Feed Bag

Today is finally the day.   This is the last session of City Council for this season for new legislation and City Council will put the 1.5¢ Soda Tax on the final passage calendar.

Next week, Thursday June 16, it is likely that we will have a Soda Tax in Philadelphia.

While I have come out in support of the tax, it’s really frightening to me how many people willingly lie to themselves and others trying to persuade us of some rosy picture two to three years out in a Soda Tax future.  Even PhillyMag’s No-Bullshit Guide to the Soda Tax is fairly bullshit.  So is former Senate Candidate John Fetterman, who denounced those who call this textbook regressive tax regressive.  Maybe that’s because he didn’t receive the thunderous endorsement he was looking for from presidential candidate Bernie Sanders, who directly attacked the tax as regressive.

And lastly are the ludicrous nanny-state supporters of the Soda Tax who take delight at punishing the free actions of the poor.  In particular, poor fat people.

I prefer to look at the bene side of this equation; the other half of the Soda Tax policy that no one in the Philly press cares to write about.  Almost none of it has actually been addressed by the Kenney Administration either.

The City’s Revenue Figure is Fantasy

The Kenney revenue estimate for the Soda Tax was approximately $96 million, but to play it safe I’ll kick off $16MM from that figure since soda after all is a consumer good with a very elastic demand and something inside me tells me Mayor Kenney is lying about that figure and he’ll have a “revelation” later on as the Revenue Department starts tallying distributor receipts and sees what it’s really projected to bring in next year.

Why do I think the $96MM figure is fantasy?    It’s simple.   The City really has only a very rough idea how much soda is actually consumed in Philadelphia County, which would be subject to tax.   It also has no idea what the elasticity of demand would be here locally.   It does know how many suburban Wal-Marts and Target stores there are just outside Philadelphia and can take a stab at how much “demand seepage” will relocate to the suburban counties as shoppers move more of their consumption outside of Philadelphia.

Just What Exactly Are We Buying With the Soda Tax?

This is a question I raised in front of Kenney’s fan club and the answers are surprising.

First, don’t expect the School District of Philadelphia to be heavily involved in pre-school.   Teacher pay in early childhood education programs is some of the lowest in the education industry (think sub-$30,000 salaries).   This tends to be non-union.   So this operation is likely going to be carried out by writing checks to private providers to create a very limited number of pre-school seats.

A very limited number.

And here’s the biggest worry which could undermine everything:  Nobody really has any idea of what kind of pre-school service the City intends to create with the Soda Tax receipts.  None.

I have an idea of what kind of level that most people who read Philadelinquency would expect a pre-school to be a real pre-school, as opposed to overpaid daycare.   There’s only ONE document that seems to spell out what those requirements are: Pennsylvania’s Keystone STARS program.   City pre-schools created under the Soda Tax regime would be subject to the state STARS accreditation rating.

As I read our state’s rating system for early childhood development centers, any provider that can achieve a STARS Level 3 or 4 would be considered suitable as a pre-school that provides the benefits the Kenney Administration says pre-school could possibly give to at-risk children.  There has been no commitment from City Council that the City will only strive to subsidize Level 3 and Level 4 pre-schools.

But honestly?  All this is just a guess.   No one yet has put forward solid concrete evidence and research that our approach to pre-school is going to pay buckets in better performance in our city’s children 5+ years down the road.   Not one study.   I’ve been waiting to see that research, and no one has gotten back to me when I’ve asked for it.

The research that does exist and is highly cited is a study done in the UK in the mid 1990s.   There it was shown that very high quality pre-schools did pay contributions forward in child achievement scores all the way out to age 10, the end of the study period.

But just last month the Royal Economic Society published a harsh critique of that very same study that put the original pre-school study into context.   Quality private pre-schools–those of the caliber which cost a hefty amount of tuition and have limited seats and high demand–were precisely not the type of pre-schools that working class parents were going to get with public expenditure.

In other words:  state-run ECE centers that are mediocre in quality are basically no better than keeping your kid at a relative’s house watching TV and enrolling the child directly in kindergarten when they’re ready.  There is no difference in achievement between children who go to daycare and children who go to a daycare that calls itself a pre-school.

If we wind up creating a program that’s only moderately better than daycare chances are good that we are really wasting our time.  That’s a fairly big imposition to put on the wallets of poor people when no one is sure of the result we’ll get.

As I said before, I do support a Soda Tax, but it comes with strings attached.   A mediocre program with limited seats that doesn’t deliver results even to those children lucky enough to get in is not a good reason to regressively tax the poor and also a good reason why no one should welcome this tax.  Why commit long-term to a new program that will be a failure from the beginning and is very expensive?   A Pre-K program that can really improve some children’s lives so they uplift the SDP’s performance figures and produce better adults is about the only valid reason to support this initiative.

Am I crazy?   That’s the shit that Kenney promised when he ran for mayor.  Anything short of that is failure.

Ah Yes, the Rec Centers

In order to divert people away from asking too many deep questions about the City’s planned pre-school program, the Kenney Administration also promised mass upgrades to all the City’s public recreation centers.   That promise?  $400MM of spending on rec center upgrades over 5 years.   There’s no money to implement universal Pre-K in the Soda Tax proposal and only a very limited starter pre-school program is even being talked about.  So how is the Rec Center thing going to happen?

By running the City’s credit card.

johnny-doc

The Soda Tax revenue stream will no doubt be used as collateral to justify new debt issue to advance part of the projected revenue early on.   A few hundred million here.    The City would then just make debt payments from part of the Soda Tax revenue stream.

A lot of the Rec Center spending will predictably be put towards repairing and upgrade of existing buildings and infrastructure, which is the public-dollar feed bag local electricians leader and powerbroker Johnny Doc can’t wait to get his hands on.   Doc has even been making threats:

One eyewitness quoted Dougherty as saying, “If you f— with my boy, I’ll f— with you,” referring to Councilman Bobby Henon. The source said Dougherty also went “toe-to-toe” with Danny Grace, head of Teamsters Local 830, which is trying to kill the tax deal.

It’s going to be very interesting to see which members of City Council will stay loyal to Doc and make his biggest dream this year come true.

Promises Can And Will Be Broken

There’s really not going to be any restrictions put on what the City does with the Soda Tax funds.   They’re going into general revenue and City Council hasn’t mentioned of any special apportioning at all so that the promise of where this revenue is going is going to remain with the new pre-school program.

That means “other externalities” can certainly get in the way which always happens in local government.   Those unforseen circumstances and events will then compete for Soda Tax dollars, namely upcoming demands that will be made of the City’s unions like the two AFSCME locals, FOP5 and IAFF22, regular screaming from the SDP for more local revenue and recurring demands for larger advance payments into the City’s pension fund to stymie the City’s pension crisis.

What, you think the City’s unions aren’t going to notice the new Soda Tax revenue stream and stay silent and be happy with a pithy 1% pay rise on their next contract, do you?