Soda, sweet drinks tax passes in D.C.

D.C. lawmakers on Wednesday approved a controversial soda tax, trimmed funding for the H Street/Benning Road Northeast streetcar plan, funded a statehood initiative and approved legislation for a commuter tax.

The measures are part of lawmakers’ preliminary approval of Mayor Adrian Fenty’s fiscal 2011 budget plan.

The actions followed dire warnings from D.C. Council member Jack Evans, who said he and his colleagues will be right back at the same dais next year reviewing the same problems if they fail to cut spending. Council member Marion Barry said the city‘s “structural deficit” problem will always leave city coffers $300 million to $400 million in the red.

Chairman Vincent Gray, who is challenging the mayor’s re-election bid, said lawmakers had no choice but to “right-size” Mr. Fenty’s plan, which relies on spending the city’s savings.

When Mr. Fenty became mayor in 2007, the city had $1.4 billion in reserves. The mayor has spent $1 billion of that money.

So the council proposed its own spending plan.

While lawmakers rejected an amendment from Council member Jim Graham to raise income taxes on residents who make $350,000 and above, they signed off on adding sodas, sports drinks and other sweetened nonalcoholic beverages to the long list of items subjected to the city‘s 6 percent sales tax. The money will be used to fund an initiative that would mandate physical education programs and what students are served at traditional and charter schools. The tax is vehemently opposed by retailers large and small across the city, including delicatessens and liquor stores.

Even the nationally famous Ben’s Chili Bowl opposes the soda tax.

The council also delayed the immediate spending of nearly $50 million on the H Street/Benning Road streetcar proposal. The tracks have been laid, but legislators said more planning is needed, including determining whether a terminus will be located at Union Station, which handles commuter rail.

The statehood initiative, which essentially is a lobbying operation, will receive a half-million in funding. Lawmakers said they will change strategy. Instead of merely pushing for a vote for the city’s nonvoting congressional delegate, the city will push for full statehood.

The measure likely to draw the most interest from Congress, which has the final say on all D.C. legislative and budget affairs, is the commuter tax bill.

“This is not a commuter tax,” said Council member Harry Thomas Jr., who proposed the measure.

But the bill would nonetheless levy income taxes on D.C. government employees who do not live within the city’s limits. Lawmakers anticipate the tax would draw $105 million in revenue.

Members of Maryland and Virginia’s delegations have long opposed allowing D.C. to tax its residents who work in the city.

The council is scheduled to take a final vote on the fiscal 2011 budget in June before sending it to the mayor and Congress.

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