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Read the news of the day in less than 10 minutes — not that we’re counting.
It’s less than 24 hours after Philadelphia became the first major city in America to pass a soda tax, and Matt Stitt’s desk is a wreck. The 28-year-old CFO of City Council is in his office on the fifth floor of City Hall; to get there, you need to basically walk through a room that’s under construction. On top of a stack of paperwork is the day’s Daily News, bearing the headline: Oh, Sugar!
I sat down with Stitt and some of the other 20- and 30-somethings who work behind the scenes in City Council. They’re not the Council president or the mayor or elected officials. They’re analysts and attorneys who could be in the private sector making more money and working less hours. Instead, they’ve sat in their offices until 9 p.m. at night for months reviewing sugary drink consumption trends. They’re the minds behind the legislation.
City Council’s Communications Director Jane Roh was in the room, as were:
- Hadji Maloumian, the 32-year-old legislative director for Blondell Reynolds Brown who played a major role in crafting container tax legislation (that didn’t pass but was a major part of the conversation) as well as a tax credit for store owners who offer healthy beverage options.
- Bob McDermott, a 25-year-old financial policy analyst who works with Stitt in City Council reviewing the budget each year. He calculated that a 2.5-cent tax on sugary drinks would have actually brought in *more* revenue than the mayor’s proposed 3-cent tax because of the impact it would have on consumption trends.
- Greg Kingery, a 32-year-old Geographic Information Systems analyst for City Council. Throughout the budgeting and soda tax process, he created maps for Council, pinpointing the highest concentrations of stores and bodegas, and calculating the distance between the city limits and the nearest supermarkets out of the range of the tax.
This is the inside story of how Philly’s soda tax was made, from the ground-level city employees who worked on it before and during its days in the council chamber. Here’s our conversation, which was edited for clarity and brevity:
Tell me what it’s like being the behind-the-scenes people. Your bosses get a lot of the credit, and you’re doing the nitty-gritty.
Roh: I’m not trying to be out there like on TV. I’m not trying to be an elected official. They get blamed for everything too.
Maloumian: Yeah, I was going to say the same thing.
Roh: I personally love being the person behind the guy. I don’t want to be out there the way that they’re out there, and it’s rewarding when you see outcomes from the work that you do. I think for the soda tax, we got to a much more equitable solution, a less regressive solution, because of the work that these guys did and thats really satisfying. If you talk to the other members, especially the freshmen, I think they were kind of astonished by how helpful and how productive these two [Stitt and McDermott] were. And it was just them on the budget stuff.
I also kinda thought that group of people would have been a lot bigger.
Stitt: It was Bob’s initial analysis. I asked him to run the sugary drinks numbers in every quarter increment, and we’re the ones who discovered that 2.5 cents brought in more than 3 cents.
That was you? So you must have had to put together a bunch of combinations, especially after the container tax idea came out and it was like one cent container, two cents soda, so on and so forth.
McDermott: The administration did whole cent numbers, and we were trying to come up with somewhat of a revenue curve and try to find out what the other options were. The council members wanted to see what else was possible. So we were taking what they gave us, the information of like -1 elasticity and the effect that price changes have on consumption and taking basically that and the Philadelphia consumption numbers and then just running with what information I had. And this was our first analysis. First of many.
So when you did all the math and were like, ‘oh my gosh, 2.5 cents would bring in more than 3,’ did you run down the hallway of City Hall waving your math in the air or something?
Roh: It was an absolute game-changer.
McDermott: Yeah, it was definitely interesting when we brought that up.
Stitt: And then I brought it up to a bunch of council members pretty much immediately.
McDermott: It definitely changed the conversation.
So Greg, where did the mapping come in?
Kingery: Where I come into the process, or any process, I guess is to try to look at things through the lens of geography because every budget item or policy measure has a location attached to it. And the spatial data, how it’s going to affect people and where. We have a great, big, diverse city, and in the case of the sugary beverages tax, we wanted to know where would people be most likely to purchase these items? What’s the location attached to this? So we found what we believe was a representative data set of convenience stores in the city.
So what does that include? Corner stores, bodegas, gas stations?
Kingery: Corner stores, gas stations, Wawa.
Stitt: What did you control for?
Kingery: We looked at crowdsourced data on Google, we looked at Yelp, I recommended we cross-check those points. Because remember, we didn’t have an official data set to work with, so we had to see well what’s the best we can do?
That must have taken forever.
Kingery: I doubt we got every one, but this was representative. So we cross-checked that with some of our official city data sources.
How did you use them then?
Stitt: The maps were shown in a couple of the budget hearings. The administration did not really want analysis on where small convenient stores were, so that was more of council wanted to see exactly what Greg said, a rough sample. And this came out of certain members who were complaining about the regressiveness of the tax, who was going to get hit the hardest, who was less likely to avoid the tax. It was also about who has choice.
Maloumian: It’s all sugary sweetened beverage. You would walk into some of these stores, there’s no healthy option to choose from.
Stitt: And a lot of lower income people buy sugary sweetened beverages because it happens to be the cheapest thing in the stores.
Kingery: We did another analysis we ran that is the access outside of the city. So we also ran a drive time. This concerned major supermarkets, and there was a similar method where it was a lot of intensive Google labor. We looked at major supermarkets in the suburbs. We found that most of the city, on an average day, is within a 15-minute drive of a supermarket that we found.
Did you guys have a lot of requests from district council members wanting these exact numbers for their own districts? How many corner stores there are, supermarkets, etc?
Stitt: We got more requests citywide. The members had a pretty good sense of their district. I think they just wanted to see more of a citywide policy. And obviously the higher the rate, the more regressive the tax is. The lower the rate, the lower your drop-off. It makes it a broader base, and the inclusion of diet also broadened the base drastically as well. And that’s why you’re able to do a 1.5 cent rate that gets you pretty much the same amount that three cents on just sugary drinks does. And the container tax helped that.
How did that sort of come about?
Maloumian: We wanted to consider a broad amount of options. Not put all of our eggs in one basket. So when the mayor proposed a 3-cent sugary beverage tax, the councilwoman immediately asked well what are our options? So we looked at other cities and what they had done to fund similar programs. And Baltimore successfully implemented a container tax on non-reusable beverage containers. It was across the board at a very low rate of 15 cents per container. We thought it was a broader base, it was more sustainable and there wouldn’t be much drop-off, which means the programs would be funded in perpetuity.
Stitt: We had to use national data, and we had a little bit of local data. Thats how we were able to come up with the projections for the container tax. So it was very interesting policy discussions. Chicago actually has a bottled water tax.
Maloumian: Five cents.
Stitt: Yeah, they do it for environmental purposes.
Maloumian: To get the litter off the streets.
Stitt: I think we know way more about bottled water and soda consumption than we ever could have imagined.
And probably more than you ever wanted to know.
Stitt: Right. Soda, diet soda and regular soda, it is declining revenue. Not to say that there’s still not a lot of money, but I think that the container tax was a very valid point, especially in terms of broadening the base.
That must be hard to figure out when you don’t necessarily have an exact revenue target that you must abide by.
Stitt: That’s part of the negotiation process. How much money does the administration really need? And council members are on that. This year you had many council members digging really deep into the budget in terms of what money is in the budget that is not being spent efficiently or effectively and can we shift some of that money to ther priorities? If anything, the debate this year really relative to prior years has really opened up the education of City Council and staffers.
And now you have these fiscal stability hearings coming up.
Stitt: And we have hearings coming up.
What else that’s positive came out of these discussions?
Maloumian: This time around, we’re doing the healthy beverage tax credit. We realized those small stores could come out on the short end here, so we wanted to help them out in some way. So council always tries to balance out winners and losers, but also help the losing situation out.
Stitt: That’s a great example. We noticed it was all about penalizing people for making poor health decisions. We wanted to put something out there that incentivized people to make better health decisions and I thought it was a great idea.
Roh: The package just overall is just more fair. It’s more progressive. If we’re going to make this about health, let’s actually make this about health. Which is what that did. The reason it was so important to have data on who this impacts the most and regressivity is that there was a suspicion all along that not all the revenue would be going toward these programs. Now we know that it’s going to address the general fund.
The question is: do you fight a citywide problem on the backs of just these few people? And so that’s why the negotiations when Councilwoman Brown introduced the container tax. It was like the needle stopped. It forced a discussion back to regressivity, winners and losers, sustainability. The question all along was: why does this have to be three cents? Why does this have to be this specific tax? Why does it matter how we raise the revenue? Now we all know the answer to that question: Because we wouldn’t be in The New York Times.
There’s a benefit to that. There’s absolutely benefit to that. We understand politically why we had to end up at some version of soda, but the question is about who this would hit and the impact and where the money was going. Those were always really important.
Safe to say you all think the introduction of the container tax, even though it didn’t get passed, might have been the turning point in kind of the conversation?
Maloumian: I think it absolutely moved the conversation.
Stitt: The introduction of the container tax also prompted other alternatives.
I guess it’s not like anybody in council was angry with having more choices.
Maloumian: No they were like please, thank you for doing this and maybe encouraged other members to put out an alternative.
Stitt: And the conversation that was coming from the public was that we need revenue for pre-K, community schools and a rebuild. It wasn’t like it was ‘pass the tax revenue proposal that’s on the table.’ The members took that as let’s go find some revenue for these programs, and that’s exactly how you get to a compromise on the taxes.
McDermott: There were other options.
Stitt: Other than just three cents.
What else do you want the public to know about this process?
Stitt: I think everybody in this room here really deeply cares about the city of Philadelphia. And we want to see it become a better place and bringing in our talents in government. A lot of people do jump to the private sector because it’s, for lack of a better word, sometimes easier. And these problems are tougher. When we started analyzing the container tax, this is something that hadn’t really been done before, only one other city in the country had done it. And we had a lot of conversations with Baltimore, but it’s still very new. All the programs are very laudable and we want to find ways to fund them. We want to make sure that they’re implemented correctly.
Roh: And Hadji’s an attorney, so he could be anywhere.
Maloumian: I choose to be here.
You mean you don’t want to be in one of those fancy high-rises?
Maloumian: No, no. Here, at a young age, you can really affect policy citywide and change people’s lives for the better. We are small staff, and we have 1.5 million constituents. Every day is new things, a change every day. But it’s rewarding work.