MONTPELIER — The $24 million soda tax approved by the House Committee on Health Care on Wednesday morning likely won’t survive its next stop along the legislative gauntlet. But advocates of anti-obesity efforts are celebrating a victory, however temporary, that they say moves the 1-cent-per-ounce surcharge closer to reality.
A bizarre morning in a crowded committee room culminated in a 7-4 vote in favor of an excise tax on “sugar-sweetened beverages.” No state has ever passed a soda tax into law.
The tax, assailed by both the beverage lobby and Gov. Peter Shumlin, will head next to the House Committee on Ways and Means, where at least six of its 11 members oppose it. But Rep. Mike Fisher, a Lincoln Democrat and chairman of the House Committee on Health Care, said he’s taking the long view.
“I’ve been around this building long enough to know that there are issues that need time, that sometimes need to be talked about for years,” Fisher said.
The soda tax originally was one provision in a complex piece of legislation to first establish health care subsidies for low- and middle-income Vermonters, and then create a revenue source to pay for them. The tax was broken out Wednesday in a strategic move.
Wednesday’s vote on it came after 90 minutes of strained discussion about the committee’s tie vote Friday on the original unified bill. That 5-5 vote materialized after Rep. George Till, a Jericho Democrat, departed the building without explanation in the minutes before the vote. Media outlets had reported that Till, a doctor, left Montpelier to attend to a medical emergency. In fact, Till said, he departed only because he hoped to galvanize more support for the legislation over the weekend.
“What I felt Friday is both sides were being stubborn to the point of being irrational,” Till said.
Given more time, Till said, he thought he could muster eight “yes” votes, thereby bolstering public perception of the support that exists for the bill. As Till would say later, “I failed dismally at doing that.”
The soda tax wasn’t the only controversial component of the original bill. Lawmakers were also divided over how much money Vermont should spend next year to help poor and working-class Vermonters afford health insurance.
The Shumlin administration wants to spend about $4.5 million to subsidize costs for the lower-income Vermonters who will, beginning next year, be required to purchase their insurance in the health care exchange. That isn’t enough to insulate them entirely, however, from higher out-of-pocket costs awaiting them in the exchange.
Rep. Chris Pearson, a Burlington Progressive, led the charge for more generous subsidies. He said the Shumlin plan will mean higher costs for Vermonters currently enrolled in programs like Catamount Health and VHAP, both of which will disappear when the exchange goes into effect in 2014.
Pearson, Till and Rep. Paul Poirier, a Barre independent, had been pleading with House leadership to add $800,000 more in subsidies, to cushion the very poorest residents from any cost hikes next year. Without the additional money, Pearson said Wednesday, more Vermonters will join the ranks of the uninsured.
Leadership, however, wouldn’t budge. Fisher and House Speaker Shap Smith know the soda tax won’t last long, and when it disappears, so will the revenue that Pearson wanted to use to fund the increased subsidies. By denying the $800,000 now, they avoided incurring yet another revenue problem later on.
Pearson made a last-ditch attempt to fund the additional subsidies by reallocating money that would have otherwise gone to hospitals, but the committee shot it down.
An odd procedural move saw the bill divided into two parts before the final vote Wednesday — one that included the Shumlin-level subsidies, the other containing just the soda tax. The move allowed Pearson to vote for the soda tax while registering his opposition to the subsidy levels; it also allowed two Republicans on the committee to vote in favor of the subsidies but against the soda tax.
In passing the soda tax, the committee jettisoned the so-called Catamount assessment, which is a surcharge on employers that the Shumlin administration had sought to use to fund subsidies in the exchange. The assessment would have generated about $11 million annually by imposing a $500-per-employee penalty on businesses that don’t offer employees health insurance.
The committee has allocated $1 million of the soda tax revenue to anti-obesity programs and $5 million to a food stamp supplement aimed at helping poor families buy more healthy foods. The remainder of the $24 million the tax would generate annually would go to yet-unidentified public health initiatives.
The soda tax was being pushed by a coalition of 38 organizations that included the American Heart Association, American Cancer Society and Vermont Medical Society. The penny-per-ounce surcharge, proponents said, would raise prices enough to deter consumption, especially among children and low-income adults.
The coalition says sugar-sweetened beverages shoulder much of the blame for the national obesity problem, a charge that lobbyists for the beverage industry reject.
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