Anticipated Revenue Drop From Sweetened Beverage Tax May Disrupt Food Security and Early Childhood

by Lauryn Bray

On Feb. 1, the Finance and Housing Committee received an update on revenue generated from the Sweetened Beverage Tax from the Sweetened Beverage Tax Community Advisory Board (SBT CAB). Using data from its 2021 annual report, the CAB presented that over four years of implementation (2018 to 2021), the SBT has garnered more than $81 million total.

The SBT was first implemented in 2018. The tax was designed to improve the health of Seattle residents by reducing sales and consumption of sugary drinks, and to help fund programs related to food security and early childhood education.

"Sugary drinks are the largest source of sugar in the American diet and a major contributor to poor health outcomes," said Jen Moss, registered dietician, Washington State University Extension SNAP-Ed program manager, and co-chair of the CAB. "The thinking behind this type of tax is the distributors will pass the cost of the tax onto the consumers in the form of higher shelf prices and that [the] sticker shock will deter people from buying the product."

The SBT taxes distributors at $1.75 per ounce. Different from a sales tax, which is imposed directly on the consumer, the SBT is levied only on the distributors of sugary beverages.

"In its first year, the SBT collected nearly $23 million even though the City's original forecast was $15 million," reported Tanika Thompson Bird, food access organizer with Got Green and co-chair of the CAB. The CAB also reported that the SBT collected $22 million in 2019 and less during the years of COVID-19 pandemic closures, with $17.3 million in 2020, and $18.9 million in 2021. While collections data has not yet been made available, Thompson Bird says CAB anticipates that SBT collections in 2022 will garner somewhere around $20.4 million.

During its presentation, the CAB reintroduced a fiscal plan from the 2022 proposed budget that outlines future SBT spending and details how tax revenue from 2022 would be expended. The CAB plans to allot $5.9 million to the Office of Sustainability and Environment, $7.8 million to the Department of Education and Early Learning, $4.9 million to the Human Services Department, $2.9 million to the Department of Neighborhoods, and $303,000 to the Parks and Recreation Department. The plan also includes funding for the Office of City Auditor.

The history of the SBT is rooted in community organization and advocacy. The tax was born specifically from the organizing efforts of coalitions formed within Communities of Color across South Seattle. The CAB says it is committed to upholding this legacy by making sure SBT revenue continues to be invested in the communities most affected by food insecurity.

"In 2017, when the City started to consider a new tax on sugary beverages, community organizing — especially in South Seattle — helped turn what could otherwise be a regressive tax into one that benefits low-income communities and Communities of Color," said Thompson Bird. "We fought hard to make sure that if SBT was passed it would include spending guidance so that revenue would be equitably reinvested in communities most impacted by the tax and most burdened by food and nutrition insecurity, and disparities in educational opportunities," explained Thompson Bird.

The CAB reported that programs funded by SBT are focused toward food equity and early education. According to data from the CAB's 2021 annual report, SBT revenue allocates funding for the Prenatal-to-Three Community Grant Program, in which 10 grassroots organizations were awarded $1.5 million. SBT revenue also sponsored a child care assistance program, in which 733 income-eligible families, 85% of whom were BIPOC, were able to benefit from subsidies.

Some of the food equity programs and services supported by SBT include community grants, food banks, and meal programs. In 2021, SBT funding awarded 35 food justice organizations with $1.2 million, provided 1.2 million meals in community and elder congregate meal settings, distributed 36,000 bags of produce sourced from local and BIPOC farms in preschool sites, and installed eight new water filling stations at low-income schools. SBT revenue also supported a Fresh Bucks program, in which 12,100 enrolled households redeemed $5.2 million in produce benefits.

Due to an anticipated fall in SBT revenue, cuts are being made to the SBT budget, and the CAB will be forced to make some difficult decisions to cope with the loss in funding. However, to keep SBT programs whole throughout 2024, the Select Budget Committee's Initial Balancing Package transferred $1.2 million in JumpStart funds in 2023 and 2024 to the SBT fund. Additionally, because SBT does not adjust to inflation, there will always be less funding available each year than there was the year before.

Because of the anticipated 2025 shortfall, the CAB has asked the City Council to identify alternative funding sources. It has also requested that the City's new Revenue Stabilization Work Group consider structural issues within SBT, and to keep food equity and Prenatal-to-Three programs in consideration as new revenue streams are identified.

"Further cuts to food security and Prenatal-to-Three programs and services should not be an option," said Thompson Bird. "Food security and Prenatal-to-Three programs need diverse and progressive revenue streams to meet urgent need in communities."

Editors' Note: This article was updated on 02/23/2023 with corrections to Tanika Thompson Bird's name and organizational affiliations.

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