How Jim Kenney’s Big Soda Tax Victory Is Upending City Hall
For years, Philadelphians saw government dysfunction everywhere they looked. In City Hall, former Mayor Michael Nutter was so impotent that he couldn’t persuade a single Council member to introduce his bill to privatize Philadelphia Gas Works, let alone hold a hearing on the plan or (gasp!) approve it. And in Harrisburg, it took Gov. Tom Wolf and the Republican legislature nine months to do their most basic job, i.e. agree on a budget.
It’s almost sadly poetic: The same place where American democracy was born was where you could best see it falling apart.
That’s why it’s so extraordinary that Philadelphia City Council is expected to pass a soda tax this week in order to fund Mayor Jim Kenney’s major initiatives: expanded pre-K, community schools, and an overhaul of the parks system. The soda industry spent nearly $3 million to defeat Kenney’s proposed levy on soda, flooding the airwaves with anti-tax ads and stuffing politicians’ campaign coffers with cash. Council President Darrell Clarke did Kenney no favors throughout the last few months, calling a 3-cents-per-ounce tax “ridiculous” and “divisive.” History was also working against Kenney: Council had twice crushed plans by Nutter to create a soda tax, and the beverage lobby had a 45-1 record of killing proposed soda taxes throughout the country.
But in the end, Council hammered out a landmark deal with the Kenney administration, giving preliminary approval to a 1.5-cents-per-ounce tax on sugary drinks and diet soda. The fact that Kenney took on one of the strongest lobbies in the United States and won — and that the once all-powerful Clarke was, at times, working against him — shows that the mayor is a skilled politician who has enough votes on Council to pass ambitious, controversial proposals. This means Kenney could potentially get a lot done over the next three-and-a-half years. His victory also serves as a reminder of the unsavory things that are sometimes required to make government work: arm-twisting, special interests, and, of course, lots of money.
How Jim Kenney Did It — and the Cost of His Success
Earlier this year, many City Hall insiders thought a soda tax was a non-starter. But if you looked closely enough, there were signs that it just might squeeze through this time, and Kenney was clever enough to take advantage of them. Kenney was inaugurated in January and is still in a honeymoon phase with both the public and City Council. If there was ever a time to propose a groundbreaking tax to fund new, expensive programs, it was in his March budget address. Also, there was a Council election in 2015, meaning that lawmakers who support the tax do not have to face voters until 2019.
Unlike Nutter, who had pitched the soda tax as a way to improve the health of Philadelphians, Kenney sold it as a means of funding populist programs that enjoyed broad support among both citizens and City Council members. That was critical. Even Harold Honickman, the beverage-bottling mogul who lobbied against the tax, conceded that “the issues make it a harder fight.”
There were also several elements of Kenney’s proposed soda tax that guaranteed that powerful electricians union boss John “Johnny Doc” Dougerty, who helped get Kenney elected, would go to the mat for it. Councilman Bobby Henon, a former political director for Local 98 International Brotherhood of Electrical Workers, liked the idea of a soda tax so much that he drafted legislation and formulated a plan to promote it last year. Building trades union members will be employed as part of Kenney’s plan to upgrade the city’s parks. And the Teamsters, who strongly oppose a soda tax, are an enemy of Dougherty’s.
Whether or not he’ll admit it, all these things worked in Kenney’s favor. John Dougherty joined Kenney and his top aides in March as they pitched the soda tax to Honickman and other soda bigwigs in a private meeting. Dougherty also reportedly stormed into a City Council meeting in May to threaten opponents of Kenney’s plan, telling them, “If you f— with my boy, I’ll f— with you.”
During the mayoral campaign, observers wondered how much sway Dougherty would have in Kenney’s City Hall. After the soda tax fight, we now have the answer: quite a bit. Doc’s allies say he has the interests of working Philadelphians at heart, and that he knows how to get things done. But what does it mean that a man who is not elected or employed in government — and who allegedly punched a non-union electrician in the face — is meeting with Kenney and business leaders as if he’s a member of the administration? And how likely is it that the mostly white building trades, which Dougherty leads, will diversify before they get contracts to rehab the park system? (A spokeswoman for the Kenney administration says it expects “significant diversification will take place” as a result of a labor agreement it will sign with the trades. Only time will tell.)
In addition to arm-twisting and deal-trading, Kenney’s plan also took money to succeed. Former New York City Mayor Michael Bloomberg and Texas billionaires John and Laura Arnold poured cash into a pro-soda tax ad campaign. Kenney’s supporters say that that funding was needed to counteract the deep pockets of the soda industry. That may be true, but what will Kenney now owe those big donors? There is a cost, perhaps, to having a functional government.
Regardless, it is clear now that Kenney has at least seven or eight allies on City Council. If he is able to hold them together, he could use those relationships to get other major progressive policies passed over the next few years. Will he use his clout to push for more aggressive marijuana decriminalization? Or for a higher minimum wage? It’s hard to say. Kenney keeps his cards close to his chest. During the mayoral campaign, he never mentioned the prospect of taxing soda, and he has not indicated what he wants to pursue after he signs this year’s budget into law.
Whatever he does, Kenney might face a challenge: Council President Darrell Clarke.
What This Means for Clarke’s Power and His Relationship With Kenney
Throughout the last few months, Clarke said repeatedly that he did not like the idea of a 3-cents-per-ounce soda tax. He signaled support for Councilwoman Blondell Reynolds Brown’s plan to approve a different tax altogether to pay for pre-K. And according to several sources, in the final hours before Council preliminarily approved the soda tax last week, Clarke worked to lower the rate from 1.5-cents-per-ounce, which is where a nine-vote majority — or something very close to it — had already coalesced.
If you don’t think Clarke has been dealt a major blow, consider how much muscle he flexed at the end of Michael Nutter’s tenure. He killed the PGW deal without a single dissenting voice in Council. He rallied Council behind a plan to plug a school district budget deficit by selling empty school buildings, while the Nutter administration was in the middle of putting together a strategic plan for reusing those properties. And he sponsored a plan to remake the Licenses & Inspections Department and the city’s planning-and-development apparatus, on the same day that a commission appointed by Nutter delivered a series of recommendations for overhauling L&I.
Sure, you can say that Nutter was weak or he had a bad relationship with Council, but those perceptions were at least partially created and certainly magnified by Clarke.
Clarke clearly wants to portray this soda tax deal as a win for Council and a win for his office. Even if we grant that it’s partially both of those — Council did successfully lower Kenney’s proposed soda tax, and sources tell us that Clarke helped whip a handful of votes in favor of the final compromise at the last minute — it’s not the win that Clarke wanted to have. That’s a change of pace for Clarke’s presidency.
— Darrell Clarke (@Darrell_Clarke) June 10, 2016
What the Soda Tax Reveals about Council’s Alliances
This isn’t the only way that Kenney’s soda tax victory has upended City Hall. Here’s how it affected the political alliances on City Council:
Clarke’s strongest allies on Council are Bill Greenlee and Reynolds Brown. According to Council sources, Clarke was working with those two members as well as Cindy Bass to lower the soda tax to 1.25 cents per ounce when the Kenney administration revealed that part of the revenue from a higher levy of 1.5 cents per ounce was needed to shore up the city’s fund balance. That’s when Clarke, who sometimes describes himself as fiscally conservative, decided to support the proposed rate, bringing Greenlee, Reynolds Brown and Bass with him. (Councilwoman Maria Quiñones-Sánchez was also in the room, but she was always going to vote against the tax.)
You can look at this a couple different ways. It could be the beginning of the end of Clarke’s stronghold over City Council, an analysis that Johnny Doc seems to prefer. Or it could be a temporary wane, and Clarke will start rebuilding his once-unanimous voting bloc from this small core alliance. Clarke’s office has been sounding the alarm about the lack of diversity among Kenney’s top brass, a real issue that could end up hurting Kenney’s credibility and tipping the balance back in Clarke’s favor.
Majority Leader Bobby Henon appears to be Kenney’s strongest ally on City Council. This probably isn’t surprising, given that Henon is still an adviser to Local 98. But Henon also seems to have a strong bond with freshman Councilwoman Helen Gym. (It was Gym, according to multiple sources, who convinced Councilwoman Jannie Blackwell to become one of the last votes in favor of a 1.5-cents soda tax.) We wouldn’t bet that the Henon-Gym bond is unbreakable. They may be at odds from time to time, but both seem to be interested in testing out what kind of power they can build together.
The Northwest Coalition
A coalition of African-American politicians from Northwest Philly had a big hand in helping Kenney get elected, and some members of that group seem to be holding together on Council, too. Cherelle Parker and Derek Green, both former staffers to former Councilwoman Marian Tasco, were said to be in the Kenney camp the whole time. Will they continue to stay on Kenney’s side? Probably depends on what he wants to do next.
Allan Domb Is a Free Agent, and Cindy Bass Might Be, Too
Councilman Allan Domb was wavering on the soda tax throughout the past few months. He’s generally not a tax-friendly man, and he’s close with bottler Harold Honickman. But in the end, he decided to support the tax, and he did so before he heard about the problem with the fund balance. Domb told us on Wednesday that he’d agreed to vote for a 1.25.-cent tax on the condition that the Kenney administration make a “110 percent” effort on collecting delinquent taxes and fixing the land assessments on big Center City commercial properties, which Domb says are way too low. Only later, after Domb talked with the administration about the low fund balance, did he agree to go to 1.5 cents. Of course, a 110 percent effort is what you promise your little-league coach before going and daydreaming out in right field, so it’s not clear whether Domb got any real commitments here. But it does seem like he’s going to try to do his own thing when he can.
Cindy Bass also seems to be shopping around for a team. Bass came up through the political ranks in the circles of former Congressman Chaka Fattah, who lost his re-election bid in April and is currently sitting through the final days of a corruption trial. After briefly trial-ballooning a property-tax increase as an alternative to Kenney’s proposal, Bass backed off last Tuesday and said that she’d become the ninth vote in favor of a 1.5-cent soda tax. But then, on Wednesday, she joined Clarke in the meeting where members discussed fighting for a 1.25-cents tax. Will she be a Clarke ally or a Kenney ally? The fact that she’s on the fence could give her a lot of power in the years ahead.
Correction: A previous version of this story stated that Councilman Allan Domb agreed to a 1.5-cents tax based on two commitments from the Kenney administration. In fact, Domb says, those commitments only convinced him to support a 1.25-cents tax. He said he then agreed to support a 1.5-cents tax after learning that the city’s fund balance was low.