EARNS COCA COLA

Cans of Pepsi and Coke are shown in a news stand refrigerator display rack. . (AP Photo/Mark Lennihan)

(MARK LENNIHAN)

Pennsylvania made headlines this summer when the Philadelphia City Council passed an ordinance imposing a city-wide excise tax on soft drinks and other sweetened drinks.

When it takes effect in January 2017, the tax on sugary and diet drinks is expected to start generating about $91 million annually, according to projections from Mayor Jim Kenney's office.

When that council vote was taken in mid-June, about 90 miles to the west Gov. Tom Wolf and leaders of Pennsylvania's General Assembly were in the midst of another long staredown over how to balance the state's budget.

And let's just say, the soda tax was.... noticed.

So the obvious question is, in a statehouse where the current paradigm is "do-everything-you-can-to-avoid-any-increase-in-general-taxes," could a soda tax be coming to the rest of us?

It's not crazy talk, especially if you believe the state is going to need more money in fiscal year 2017-18. If the city tax raises $90 million a year, a state tax would have the potential to raise hundreds of millions a year.

But it is also probably, based on a recent PennLive sampling of administration, legislative and industry sources, a longshot.

***

The Philadelphia tax, slated to take effect Jan. 1 but, as of Wednesday, the target of a fresh lawsuit that opponents hope will see it killed, was sold primarily as a budget building block.

Kenney has earmarked most of its proceeds for expansion of pre-kindergarten programs; upgrades to city recreation centers, parks and public libraries; plus a slice to boost the city's cash reserves.

Proponents, in an echo of past tobacco tax debates, have also argued that there should be public health benefits if the tax drives down sugary drink consumption, as has been the case in other jurisdictions.

But the debate hasn't really started yet in Harrisburg, in part because a soda tax does not appear to have a clear, public champion.

"I'd be lying to say it [imposing a soda tax statewide] has never been talked about," said Drew Crompton, chief of staff to the Senate President Pro Tempore Joe Scarnati, R-Jefferson County.

"But, it's never been seriously talked about."

We heard almost exactly the same thing from Wolf's office, where major income and sales tax increases in each of Wolf's first two budget proposals gave way to alternatives like this year's $1-per-pack hike in cigarette taxes.

"We have not had a serious conversation about it in the governor's office," said Wolf's Chief of Staff Mary Isenhour.

Industry leaders say they hope those serious conversations about a statewide tax never occur, arguing the public health argument that's been used to justify cigarette taxes isn't nearly as strong when it comes to Coke, Pepsi or Dr. Pepper.

They point to long-term declines in sales of soft drinks - per capita consumption in the U.S. hit a 30-year low in 2015, according to Beverage Digest - and note those declines haven't been matched by similar drops in obesity rates.

"Drinking a soft drink is not a sin, so to speak," said Tony Crisci, counsel for the Pennsylvania Beverage Association and a registered lobbyist in Harrisburg. "The truth of the matter is you have to balance what you eat and drink, and what you do."

But many public health advocates disagree.

Jim Krieger, executive director of Healthy Food America, said Wednesday that here is a strong correlation that high rates of calories from sweetened drinks increase risks for obesity, heart disease, diabetes and cavities.

It's just a matter of time, Krieger believes, till consumption declines traced to relatively new soda taxes in places like Mexico and France start to show real public health benefits.

Besides opposition from beverage companies and allies that include supermarkets and convenience store chains, restaurants and even unions representing route drivers, here's some other hurdles a soda tax could face:

* Potential public anger.

Cigarette taxes get leverage with lawmakers because only about 20 percent of all adults smoke.

Sweetened drinks are more ubiquitous. A survey conducted for The Philadelphia Citizen earlier this year found that 63 percent of respondents said they enjoyed a sweetened drink at least once a week.

Lawmakers may be a hesitant to tax a product that three out of five constituents use routinely.

* There are other places to turn.

For one thing, depending on the state's monetary needs, there are other taxes that had already started to be seriously explored this spring, for fiscal 2016-17, and were actively pushed by some legislative leaders.

As one example, there was the proposal to extend the state's gross receipts tax to the use of natural gas, something that those working on the budget this spring had argued could raise as much as $350 million for the state.

Or, policymakers could simply decide to extend the current 6 percent sales tax - already imposed on most beverages - to bottled water, which is currently exempt.

* Letting Philly be a test lab.

Remember, the soda tax hasn't even begun to be assessed in Philadelphia.

State policy makers might want to see whether such a tax can truly meet its financial targets, or whether it has adverse affects like driving more commerce outside the city line.

Philadelphia's tax is to be levied on distributors, and applies to sodas, teas, sports drinks like Gatorade, flavored waters, bottled coffees like those popularized by Starbucks, energy drinks and other products.

It exempts beverages that are more than 50 percent fresh fruit, fresh vegetables or milk.

Only time will tell how much of that new cost will trickle down to consumers.

At 1.5 cents per fluid ounce, the tax - if passed on to consumers - could add up to 18 cents to the cost of a 12-ounce can, $1 to the cost of a 2-liter container, and $2.16 to the cost of a 12-pack.

* The court challenge.

The Philadelphia tax's opponents did file their long-promised suit to have the city's ordinance overturned Wednesday morning.

Interestingly, some of the major prongs of that fight could have legal implications for the state, as well.

For example, the industry has argued that as written, the ordinance violates the state Constitution's provision requiring uniform taxation of the same subject.

The per-ounce template used by the city is a problem, attorney Shanin Specter said, because the tax on a "5-hour Energy" vial amounts to a little more than 1 percent, but it mushrooms to 149 percent for a two-liter bottle of pop.

That issue, a by-product of taxing by volume, would be there even if this was a state law, Specter noted.

Same with an argument that the city tax, because it is embedded at the distributor level, might interfere with food stamp users' ability to be exempted from taxes on their food and grocery purchases.

***

Isenhour and other administration officials were careful to note for this story that the governor's office is still months away from even starting to consider the revenue side of the state budget.

And Crompton, speaking for the Senate's majority Republicans, said a statewide soda tax would have "no likelihood of fermenting without the governor's strong advocacy, and even then, I have my doubts."

So for now, then, looks like this cap is tightly sealed. And it's worth nothing that only two other states have excise taxes on non-alcoholic beverages - Arkansas (since 1993) and West Virginia (since 1951).

But budget dynamics have a way of shaking things up. And if this particular tax can is ever opened up, get ready for a fizzy fight.