121 Report – CRMA – November 2016

IN THIS ISSUE:

COOK COUNTY SWEETENED BEVERAGE TAX
BAG TAX
LEGISLATIVE UPDATE

 

COOK COUNTY WRAPS UP 2017 BUDGET SEASON WITH 

A TAX AND A PROMISE

This week, the Cook County Board passed its 2017 budget by accounting for $100 million of its deficit with a combination of cuts to county employees, holding the line on COLA increases for non-union employees, reductions in non-essential spending and increased revenue projections. With $74 million remaining in the deficit, President Preckwinkle turned to a proposal to implement a tax on beverages sweetened with sugar or artificial sweeteners. The controversial proposal was met with fierce opposition from IRMA and all of our partners along the chain in the beverage industry. After meetings with the Commissioners, phone calls, letters, emails, a TV, radio and social media campaign and in-store efforts to alert customers to the impending tax, the measure passed by one vote.

This beverage tax will actually put retailers in the precarious position of having to tax a tax. The ordinance requires retailers to fold the tax into the selling price of the product and then apply the sales tax along with, when applicable, the Chicago soda tax. In addition, for those retailers that are contracted to accept SNAP benefits, they are being forced to collect tax from a customer in direct violation of their SNAP contracts. The County imagines that the tax will work similarly to Chicago’s bottled water tax and that clarifications will be made in a rulemaking process. This has led to a number of questions not only about the sweetened beverage tax, but the bottled water tax as well. At this point, there are many more questions than there are answers, and we are working to get clarity before the tax goes into effect.

In exchange for the vote on the sweetened beverage tax, President Preckwinkle promised that she would not raise existing taxes or implement new taxes in the 2018 and 2019 budgets. This would get the existing Board members through their next election. Her resolution (which was non-binding) ultimately became an ordinance when Commissioner John Fritchey folded the promise into a larger proposal to make it more difficult to raise certain taxes in the future. Commissioner Fritchey’s ordinance will allow the County Board to increase sales and/or property taxes only after the President’s office submits a forecast of how any such proposed increase will be used and affirming that the increase will carry them through at least three years.

Cook County is the 7th local jurisdiction in the country to pass a sweetened beverage tax after Berkeley, CA, passed the first such tax in 2014, Philadelphia, PA passed its tax this year, and on Election Day, Boulder, CO, San Francisco, Oakland and Albany, CA all passed ballot referenda to implement the tax. But Cook County is the first county to pass the tax covering the largest area. It received a tie vote in the Finance Committee, and even though that meant that the ordinance technically failed, it could still be moved to the floor for full Board consideration. President Preckwinkle called a special meeting of the Board which took place immediately, but the vote was again tied with the following Commissioners supporting the tax: Arroyo, Butler, Daley, Garcia, Moody, Moore, Sims and Suffredin. President Preckwinkle stepped in to cast the deciding vote to break the tie. The tax goes into effect on July 1, 2017, the same day that the county will implement its own wage of $10/hour and a paid sick leave/paid FMLA ordinance.

A copy of the sweetened beverage tax ordinance can be found here.

 
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THIRD TIME’S A CHARM: CHICAGO PASSES A BAG TAX

Using the tax in Washington, DC as a model, Chicago’s City Council passed a $0.07 tax on single-use plastic and paper checkout bags. Chicago first started legislating plastic bags in 2008 when it required grocers, pharmacies and convenience stores to provide bins for customers to place plastic bags in for recycling. The program ran for 5 years before bag bans and fees began to make their way up and down the west coast, then east to Washington, DC. As the plastic bags issue began to gain more media attention, an idea was introduced here to ban the thin, T-shirt bags. While we cautioned that banning one type of bag would just make consumers move to the next free option, the City Council passed the ban. As expected, consumers moved from thin plastic bags to thicker plastic bags and paper. Retailers saw their costs increase more than threefold to supply customers with alternative bags.

After realizing that the bag ban had not achieved the goals of encouraging customers to bring their own bags to the store and decreasing the amount of bags in the waste stream, the Council decided to repeal the ordinance in its entirety and replace it with a bag tax very similar to the tax imposed by Washington, DC. Customers will now be charged a fee of $0.07, with $0.05 of the revenue going to the city and $0.02 going to the retailer to help defray costs. The hope is that Chicago will see similar results to other cities who saw their bag use go down by 50%. Retailers will need to move quickly to implement the tax as it goes into effect on January 1, 2017.

The bag tax was passed as just one piece of the overall city budget of $8.2 billion which didn’t include any increases in the sales or property taxes or any major fee increases. The budget did include a pilot program to change loading zones in the 2nd, 27th and 42nd wards to time-allotted, metered zones. Moreover, prior to the budget process, the Council debated and passed an unpopular measure to increase in the water and sewer tax. With the tax increase under their belt, the actual budget process turned out to be fairly non-controversial. The budget passed 48-0 and the revenue portion of the budget passed 45-3, with Aldermen Munoz, Ramirez-Rosa and Waguespack voting against the revenue package amid concerns about the details of a new investment fund to attract commercial real estate development in communities on the south and west sides of the city.

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CITY COUNCIL AND COOK COUNTY ORDINANCES AND RESOLUTIONS

 

INTRODUCTIONS

Changes to Drive-Through Permits

Sponsors: Ald. Patrick O’Connor (40th Ward) and Ald. Margaret Laurino (39th Ward)

Committee: Zoning, Landmarks and Building Standards

This proposal seeks to change special use permits for restaurants with drive-through facilities. Currently, once a special use permit is approved for the drive-through, it lasts through the life of the license. This proposal would require approval every 5 years if the drive through operates between the hours of midnight and 7am. The approval process would include existing permits and new permits. It also gives the Zoning Administrator the authority to recommend to the Zoning Board of Appeals a restriction on hours of operation for the drive through as a condition of approval.

 

PASSED INITIATIVES

Revocation and Nonrenewal of Tobacco Licenses

Sponsor: Mayor Rahm Emanuel

As part of the annual Management Ordinance, Mayor Emanuel made clarifying, non-substantive changes to provisions on revoking and renewing tobacco licenses. The changes explain that a violation is a finding of liability or that and offense was sustained by the court. It also clarifies that a revocation hearing is limited to the licensee’s record and any pending charges that affect the same or similar hearings. Licensees cannot address previously resolved items.

 

Pilot Program for Commercial Loading Zones

Sponsor: Mayor Rahm Emanuel

As part of the annual Revenue Ordinance, Mayor Emanuel introduced a pilot program to change how commercial loading zones operate in three wards of the city: 2, 27 and 42. Loading zones, traditionally paid for by the business, will now convert to metered zones paid by the user, similar to the city’s already established parking meters for personal use vehicles. Some loading zones may be converted to standing zones depending on how the zone is being used. Curb loading zones currently designated for valet services, day care centers, government buildings, hospitals, hotels, houses of worship, nursing homes, private residences and schools will not be converted for purposes of this pilot program.

Permits will be issues for individual or fleets used for commercial purposes. Permits must be displayed in the front window of the vehicle. The user must pay the meter fee and there will be time limits for the maximum length of stay. The rate in these zones is established at $3.50 per 15 minutes.

The next City Council meeting will take place on Wednesday, December 14, 2016.
 
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CONTACT INFORMATION:

TanyaTricheTanya Triche
Vice President & General Counsel
312-726-4600
ttriche@irma.org