't going to be there and we're going to have to -- and again, it's not going to be under my watch. This is going to be down the road when another Council group is in this room and they're going to have to come up with that money. Just like this Council right now is coming up with a billion dollars this year to pay off a bond deal that we did in 1998, and that's why we're in the predicament we're in, in the first place. Thank you all for you know all you do, because there's no 7 doubt, teachers are the first line of defense for us as parents and for our children. You guys take care of them. And I've said it before, teachers are teachers, they're counselors, they're family. That's for sure. This isn't about any of that. It's not about how good the program is. It's great. This is about how do we fund it for future kids, because right now we're losing money, money, money, money. Listen, eventually we're going to have to pay for it anyway. That's my saying. If we're going to have to do that, let's throw the money at it. Let's expand it. Let's make it something that we can be proud of. But none of us are talking about getting rid of PreK. That's outrageous. It's just ridiculous. All right. Any questions for this panel? (No response.)
Again, thank you for coming down. Thank you for staying all day too. We appreciate all you guys do as educators and thank you for helping our children. (Applause.)
If I may, Councilmember. When you guys are having those conversations, the best people I believe in alignment is being able to sort of ECE community, my colleagues and I are more -- we had this in a meeting --
-- at that table to have those conversations to make sure that if we're going to get some wins here, that we have those universal wins that can contribute to many, many more seats in the future. You have a whole participant. I can restructure a medical schedule and be here like nobody's business. And so, I know what the fights like when you have to go behind closed doors and know for a fact that we could be two different races but the same mission. And when you need someone to go and you like you say the Eagles being there for their teammates, you have a whole team that wants a seat at that table. So when we're fighting, we know we're fighting for it and make sure we get to fight for it again. So we thank you for your time 100%.
Thank you, Doctor. I'm starting to think that we need to form this working group asap because communication seems to be the lack that we're getting here. Mr. Kunkel, will you please call the next panel to testify.
Fran McGorry, Liberty Coca-Cola; Reginald Goins, the Honickman Group; Michael Howells, PFMA; Jennifer Rodriguez, Greater Philadelphia Hispanic Chamber of Commerce. (Witnesses approached witness table.)
Thank you all for being here today. Please state your name and begin your testimony. MR. McGORRY: Is the mic on? My name is Francis McGorry with Liberty Coca-Cola. Hello? My name Francis McGorry, Liberty Coca- Cola. So good afternoon, Chair Harrity and members of the Labor Committee, those that are left here. I am the co-founder and CEO of Liberty Coca-Cola. Thank you for the opportunity to testify today at this beverage tax hearing. Coca-Cola has been proudly served in the Philadelphia and its neighboring communities for, believe it or not, 123 years. We employ over 3100 people across our franchise territory, which spans from Delaware to Southern Connecticut, including New York boroughs up to Upstate New York. In Philadelphia, we employ 600 people who live and work in the city of Philadelphia. Our company is deeply rooted in Philadelphia and the city neighborhoods and the economy and the workforce. We take pride in being more than just an employer. We are community leaders, partners. We support organizations such as Police Athletic League, the National Constitution Center, the Philadelphia Zoo, the Franklin Institute, the Special Olympics, Ronald McDonald House, Children's Hospital, to name just a few. These partnerships really reflect the belief that a strong business has to be strong in the community and that is really something we are absolutely passionate about. We're also investing heavily in our community in our facilities, especially in sustainability. We think that's important as a leader in the community. At our Juniata plant, our production plant is one of the largest in the Coca-Cola system. We're proud of that. We've replaced all of our plastic rings with paperboard carriers, reduced plastic use by 200,000 pounds. Our 20-ounce plastic bottles are made 100% plastic-recycled reused bottles. We've upgraded our entire fleet, reduced emissions by 30%. I want to thank Councilwoman Quetcy Lozada for really partnering with us in the community here, our Councilperson. So thank you for that. Despite all these efforts and investments we've made locally, the beverage tax have really had a profound and lasting impact on our business, our employees and our communities we serve in Philadelphia and where we work and grow. And I'll explain a little bit why. I grew up in Philadelphia. I went to school in Philadelphia and I'm proud really about being part of Philadelphia and the community. Two of my best friends are teachers in the Philadelphia community, so I know a lot about the Philadelphia community and very, very proud of it and support it. Our internal data -- and this is our data, it's our books and we're open and transparent about it -- reflects that since the beverage tax was enacted, we experienced the 45% decline in beverage sales within Philadelphia. That's within the city regions. And we have tax figures that back this up. While sales in the surrounding suburb markets and zip codes are marked, and we have all that data, increased by 17%. You're going to say why isn't it exactly the same number. It's because people can't leave the city to shop. Only the affluent that have cars can shop outside the city. So not all those sales actually can get picked up by outside the city. That shift reflects more of a change than just taste and preference. It shows consumers are really just shopping elsewhere to avoid tax, taking their spending power and the city's revenue with it. Basically we heard it today. They're taking the entire basket. We heard it from Jeff Brown. They're taking everything with them, their entire shopping basket. For Liberty Coke, that resulted in a reduction of more than million physical cases, and there's math behind all that of products sold in Philadelphia. And that ranges from juices, sports drinks, diet sodas, diet teas, about 5% of our total Liberty Coca- Cola beverages of our entire franchise. So again, it's 5% of 90 million cases sold.
So what do we do to adjust for these market changes, because people are talking numbers theoretically. We cut jobs in the Philadelphia market, but we shifted our delivery workers, and Jack mentioned it. We shifted them to outside the city because our sales outside the city picked up. So we moved our drivers outside the city. They're not paying wage taxes or paying taxes in Bucks County, Montgomery County. And a good portion of the sales went to Cherry Hill and other portions of Jersey. So that's where a lot of our jobs went to, merchandising jobs, sales jobs. At the same time, the Philadelphia beverage industry absorbed roughly $68 million of lost wages. That's all the impact of those wages that got lost, nearly as much as the city collects from the tax, according to an updated Oxford analysis that we just got back from 2024. This wage loss reduces household income and spending power across all Philadelphia neighborhoods. In addition, the same study reflects lost beverage sales of almost $76 million annually. So the combination of the lost wages, the lost beverage sales is about $144 million. Again, a snapshot until 2024. 6. That's at least $4 million that just goes away, never going to get back, unless the sales come back. So that's pretty substantial. Philadelphia households are also paying a lot more. You heard this from Jack. I don't want to be repetitive, but I'm just going to go in a little bit more detail. The retail price for many beverages have increased between 32% and 40% once the beverage tax and sales tax both apply. 55. It's 40% increase is what the penny and a half per ounce is, $2 increase per 12 pack that is added on. 80. 80. I think Jeff Brown said it's a dollar increase per bottle. 47. 30. This increase, we don't pass it on. That increase, based on the law, says the retailer has to put it on the invoice. The consumer has to pay it. It's not the beverage companies. It has to get put on the invoice. So I think that's a misnomer I heard today. We're not passing it on. It's passed on based on the law. Liberty Coca-Cola remains absolutely committed to the city. We want the city to know that these costs are real for the working families and small businesses that serve them. You go in North Philly right around our plant, the bodegas and the small businesses, their businesses, whether you like it or not they sell beverages. It's not just soda, it's juices, it's teas, it's every other product. They lost half their business. Half of them went out of business, small businesses. For higher income residents, I said it, they just avoid the tax. They hop in the car, jump over the city limits and they take their whole grocery cart and pile up their groceries because they're doing one stop. Jeff Brown said that today. I just want you to know Liberty Coke is absolutely committed to the city. We believe it's important to fund the vital programs. I want you to know that. We absolutely -- even the PreK or even the Rebuild, just the beverage tax, you see the numbers. You could project it out 10 years. It's going to continue declining. People are going to get smarter. It's Philadelphia. There's a black market. It's not going to stop. It'll accelerate. The wage taxes will continue to decline. That's not going away. So we stand ready to work with City Council, the Administration to identify any fair, long-term solutions really to sustain essential programs to make Philadelphia really a competitive city. Right now it's not growing and this is one industry that's not growing. It's actually going backwards. S. with a beverage tax. Chicago repealed their sweetened beverage tax several years ago. West Virginia who had a beverage tax up until last year, after 71 years just repealed. So thank you for your time. Thank you for your service to the people of Philadelphia. Thank you.
My name is Reginald Goins and I am the President and Chief Operating Officer of the Honickman Companies. The Honickman Companies own and operate beverage businesses from New York all the way down to North Carolina. And most of our facts, and I have a whole list of facts, are very similar to what Mr. McGorry just stated. So I won't restate those because you all have had a long day. I've been sitting back there listening to all of this. I don't know how you all keep it all straight quite frankly. But I want to say that all the facts that Fran have are absolutely accurate. I know you've had people up here with contradicting points of view. It is an absolute fact that since the tax was put in place 40% of our volume in the city of Philadelphia. In the surrounding areas, we've had 27% increase outside of Philadelphia. We own and operate beverage companies from New York to the North Carolina border. So all the folks that left Philadelphia that went shopping somewhere else didn't kill our business. We still have it. It's outside of Philadelphia. So what did we do? I think it was Councilwoman Richardson that said it earlier, businesses know how to flex. We sure do. What did we do, we flexed. So those people who used to work in Philadelphia no longer work in Philadelphia. They work outside of Philadelphia. We put them to work in Southern New Jersey. We put them to work in the suburbs because the volume in Philadelphia went to other places. So this is absolutely 100% not about trying to eliminate PreK. I'm a product of PreK. I grew up as the youngest of 8 children. My mother had a 9th 9 grade education and my father had a 10 3rd grade education. My family 11 grew up -- I'm a product of PreK. 12 I graduated high school at the age 13 of 16 because I had a fair shot. 14 We grew up poorer than poor. So this absolutely has nothing to do with the PreK or any of that stuff. So I completely commend you all for the thought of doing something to help the Philadelphians, especially the people who are in need. I am the Chairman of the Board of a nonprofit as well, as well as running the soft drink businesses we run. I chair Volunteers of America of Greater New York, $190 million nonprofit. We run a lot of the homeless shelters in New York City. The last thing I want to do, the last thing our company wants to do is hurt people who are in need. So this absolutely has nothing to do with that and we would welcome the opportunity to figure out a more sustainable, long-lasting solution to helping the people of Philadelphia, which the Honickman family, who've been in business since 1957 here and have given just a ton of money from a philanthropic standpoint, to help people in Philadelphia, be more than honored to help figure out a solution. The beverage tax is not it.
Just real quick while I have you two there before we move on to the next one. Just very general question: When they were doing this, you were both around, right? Did anybody ever come to you with a philanthropical option to this? Because in reality, what you just said, which struck me as new information, was the fact that by law you have to pass that on to the customer, right? That's correct what you said? MR. McGORRY: We don't pass anything on. The retailer by law has to put it on the invoice. By law, they have to submit it to us to now submit it into the city. So we act as the broker, the broker of record to collect it. So it's more of an accounting. We play accountant for collections.
All right. Thank you for that clarification. MR. McGORRY: But there was no real conversation. I was here from the Nutter two administrations and the Kenney. There was never a real conversation about any charitable measures at all.
Is that a real conversation in your mind? MR. McGORRY: I think we should discuss it because it's easy to (inaudible) in a vacuum without guidelines and parameters governing it. I worked for the City Controller's Office so I think there should be a broader conversation around that, if you know what I mean.
Yeah. Nobody even asked you to donate some of this money in order to help us?
Reginald's correct. We give a lot back in the city. That's what we do, our employees, everything. I mean, I don't know if you saw the Jefferson Hospital that has the Honickman Center. That's from these same people, sell soda. You go down to where Project HOME happens and there's a Honickman Learning Center for underprivileged people, that's the Honickman Companies. It's the same people who are donating and giving in Philadelphia since 1957. It's the same people so --
That's what I was getting at. You guys are already giving millions upon millions of dollars in charity. Nobody actually even asked you if this would be something that you would be willing to support voluntarily rather than whatever. But thank you. Councilwoman Lozada had a quick question and then we will proceed. I just wanted to ask that question while you guys are up there.
I want to say thank you to Jack at Liberty Coke and I want to confirm and reaffirm that he and his organization have always been present. Have always been very supportive of activities and events and groups in the 7th and I'm sure beyond when asked to support anything that is happening, whether it be for children, whether it be for seniors, whether it be for just general (inaudible). And I just want to say thank you. MR. McGORRY: You're welcome. And she's hard to say no 21 to.
Yeah. I think that what we'll hear and it is very consistent is that, as always we have become, as the Mayor likes to say, expert articulators of the problem. What I will add to that is that although many know the problems, none of us want to respond to the difficult decisions that need to be made to be able to fix the problem. And so, I think that this is the beginning of what I hope are more conversations through a task force or a working group that will bring us together to find more sustainable solutions around how do we do both, right, how do we protect our workforce, manufacturers and small businesses working, operating and thriving, and how do we respond to our children through PreK and afterschool programs that are absolutely necessary in order to keep our (inaudible) working. And so, thank you again for all that you do in the 7th and beyond to make sure that the (inaudible) are supported.
I'd like to make note of our colleague Councilman Curtis Jones. Did you have --
Thank you, Mr. Chairman, and thank you, members of the Committee. I'm one of the survivors of the soda wars, if you would. I was here, liberated a long time and I was listening to the hearing in my office and I remember Mr. Hyman sitting right outside my office, because I think we had a plug in there that he could charge his battery. And literally, this chamber went back and forth about where we were. There were eight votes, there were nine votes. There were times that Bill Green, who used to be here, was the anti- soda tax guy. And at times, I picked up the banner to become the soda tax guy. But we all, all of us cared about the kids. At the end of the day cared about the kids. One of the things that Member Harrity, Chairman Harrity wants to do is figure out sustainability. He wants to figure out is there a reliable substitute for the soda tax. And someone may argue tax it was an aggressive tax and this, that and the other. Some say that -- but what made me come down this hallway is the word flexing. As a benefit, I did not know that my grandkids at the time could not get in preschool. And the surprise came to me, the first preschool class that Jimmy, Mayor Kenney at the time, sat over there and I'm looking in the audience and guess who's there? My grandkids were there. And I was so shocked. I mean, it was -- I did not make a call. It was organic. It was original, and it almost brought a tear to my eyes. My grandkids are doing well because of that PreK. They read -- one of them suffers from -- she's on the spectrum, autism, and she needs extra care and extra time. So I care about jobs in the City of Philadelphia. I love my grandkids. I care about jobs leaving but I love my grandkids. And we always should couch things as how do we get to a win-win, how do we get to a win-win. I visited the Pepsi plant up there. I think it's in your district -- no, it's Coke. Sorry, the opposition. We walked through and so I know what economic benefit you guys bring to our city and I appreciate your contributions. But we got to figure out a win-win. And before we take our foot off of first and cut soda tax, we better know because it's not just about my grandkids. It's about all of our kids. And everybody knows that if a kid cannot read up to about 4th grade, we know how many prison cells to build. It is that serious. So I just wanted to come down. Thank you for indulging me, Mr. Chairman. You almost lost my vote. I ran down the hallway. I said flexing. You know I'm for it. So you said that many of your employees left Philadelphia to go to Southern Jersey, I think was the quote.
Didn't have the work because we don't have the routes. The soda sales are not there.
The people they would have had there over in New Jersey because the sales required it. It was more sales over there so they needed more people.
Councilwoman Richardson said businesses are good at flexing. And I said, yes, we had to flex to --
Just for the record, it's not Councilmember Gauthier or Richardson. It was Dr. Ahmad.
I just wanted to let you know that I support the concept as long as there's a win-win, as long as our kids get that PreK. There are people that want to -- we want to expand PreK. We don't want to (inaudible). We want more kids to benefit from PreK. I see the difference. I saw it in my own household. So I want to bring soda prices down, I do and I respect the economic contributions you guys make. Thank you, Mr. Chairman.
Please state your name and begin your testimony. Thank you.
Good afternoon. I'm Jennifer Rodriguez and I serve as President and CEO of the Greater Philadelphia Hispanic Chamber of Commerce. I appreciate the opportunity to speak today on behalf of our members regarding the Philadelphia beverage tax. While GPHCC does not currently hold a formal position on the tax itself, we're actively engaging with our members to better understand its impact and implications. Earlier this month, we initiated a survey to gather updated feedback from our members, our business members. Preliminary feedback aligns with concerns raised in our original survey conducted when the tax was first proposed. The businesses that responded, primarily small enterprises located in North Philadelphia neighborhoods include bodegas, restaurants, retail shops and professional service providers. Many operates with fewer than five employees and are deeply embedded in their communities. Among those who sell sugar sweetened beverages, some reported raising prices to offset the tax while others noted no 17 direct impact. However, indirect effects such as changes in customer traffic and supplier costs were mentioned. In fact, notably one respondent observed improvement in nearby parks, suggesting that the tax has had visible community benefits. So the results are mixed. When asked about overall impact of the tax, responses have been mixed. 50% rated it as very positive, while others express concern (inaudible). Importantly, 75% of respondents believe that the tax has supported improvements to public services such as parks, schools, libraries and PreK programs. We want to emphasize that one of the original goals of the beverage tax works to expand high quality access to quality PreK education, a goal that our members -- and we have spoken about this today -- strongly support. It is essential that this benefit continues to accrue in our communities, particularly those who served by Hispanic-owned businesses. Early childhood education is a foundational investment in our city's future. It is one of the top challenges for small business owners and its sustained funding must remain a priority. At the same time, our members recognize the need for balance. They understand the importance of investing in public services. But they also emphasize that the burden borne by small businesses, especially those in underserved communities must be acknowledged. One respondent eloquently stated that the revenue from the tax should create a balance supporting essential public services, while also easing the burden on business community. To that end, perhaps there's an opportunity for the beverage tax to be very transparent and equitably allocated and there may be an opportunity for a portion of these funds to be reinvested directly in the businesses that have absorbed the cost of the policy through small business grants and other economic support mechanisms. This is a difficult compromise our businesses have made. Accepting added cost and the revenue loss, we hope that their sacrifice will lead to meaningful community investment. And so, we believe that honoring this compromise is not only fair, it is essential to building trust and fostering inclusivity. Thank you.
Good afternoon, Committee members. My name is Mike Howell. Thank you for the opportunity to provide testimony today. I will do everyone in this room a favor and I will be brief with my comments. I'm here today on behalf of the Pennsylvania Food Merchants Association. PFMA has been advocating for the food and beverage industry across the Commonwealth since 1952. Today the association represents more than 600 members and 3000 retail food stores that collectively employ more than 350,000 Pennsylvanians. In Philadelphia, PFMA members operate more than 140 grocery stores, convenience stores and other businesses in the food supply chain, employing thousands of city residents and serving millions of customers each year. Jeff Brown spoke earlier and he really did a nice job of encapsulating what our industry is seeing. And all I would really add to what he said is he is not the exception. His experience is not unique. This is something that we've been hearing from our members up and down the food supply chain. The one thing I did want to mention specifically we've talked about volume here. As has been mentioned, we saw an almost 50% decrease in beverage sales within Philadelphia since the prohibition came into effect. This decline is not only reduced revenue for businesses on those specific items, but it's also decreased foot traffic in grocery and convenience stores, which has adversely impacted other sales. I think what's important to understand about the grocery industry is that it survives based on sales volume, not on the margin of individual products. We need a lot of people coming through the doors to make the numbers work and the soda taxes hurt us in that respect. The average margin in food retail is between and percent. 2 So in other words, the difference between a grocery store ending the year in the black and the red is between $.01 and $.02 on every dollar of revenue they make. That's why this tax has been a real challenge. Those margins are already fine and there's a limited ability to absorb those costs when it comes to other goods that are being sold. Councilmember Lozada, to your point of establishing a working group or task force, absolutely whatever you come up with in terms of continuing this discussion, hopefully, this is not the final word but the start, on behalf of PFMA please count us in. Thank you.
(Inaudible) as to how we can come to common ground to make this happen. I do have some questions that I just need some clarity on and I think this is the panel to help me figure this out. So I've heard that folks said that when they go to the stores to buy beverages, unsweetened and sweetened beverages are all equally priced. So I'm trying to figure out the revenue that you would get from the unsweetened beverages being taxed or at the same price because of the soda tax what is that money, though? Is that equally just go into the pot to sustain what you're already doing? I'm kind of confused. Where does that revenue go? If everything is priced at the same price point, whether it's sweetened or unsweetened, where does that revenue go? That's one. And Part 2, I'm not a big soda drinker so I wouldn't really know. I buy water. But I was wondering what is the price difference between the Wawa on Limekiln Pike and one that would be on Ogontz Avenue? Is it a huge price difference or is it all priced the same? Because in my mind, I figured out when I go look if it's a Wawa, it's all 2 for $4.50 or whatever the number is. So I'm just trying to understand this argument just for clarity of if it's equally being priced at certain huge corporations that are surrounding Philadelphia, I'm confused. The point is being confused to me of how are we losing jobs just in Philadelphia if it's all priced at the same level, whether you're in Cheltenham or Philadelphia? So can you give me some clarity to that please. MR. McGORRY: I'll attempt to take a stab at it because your question is asked a lot because it is a bit confusing. If you go down City Line, the Acme outside of the city has different only because in the city it has a beverage tax. On the side where the Acme is, there is no beverage tax. So if you're buying a 12-pack in the city, there's an extra $2.16 of tax on it. You go to the Acme, there is no extra $2.16. There's no markup by the Acme. It is prescribed by the actual penny and a half per ounce. We don't prescribe it. The retailer doesn't prescribe it. The tax law prescribes it. We have to put it on the invoice to Acme. Acme has to submit and pay us and then we pay the city. So same with a Wawa. The Wawa in the city sells the same retail as it does outside the city, except for the one in the city has to add on $0.30 for tax.
So it's priced at the register, not on the shelf? MR. McGORRY: It's on the shelf. They actually say -- and some retailers, maybe they have the tax with and without the tax. They may get a little cute, but they try to be very transparent and say, here's your tax without the tax and here's it with the tax so the consumer knows exactly what they're paying extra for the tax. And it's right on the tag itself, on the shelf tag. So the Wawa is an extra $0.30 in the city. Go right outside the Wawa on City Line or Cheltenham, you're paying $0.30 less.
Okay. That was my only, like, in the (inaudible) question just for clarity. MR. McGORRY: And that's why, especially the larger packs people will drive. If you think about it, $2 is an extra gallon of gas frankly. That's how people think.
The $2 is just on one 12-pack. So if you buy two or three 12-packs, it's 8 bucks.
I get you. I'm following you. Because we have so many other taxes in the city. We have cigarette tax. We have taxes on alcohol and all these other sin items. So are you just against soda tax or just all of them should be eliminated?
Even if it's a diet soda, you're paying the tax. If it's full sugar soda, you're still paying the tax. So it's not a -- it's a misunderstanding --
So should we do a sugar tax? Let's tax all sugar items. Is that what we're leaning towards?
I think instead of just pointing out a beverage tax, if you want to do something to say, hey, we need something on all things that have sugar, then okay. But this is just specifically on beverages. Whether it has diet or regular, it's still taxed. So it's more taxing soda than it is taxing sugar.
Okay. So I'm hearing we'll be okay for doing a sugar tax. It's a problem because it's a soda tax?
It's a soda tax, right. It's not a sugar tax. If you put a tax on everything that has sugar in the whole supermarket, one, it wouldn't be as drastic as just on one item in the basket which is soda. If it's spread across all things with sugar, now you don't have one impact on one industry that's losing jobs. Now, it's across a lot of different things and you'll probably have a more sustainable thing that doesn't drive people out to the suburbs, so you're not losing jobs in Philadelphia. MR. McGORRY: Can I just clarify? I think that was the argument that we were trying to give the Administration. When you pick one item, it is a huge percent. It's a huge percentage increase on one item versus a broad-based tax. Where if it's just a little bit of a tax on a bigger item, it's only a percent or a 2% sales tax. Honestly, I'm in the city, it's a rounding error frankly. In a lot of cases, nobody really blinks about 2% tax. But a 40% tax on something, yeah, they just stop buying it. So I think that's what Jeff Brown was trying to say, a broad-based tax would have been much more palatable. And that's what we were trying to kind of sell the administration on something that was more broad-based.
So same kind of support for revenue, same kind of support for PreK, same kind of support for Rebuild. I mean, all the same things, just not driving people away from Philadelphia.
We're going to move on. Mr. Kunkel, are we in public comment?
No 7 further witnesses. I'm sorry. Hold on. Let me get to where I'm supposed to be. Okay. I would like to thank all the witnesses for joining us today. Clerk, will you read the list of people who have provided written testimony to the public record.
Capital programs, the Mayor's Office of Education, Office of Children and Families, Department of Health, Department of Parks & Rec, the Free Library, Philadelphia City Controller. Also included as beverage tax revenue and expenditures, Arthur Steinberg, President of Philadelphia Federation of Teachers, Elizabeth Ozer, First Up, and Jacob Zychick, American Heart Association.
Thank you, Mr. Kunkel. Before we conclude our public hearing on Resolution No. 10 250028, are there any -- okay. Here we go. There are no other speakers on the public comment -- no, Mr. Kunkel, where am -- I'm missing a sheet. That's why. Sorry about the confusion here. All right. There we go. Hearing none, we will now transition to our public comment session. Mr. Kunkel, will you please call the first speaker for public comment -- please limit your comments to three minutes for the sake of time. Otherwise, we'll have to break and give our stenographer who's been very patient a break. But if we can get through this, there's not many public comment speakers we won't have to do that. But it doesn't matter. Please bring up anybody that's here for public comment.
Daler Khamidov, Christie Morrow and Lisa Smith, Laverne Cheeseboro. (Witnesses approached witness table.)
Hello. Thank you for your patience and being here. I know this has been a long hearing. We got a lot of information. So as far as I'm concerned, it's a win. I acknowledge our former colleague David Oh. Thank you for being here today, Councilman. Please start with your name and your testimony. Whoever wants to go, I'm good with it. Please start with your name and testimony.
Good afternoon, Mr. Harrity. Good afternoon, Dear Councilmen and Councilwomen. So my name is Daler Khamidov. S. Financial and Consulting Services. In addition, I serve as Vice-Chair of the Asian American Business Alliance of Greater Philadelphia, chairman of the American Uzbekistan Chamber of Commerce and Industry and Chair of the Pennsylvania branch of the forum of Uzbekistanian Americans. There in Philadelphia are about 442,000 Asian Americans living in our three-state area, Philadelphia, New Jersey and Delaware, and many of them are small business owners. And even I am small business owner too. I am in communication with many of the leaders and organizations in addition to Central Asians, Russian-speaking people. We interact cooperatively with Ukrainians, Russian and other different kinds of 15 ethnics, ethnic groups and nations. So after all this discussion, I'm really confused. I'm going to tell by my words everything. We have to separate two different things. I'm a former teacher and my mom was a former teacher, nobody, no one small business owner against PreK, against school, against all the projects, against parks and recreations. We support the projects. We argue today against soda taxes. When soda taxes was presented on 2017, we believe we're going to reduce the amount of diabetes, heart disease and alcoholic disease. We got it in 10 years? No. All this disease was increased. This is -- some confused about another thing. We waiting more money from soda taxes, but another way we fighting against disease. How is possible? It's not going to work that way. It must be more money to reduce the disease, heart attack, diabetes and other. And what we have finally this time in 10 years, we have soda taxes. Before soda taxes was approved on 2016, we had 17,500 cases of heart disease. Now, we have 19,000. That was increased. The soda taxes not affected to that and other things. Before soda taxes, we had in 2016, 11,000 cases diabetes. on 2024, we have 12,000. It's increased again. Same thing, we got 70 million last year, I believe, right from soda taxes. But from that, we spent 32 millions for alcoholic disease. Around the country, we have 19,000 cities and only 8 of them have soda taxes, one of them Philadelphia. How pay another 19,000 cities for park and recreations, for PreK for another. They found another sources. Do we have that sources? Yes, of course. Philadelphia is a big city; 1,500,000 people live right here. And people who's sitting on the chair seats right here or who got the signs like small taxes, but big differences, I want to explain to you guys what that means. Few minutes ago, the CEO of Pepsi or Coca company, he said, we got increased 40% of prices for soda, right. Who paid that, big companies. No, I'm a owner of restaurant. I will tell you, you guys who hold the sign, you pay the taxes from your pocket. Because I live on the border of Philadelphia and out of Philadelphia, Bensalem. Every month I spend $2,000 for food only for my family of four people, 2000 monthly. Of course, in my food basket I have some beverage too. It's not only Coke or Pepsi. It's another, Powerade, Gatorade. It's sweets, another non-alcoholic beverage, it's so many of them. Now, last five, six years I spent that money in Bensalem because it's two minutes away from my home. What happened finally? We have 2 million population in Philadelphia, 2 million population. Annually, every people use 144 liters non-alcoholic beverage. That money now spending in out of Philly. We don't lose only 2000 jobs. We lose so many things, logistics, delivery, jobs, restaurants. In my restaurants, few minutes from my restaurant in Benalem they sell two-liter soda for $2. I must sell that for $4. Where I get that money? From you, from customers, from people. Same big company who produced another non-alcoholic beverage. You think they pay that money? 50 two-liter soda. In Philadelphia, it's $3. 50 extra? I pay from my pocket. That's why it's very important.
Once again, we not against that all social projects. Everyone who adequate people sitting here, we support the projects, PreK, Parks & Recreation and other. What about other city, for example, San Antonio in Texas? Same amount of population, 1,500,000. They have soda taxes? No. How much they spend for parks and recreations? 100 million yearly. How much we spend right here, 5 million. Differences, big differences. They got soda taxes? No, they didn't. That's the problem. This is the reason why we have to stop by that because it's not affected to us. Soda taxes doesn't make equal competition for me and Bensalem residents. We have two different conditions. I got that money from your pocket because I pay that soda taxes. They not. That's why so many in Asian American community, lot of people decide to open businesses, restaurants, grocery stores and other businesses out of Philadelphia. We lost millions from my analysis. We lost about like 700 million annually. We make 70 million, but we lost from sales 700 million. But specialists have to make more clearly that amount. Thank you so much. FORMER
All right. Thank you very much. My name is David Oh and I want to first thank you for holding this hearing, really looking at the idea of how can you sustain this program over a long period of time. I think it's a very important question. The perspective that I'd like to present is that of the Asian American Business Alliance of Greater Philadelphia. We are an umbrella group that represents many restaurants, corner stores, take- out restaurants and other types of businesses that deal directly with the neighborhoods, communities and others, spanning from the Middle East to the Pacific Rim, so a very broad organization. We are tri-state. And so, we're not only in Philadelphia. And so, my comments are related to that perspective and it is because myself, having been a legislator once, I know that you need to get the best possible information to make your decisions in the best interest of this city. So I'll try to be direct about this. The soda tax is a very disliked tax. What I mean is disliked by businesses. Whether they benefit or they are harmed by it, they don't like the tax. That means our businesses just outside of Philadelphia like the tax in the sense they benefit from it. They don't like the tax because they don't want that tax to happen in their county, in their township. They don't think it's a wise or smart tax. They do appreciate the Philadelphia tax because they've seen an equal amount of increase in their sales as we have seen a decrease in our sales, greater employment, other things. I doubt they've seen an increase in cavities or obesity commensurate with the increase in their sales quite frankly. Our businesses in the city truly dislike that tax. There's many other issues they may have, but that tax is very representative of this. If you are going to fund PreK, if you are going to provide a benefit to the children, doesn't that fall upon the public in general, everybody. Not just one small sector of the community, not just those businesses, retailers who sell to people and in this case, sell to mostly the poorest people in our city. So now, they're increasing cost to them. It creates a lot of problems, a lot of animosity and they don't like to do that, but they are kind of forced to do that. These businesses would rather be able to reduce or repeal that tax, as you said, what is going to replace it. But if you spread the tax or the fees across, you would have more money, more sustainable over a long period of time. So what our business organization, very clearly in our board we voted against the funding of PreK through solely the soda tax. We are very much standing with you in the sense you have to find a more sustainable, broad-based way that you can really do this. Because the result of the tax is this: When the tax first occurs, yes, there is revenues but over time, not only is there a decline, there's an increased loss of jobs and there's an increased movement of business outside of the city. The type of jobs that people in these communities need, they are for the most part not going to get a high-paying job at Comcast. Hopefully they'll be manufacturing jobs, but small business jobs are the jobs that need to be created in most of our neighborhoods where people can find real employment and develop themselves from there. So for us and our board and our organization, we would urge this Council to do what you're doing, find an alternative to a very particular, narrow, hard- hitting tax that has caused the loss of jobs, loss of opening businesses and has really burdened the poorest people the most. Thank you.
Thank you. Good afternoon, everybody. I'm going to hurry up and rush this along because we hungry. My name is Laverne Cheeseboro and I'm the owner of Heavenly Made Creations in Southwest Philadelphia, a family group child care program and a proud PHL PreK provider that has been serving since this program started in 2017. I am a mother of two adult sons, but I want to emphasize this program funds our children, not just mine, but our children. This is an investment in our children. If the General Fund has to be used in addition, whatever fund has to be used, this is an investment in our children. They are not a charity. It is a lifeline for our children, our families and our early education programs. Serving our children is essential. During the pandemic, we were considered essential but we continue to not be a priority when it comes time to planning in these budgets. The PHL PreK program is not child care. It is an early education that has opened doors for families that value education and understand it begins before kindergarten. It has ensured children have a safe and nurturing environment to learn and grow and strengthen neighborhoods by investing in the youngest learners. And for providers like myself, PHL has allowed us to continue to do the work with excellence and sustainability. This is not about soda. The beverage tax is a concern, but charging those in poverty for brown bags is not? This is not about children. Don't look to take away the needs of our children. They are not a charity. They are our future. Finding funding for SEPTA has been priority, but without funding for PreK the SEPTA employees can't go to work. With cost of living increasing, they too can't afford the true cost of early education. We must invest in our children. They are our priority. They are our future. And I'm going to stop right there. Thank you for hearing my testimony.
(Inaudible). Thank you, everybody. Colleagues, do you have any questions for this panel? COUNCILWOMAN LOZADA I don't have a question. I just want to say thank you so much for your input. Thank you for your patience and for staying so long, for sharing your perspectives. I think that as a result of testimonies like yours we will continue the conversation and figure out what are the best options, right. Again, this is not about this or that. We need to figure out how we do this and that because both are extremely important. So I just want to say thank you so much for being with us today and for your patience. It's been a long day. It's been a long hearing. And so, sometimes folks pick up and go and we don't get to benefit from testimonies like yours.
And I'll just add just bring us to the table, because we definitely cannot have this conversation about what sources and resources we can use to continue to fund and keep this program going if we are not at the table so that you all understand how this program is ran and how we need the resources that we do to continue to sustain it.
Absolutely. You definitely -- the people doing the work should definitely be in the room when we're making decisions. That's for sure. Look, it was brought up, this became something over the years. When they first started this, I was around for it. I remember the inside politics of how this happened. In the beginning, this was supposed to be a container tax or a sugary products tax, which would have pushed it instead of 4400 products over millions of products, which in turn would have been able to be less on the consumer and still bring in more money for the schools. The fact of the matter is that if we would have done it that way, as you heard stated, nobody's going to complain about a couple percentage points on a dollar. They are complaining about $0.38 on a dollar, you know what I'm saying. So if we getting the ideas and bringing -- this is why we want to do this, because the fact of the matter is this is not abstainable. We need to do something because I'm scared for our kids. I don't want this happening. And again, I said it before, I may not be here. This is going to be -- that shouldn't be the way it is. That's what happens. So many times in this building and others bureaucracy checks in, you understand, and nobody wants to admit when something is wrong or something needs to be changed, especially the people who did it. So what we need to do is bring everybody together in the room for a real conversation on how we bring this to the future for all our kids in Philadelphia. Because me, I said it in the beginning, I believe the state should be paying for this just like the other six, seven states that I mentioned are doing. This is part of education. We already know the studies show that if you start them before kindergarten, they have a much better chance of succeeding. We need to get there. I believe that we should be paying for it. The question is how do we pay for it. That's it. Do we have more witnesses?
Donna's still here. (Witnesses approached witness table.)
I don't understand. We should have had you on one of the panels, but it's okay.
That's okay. It's freezing in here so I have my coat on. Sorry. Thank you for the opportunity to speak. And I want to thank you, Councilman Harrity, for pointing out the fact that you were here when this happened. One of the things I wanted to get on the record --
Well, I wasn't actually in Council when it happened. I was an operative --
Yeah, exactly. And Councilwoman Brooks is very familiar with the creation of the soda tax and what happened. And I just want to get on the record that Council had 18 hours of hearings. The soda industry, the Chambers, the early childhood community were deeply involved in the conversation and philanthropists. In fact, the conversation about Harold Honickman, he was in this Council. And he was asked point blank, if we don't pass the soda tax, will you come up with the $50 million that's needed? And he's like, what are you guys crazy. I mean, even the largest contribution to Project HOME, beloved Project HOME is $5 million a year. And collectively, they raise less than 20% of their budget from contributions. So the idea that philanthropy is going to be a way that we fund a $67 million set of investments in kids, I think is not a realistic starting point. I also want to say that those 18 hours of hearings were predated by a commission that met for 18 months, on which Marita Crawford sat as did I, and we worked through revenue options, and this was the consensus of that commission as a viable revenue option, knowing that once it was instituted, the amount of revenue would decline. But in spite of you're claiming that it is not working, we are generating 83% of expected revenue. We thought we'd get 80. We're at 67. That's 83%. That's a pretty good return on something that was expected to decline much more rapidly. Should we do more? Absolutely. But the idea that we're going to solve this with a tax credit for contributions and charity is the way our kids are going to get a good start in life, I would urge us to think otherwise. Now, the real reason I wanted to be here today is because there are many studies that point out that when the soda tax was enacted, the soda industry increased the price of soda greater than the amount of tax immediately. 015 an ounce, the amount that was jacked up on the prices was a 30% increase in soda above the tax. So for Pepsi and Coke and the union to come here today and say that they lost jobs because of the tax, that may be true, we don't know, because they increased the price more than the price of the tax. So we can't say, oh, it's the tax that caused this problem. There are industry patterns, particularly in taking advantage of the passage of the tax that may have contributed to whatever job declines that they have suggested. But I would urge you, Councilman, to ask for the evidence of that job decline because you cannot see it in public data, Bureau of Labor Statistics, unemployment. There is no change in the distribution or in the retail sector that anybody can identify that comes anywhere near the numbers that the soda industry is claiming. If they were able to show a thousand job losses over eight years, that would be 200 jobs a year. I don't know what that means. I don't know what that data is. I don't think anybody does because I don't think that data exists. But if it does, they should show it. And then contrast that to the 1350 jobs created in PreK, sadly at a lower pay rate. But I would ask us to think more carefully about the jobs claims, the soda sale claims and the reason that that happened. Now, Councilwoman Brooks, thank you very much for asking about the sugary drink versus unsugary drink price. When soda was enacted, I went to my corner store. Sweetened and unsweetened beverages went up the exact same price. I last weekend went to stores. Every one of them had 11 sweetened and unsweetened at 12 exactly the same price. So that 13 means if we've generated $67 14 million in unsweetened beverages, 15 I'd love to know what they've 16 generated -- I'm sorry, on 17 sweetened beverages. I would love 18 to know what they've generated on unsweetened beverages and explain to me how that sort of extra windfall didn't do something for them to enable them to continue to employ their employees.
So there's a lot of data here that if you are going to bring people together, please recognize we will be dogged to demand industry evidence, to demand that they open their books, to demand that they show where these job losses are and to demand they show us where the money that they built Philadelphians out of on unsweetened beverages, where that money went and maybe we should be thinking about a beverage tax as opposed to an all sugar tax, because we've already got that industry showing that they can make a ton of money and continue to employ people. They told the Councilwoman, who was Councilwoman Maria Quinones, they were going to close her soda plant right away, right, the bottling plant -- and you live near there -- and that bottling plant is still there. So the fact of the matter is we were told the sky was going to fall. I believe the soda industry has made more money off of this tax than they expected. I think we are doing a very good job with collections, getting 83% of the revenue and it is having the desired impact. If we're going to bring people together, let's start with the facts, get them to give us evidence and then think about how we do more. That's all I came to say to you today. Thank you. APP.
(Inaudible). Okay. There we go. Sorry about the technical difficulties. I thank you for staying all day and being around. And I agree -- because people think I got involved in this to have the hearing because of the unions, and that was not the case. It's because I live on a little tiny street in Kensington and every night when I get home, my neighbors are there to beat me up about everything that's going on in my neighborhood. Now, most of the time that's about the drug dealers on the corner or other issues that we have. But one day I get home and Mrs. Parker down the street comes running up to me, I got to talk to you. And I thought she was going to yell about something that happened on the corner and all that. And she comes up to me and says, I'm tired of this. She says, my $0.99 bottle of soda went from $0.99 to $5. Now, it's only supposed to be 3.20, but come to find out the store was putting a surcharge on top of it.
So that's exactly why I did this. A, we got to start enforcing what we got going on already. B, I get it, 80% of the money coming in, okay. But the fact of the matter is next year it's going to be 70%, the following year it's going to be 60, 50, 30, until it's gone. We can't wait until then. I don't want to wait. I want to find out what the answer is to this now. Again, having good ideas here that came out with people saying, and I heard this in the beginning, when they first posted this, it wasn't supposed to be a soda tax. It was supposed to be either a carton tax or a products tax along all sugary products, which would have been over millions of products and would have been pennies, as it goes to $0.32 or $0.38 on a dollar, it would have been $.03 to $0.05 on a dollar, if that, and we would have made the same amount of money, if not more, without the impact that it was having. That's what we're trying to get at. I need to find out how do I keep this going for the kids for generations down the line.
Councilman, thank you so much for saying that, but I think you need some evidence of the impact --
On both sides. That's what I'm saying. And that's why we need to do it and I --
I mean, I'm not just taking the side of Coca-Cola just saying that they lost as many jobs or whatever. I see it. You know you see it. Stores are closing down. That's what I want to know. How do we stop that? Jeff Brown himself said one store closed of his, right. No 5 big deal. But we're on the brink of maybe two more in food deserts. My thing is I don't have any stores in my neighborhood. We don't have a supermarket. We don't.
My neighbors have to take two buses sometimes to get to a supermarket.
We need more, not less. So bringing this together was supposed to get people in the room, hear everybody's different side of that story so that we can get some ideas on how we move forward with this. The numbers don't lie. 73 million in 2023; 2024, 69, almost $3 million. Same thing for this year, almost $3 million, you know what I'm saying. At that level, we got to figure something out quick. And with this food stamp, I mean, my neighbors are hurting already. This is going to hurt them even more. So I thank you for spending all day here and helping us out. And hopefully, we can get you involved with me and my colleagues if we decide what we're going to do with this, whether it's making a working group to look at what our options are. Because the fact of the matter is, it's not a question -- it's only a question of when we're going to have, you know. There's no option. We have to do something. Because if we want to fund this thing through the future, something has to happen. All right. Again, this Mayor is great. Her priorities are to fund this. So she's going to do what it takes to do it, take it out of the General Fund. And I'm all with that too. I believe that we should be paying for it. I believe we should throw 100 million at it and expand it to 8000 to 9000 kids from 5200 because God knows we need it.
Right, exactly. But that's the point, we can't expand it now. All we can do eventually is start to cut it, and that's not going to work. So thank you for your time. Thank you everybody for your time. Mr. Kunkel, is that it?
There are no more testifiers for public comment. All right. Thank you everybody for your testimony. This concludes our hearing today. Thank you so much for attending. (Committee on Labor and Civil Service concluded at 2:25 p.m.) C E R T I F I C A T I O N I, hereby certify that the proceedings and evidence noted are contained fully and accurately in the stenographic notes taken by me in the foregoing matter, and that this is a correct transcript of the same. __________________________________ TANEHA CARROLL