Cook County, Your New Soft Drink Tax Will Go Towards Pensions, and Appears to be Illegal – WP Original
By: Mark Glennon*
Cook County on Thursday slapped another $224 million tax on its residents, this time in the form of a “sugary drinks” tax. According to the Chicago Tribune, the tax will add 72 cents to the cost of a six-pack of soda or 68 cents for a 2-liter bottle. The tax also will be imposed on fountain drinks at a penny an ounce, bringing the tax on a 7-Eleven Gulp to 32 cents and on a Double Gulp to 50 cents.
Where’s it going? In a sense, money is fungible, but it’s pretty clear from the county’s new budget what necessitated the tax. For 2016, the county decided to make additional contributions to its underfunded pension, above and beyond the schedule set forth by state statute. It contributed an extra $270 million. For 2017, it will increase that supplemental contribution by $83 million, making the total supplemental pension fund contribution $353 million. There goes your tax money.
There’s a pretty glaring question whether the whole thing is legal, which was flagged by The Civic Federation in its report on the county budget. An Illinois statute (40 ILCS 5/9-16938) says county pension contributions must come from the property tax, not a sales tax. The statute also caps pension payments at no more than 1.54 times what the employees themselves contribute for the two years prior. The county’s proposed additional pension contribution exceeds that cap and the increase in pension contributions comes from a revenue source outside of the property tax, The Civic Federation says. In other words, Springfield set a limit on how much taxpayers have to contribute to the pensions relative to the pensioners themselves, and the county is ignoring that limit.
So what if it’s illegal, it’s a healthy thing, right? Well, the tax covers drinks with no sugar as well, such as iced tea, sports drinks and artificially sweetened soda.
And what a nightmare for small restaurants and shops to comply with this. The tax is in addition to the sales tax, so it has to be calculated separately, and food stamp users are exempt. Cook County sales taxes are already the highest in the nation.
This is a horribly regressive tax and in-your-face mean to small shops and restaurants. Let’s hope it’s challenged in court or that Springfield says no if the county asks for the statute to be changed.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.