Updated, 4:38 p.m.
Philadelphia’s soda tax will live to fight another day, but the war may not be over.
After a court battle that started right after the the law passed in 2016, and continued through multiple appeals, the Pennsylvania Supreme Court ruled in favor of the city Wednesday morning.
The ruling can be seen as a major victory for Mayor Jim Kenney, whose Rebuild program for parks and schools depends on funds from the levy. Although the tax has been collected for more than a year now, spending has been delayed as the various legal challenges wound their way through the court system.
Now, with a 4-to-2 majority, justices have definitively decided the tax on sugary beverage distribution is allowed. The case hinged on interpretation of what’s known as the Sterling Act.
“The Sterling Act conferred upon the City of Philadelphia a broad taxing power subject to preemption, while clarifying that ‘any and all subjects’ are available for local taxation which the Commonwealth could, but does not presently, tax,” Chief Justice Thomas Saylor, a Republican, wrote for the majority. “The Commonwealth could, but does not, tax the distributor/dealer level transactions or subjects targeted by the beverage tax.”
In a statement, Kenney said the “decisive ruling offers renewed hope for tens of thousands of Philadelphia children and families who struggle for better lives in the face of rampant poverty.”
Both Kenney and City Solicitor Marcel Pratt said Philadelphia can now move forward with its original plans.
Looking to Harrisburg
Harrisburg can — and may — prohibit Philadelphia and other municipalities from passing soda taxes. The legislation, introduced by an Allegheny County Republican, was due for second consideration before House lawmakers recessed for the summer in June.
The majority ruling makes it clear that, in many situations where the court is unable to act, Harrisburg can.
“The concern that unintended consequences may unfold are prevalent relative to the promulgation of experimental, remedial legislation such as the Sterling Act. Where the language of the governing statute is clear (or clear enough), however, the solution is legislative — and not judicial — adjustment,” the ruling states. “In this regard, this Court regularly alludes to the superior resources available to the General Assembly in assessing matters of social policy.”
Opponents to the soda tax in Harrisburg include Democrats as well as Republicans. Most notable among them is state Sen. Anthony Williams, a Philadelphia Democrat who signed on to a friend of the court brief opposing the tax.
In late June, Williams told Billy Penn Philadelphia needs to find a different source of revenue for the projects the soda tax is funding. “I don’t like a regressive tax. I don’t like it billed as it is, which is helping the poor,” he said. “No, you’re taxing the poor to help themselves.”
“I’m not a fan of preemption,” he added without saying one way or the other how he would vote on a bill. “But we’ve got to fix this.”
Anthony Campisi, a spokesperson for Ax the Philly Bev Tax, said in a statement the coalition is “clearly disappointed” in the ruling. “It is now up to our elected officials to listen to the concerns of their constituents and provide Philadelphians much needed relief by reversing this tax,” he continued.
It’s unclear if the House will prioritize the soda tax bill when it returns in the fall because of Wednesday’s ruling. Earlier this month, the bill’s introducer, Rep. Mark Mustio, said in a statement, “With the limited number of days left in session, I do not feel there is a realistic shot to move the bill.”
Mustio told Billy Penn by email Wednesday he is interested in pursuing the bill, but could not say if today’s ruling would change anything until the House Republican caucus next meets.
Philly state Rep. Jared Solomon, who strongly opposes the bill, said the Pa. Supreme Court decision supports the intent of the Sterling Act — to ensure that Philadelphia has the ability to solve its own problems.
A lot has changed between when the act was passed in 1932 and now, he added.
“One of the critical changes is that Harrisburg and the federal government have been less than generous for providing the necessary resources for Philadelphia and urban centers throughout the whole country to try to tackle many of the issues we all deal with,” he said. “If we don’t have this legislative ability given to us by Harrisburg, then we’re not able to handle our own problems.”