Sweet promises of soda tax money gone flat, Philly Controller says

City Controller Rebecca Rhynhart sailed into office a little more than a year ago as a transparency-minded reformer who could pair progressive leanings with an eye for efficiency that could help perpetually-broke Philadelphia spend taxpayer dollars more efficiently. A member of Mayor Jim Kenney’s cabinet before running for the office, she supported Kenney’s soda tax and the funds for universal pre-K, parks, rec centers, playgrounds and libraries that it promised. But now, with the release of data showing that 75 percent of the revenue generated by the tax has flowed into the city’s general fund instead of being spent on programming, or set aside in a designated reserve fund, Rhynhart has waded into a debate about the controversial levy on sugary drinks.

The Controller’s analysis reported that about $22 million of the nearly $85 million in beverage tax revenue collected has gone towards pre-K and community schools.  None of the soda tax windfall has yet been spent on Rebuild, Kenney’s $500 million public space improvement program, according to Rhynhart.

“The fact that so much money [generated by the tax] is in the general fund raises questions,” she said. “If it were in a segregated fund, it would give the public more confidence that the revenue will go to the important program it was intended to fund.”

The report inspired an immediate rebuke from Kenney. “It is extremely disappointing that the Controller chose to issue such misleading and inaccurate information,” said mayoral spokesman Mike Dunn in a written statement.

“The Controller’s recent reporting that beverage tax funds are being held in reserve is actually nothing new,” Dunn noted.

With respect to Rebuild in particular, Dunn says the Controller’s report lacks context and omits the fact that $6.6 million in soda tax revenue will go to the Department of Parks and Rec to advance Rebuild. Dunn could not immediately offer a full accounting of that $6.6 million but pointed to $2.9 million, or about 44 percent of that “other” going to Rebuild. That funding  is going toward the creation of “skilled trades positions that are in PPR [Philadelphia Parks and Rec] for Rebuild,” and able to execute some of the renovations to rec centers, libraries and parks, he said.

Rhynhart says that she is just doing her job.

“I fully support pre-K and Rebuild. I said throughout the campaign that I supported the soda tax because it supports these important programs,” Rhynhart said. “Now that I am the controller, my job is to ensure the money goes where it is supposed to go, in a transparent and efficient way.”

The data release was the first to come out of her office. She plans to continue to release information on taxpayer spending on a regular basis.

The Kenney administration doesn’t dispute the Controller’s central finding that most of the soda tax revenue is unspent and sitting in the city’s general coffers. Rather, Kenney seems to take issue with Rhynhart’s framing. It maintains that it’s always planned on banking the money earmarked for Rebuild until the lawsuit seeking to end the tax, now before the Pennsylvania Supreme Court, completes its winding path through the courts.

That’s largely due to what the money will be put toward within Rebuild. Assuming the soda tax is held up by the courts as constitutional, the PBT funds going to Rebuild will pay for the principal and debt service on the bonds the city will be issuing in order to raise the capital for Rebuild. In essence, the tax revenue is a nest egg to build up the rest of the financial infrastructure around Rebuild.

“In short, all of the money that is in reserve is going to be spent on the programs,” said Dunn. “This was made clear when the Mayor proposed the tax two years ago, it was made clear during last year’s budget process, and it was made clear on March 1 of this year, when we announced to reporters the revised projections for the beverage tax.”

From Rhynhart’s perspective, open data is just part of the back and forth of improving the relationship between city government and the taxpayers who support it.

“One of the biggest areas I got questions about when I was running for office, in neighborhoods across the city, from West Philly to the Northeast, to the Northwest to South Philly, was ‘is the soda tax going where it’s supposed to go. Is it going to pre-K?’ People really wanted to know,” she said.  “There a lot of questions about how tax dollars are being spent in general. Taxpayers want that transparency and they deserve it.”