Sugary-drink tax questions answered

April 2, 2017 GMT

On May 2, Santa Fe voters will cast ballots to approve or deny a 2-cents-per-ounce tax on sugary beverages ranging from Cokes to bottled Frappuccinos to raise funds for early childhood education programs. Many Santa Feans still have questions about the proposed tax. Here are some answers.

Question: How will the proposed sugar tax work?

Answer: The city will tax distributors 2 cents per ounce to raise an estimated $7 million per year, which will be used to expand existing early childhood education programs, commonly known as prekindergarten or pre-K.

Question: What drinks will be taxed?

Answer: Any drink with at least 10 grams of sugar content, which means most sodas, sugary coffee drinks, sports drinks and other sugar-sweetened beverages directly linked to childhood obesity, diabetes and heart disease. Diet drinks will not be taxed. Nor will chocolate milk.


Question: Does that mean I will be paying more for my sugary drinks?

Answer: Probably. Distributors are likely to pass the tax on to local retailers, who will likely pass most or all of it on to consumers.

Question: Who will oversee the collection of the tax, and what will that cost?

Answer: The city plans to hire a third-party contractor to collect the tax and set penalties, if need be, for late payment. The city plans to use 5 percent of the annual sugar tax revenue to pay for this service — about $350,000. Details about that plan are still being developed.

Question: Will City Hall be hiring new employees to help handle this new initiative?

Answer: Philadelphia hired four people, and Berkeley, Calif., hired one after instituting taxes, but Santa Fe says it will not have to hire any.

Question: Who will qualify for the benefit?

Answer: The city hasn’t come up with income levels to qualify for the program. The resolution that establishes the guidelines for the mayor’s initiative states that an Early Childhood Development Commission will target “those most in need,” so low-income families would get priority. But the mayor’s goal is to provide preschool access to as many children as possible.

Question: How will the money for pre-K be distributed?

Answer: The city will create a committee of early childhood education experts to review applications from existing pre-K providers and then give out grants based on criteria that, for the most part, have not been determined. The mayor said more details about the committee and the grant qualifications will come after the election.

Question: Will the funds be used to start new pre-K programs or build new facilities for pre-K?

Answer: No. Only existing pre-K providers can apply for the grant. There is a capital improvement clause that would allow existing programs to improve and even expand their facilities.

Question: Can private, public and nonprofit pre-Ks apply for these grants, including Santa Fe Public Schools?

Answer: Yes.


Question: If soda consumption is expected to drop as a result of increased prices, won’t that decrease revenues for pre-K?

Answer: Initially, Mayor Javier Gonzales said consumption, and thus revenues, would drop, which would mean the city and community would have to come up with new ways to keep funding the expansion. But Gonzales recently said he does not believe consumption will drop that much and that the fund should remain sustainable. Berkeley has seen consumption drop by as much as 21 percent in low-income neighborhoods, but revenues have been higher than anticipated. Philadelphia also has seen a drop in consumption but higher-than-expected revenues in early results.

Question: If the tax passes, how do parents enroll their kids in these expanded pre-K programs?

Answer: The city plans to create an education hub, a one-stop site for parents to review and find an appropriate pre-K program for their needs. More details will come after the election, the mayor said.

Question: If the tax passes, when will it go into effect, and when will we see an expansion of pre-K services?

Answer: The tax would go into effect Dec. 1, 2017. Though Gonzales initially said he hoped to start pre-K programs in January, he said more recently that the city will need more time to implement the tax, so the pre-K expansion will “probably” start in the summer of 2018.

Question: The beverage industry launched a lawsuit to stop Philadelphia from implementing the tax. That suit is still lingering and will be heard in the Commonwealth Court of Pennsylvania sometime in April. Is it possible Santa Fe could face a similar suit and, if so, how will the city pay to fight it?

Answer: Philadelphia has put aside $1.1 million and has received an additional $500,000 from a private foundation to handle legal expenses. Gonzales said it is possible that the beverage industry would sue the city and that the city is prepared to defend itself, though he has not yet discussed what the cost of a legal defense would be or where the money would come from.