Unexpectedly Intriguing!
January 30, 2018

Based on final figures for January through October 2017, and preliminary estimates for November through December 2017, the city of Philadelphia is set to fall nearly 15% short of its $92.4 million revenue target for the first full year of its controversial soda tax.

Desired vs Actual Estimates of Philadelphia's Monthly Soda Tax Collections, January 2017 through December 2017

Overall, Philadelphia is set to collect $78.8 million from its 1.5 cents-per-ounce tax imposed on all pre-mixed naturally and artificially-sweetened beverages, including regular and diet drinks, distributed for retail sale within the city during 2017, which will fall $13.6 million short of the city's planned $92.4 million of revenue from the new tax.

That kind of a miss will have an impact on how much money is available to support the spending that Philadelphia city officials had planned for the proceeds of its soda tax. The following chart shows how the city had planned to spend the money it expected from its tax on sweetened drinks from Fiscal 2017 through 2021.

Desired Spending From Philadelphia Beverage Tax Revenue, Fiscal 2017 Through 2021 [Millions of Dollars]

Instead, if the city's projected beverage tax revenue of $78.8 million represents the amount of money that it will be capable of collecting from the tax, the city can expect to only have $349.3 million to spend from 2017 through 2021, falling $60.3 million short of the $409.6 million that city officials planned they would be able to spend.

Philadelphia's city leaders will now have to make some choices. They can divert the revenue from other city taxes to make up the soda tax revenue shortfall so that they can still spend the same amount on the things they promised to Philadelphia's residents, or they can hike taxes to make up the difference, or they could cut their desired spending down to levels that they can actually support using revenue from Philadelphia's soda tax, or they could try to make up the gap by borrowing more money. And quite possibly, they could try some combination of all of these strategies.

Regardless, whatever they choose will come with a cost. The following chart shows how much the city's planned spending from Fiscal 2017 through 2024 would change if each category was reduced by an equal percentage to match the city's actual soda tax revenue in 2017, should Philadelphia's city leaders choose to follow a path of fiscal responsibility by not raising or diverting taxes or borrowing new funds.

Projected Spending From Philadelphia Beverage Tax Revenue, Fiscal 2017 Through 2021 [Based on Actual 2017 Revenue]

The real question now is which interest groups within the city will be the designated losers for addressing the soda tax shortfall in what Philadelphia's city officials will decide to do. The city will revisit its spending plans in March 2018.

If Philadelphia's leaders were smart, they've been planning how they'll respond to the funding shortfall since January 2017, when the city's soda tax collections first fell below desired levels. At no time in 2017 did the city ever collect what it would have needed in any given month to hit its $92.4 million target to sustain their desired level of spending, so there's really no excuse for not having such a plan ready to go.

Labels: ,

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Stock Charts and News

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links

Charities We Support
Recommended Reading
Recently Shopped

Seeking Alpha Certified

Archives
Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.