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Seattle Votes to Fund Grocery Voucher Program With Soda Tax

Posted on Apr. 2, 2020

Seattle’s city council has approved legislation to use revenue from the city’s sugary beverage tax to fund a voucher program to help low-income residents buy groceries, part of the city's response to the COVID-19 pandemic.

The council voted unanimously March 30 to approve the legislation, which will send $5 million from revenues generated by the 1.75-cent-per-ounce tax on sugary beverages to help pay for $800 vouchers distributed to 6,250 low-income families enrolled in the city’s existing child care and food assistance programs, which are anticipated to be economically affected by the pandemic. The vouchers can be used at Safeway grocery stores in the state and will be applicable for purchases of food, cleaning supplies, and other household goods. The vouchers can’t be used to buy gasoline, alcohol, tobacco, and lottery tickets.

The voucher program was announced by Democratic Mayor Jenny Durkan’s office March 16, and the first installment of the vouchers — worth $400 each — were mailed out March 20. The second installment will be sent during April. However, to fund the program from revenues generated by the city’s beverage tax, the city council needed to approve the new legislation.

According to a city statement provided to Tax Notes March 31, the reallocated beverage tax revenue is "a combination of 2019 unallocated [beverage tax] dollars and a reprioritization of 2020 [beverage tax] revenue that was previously allocated for the Department of Neighborhoods and Parks and Recreation." The tax was previously projected to generate approximately $24 million this year, but the city expects that revenue to be down significantly because of the pandemic. 

The beverage tax funds education- and nutrition-oriented programs, including one to help lower-income families buy fresh fruits and vegetables, in which Safeway is already a partner. However, “while the Sweetened Beverage Tax funds important programs, the City must press pause on those [programs] in order to ensure families across Seattle, especially children enrolled in Seattle’s child care programs, have food on the table so they can remain healthy during this public health crisis,” council member Teresa Mosqueda (D) said in a March 30 statement. Mosqueda sponsored the legislation diverting the revenue.

Durkan praised the decision in a release, arguing that “working families in Seattle are already struggling because of the COVID-19 pandemic,” and that city leaders “need to do everything we can to support families.”

The March 31 statement by the city said Seattle was able to quickly develop the voucher program via its relationship with Safeway for the existing program to help lower-income residents afford fresh fruits and vegetables. Households included in the voucher program were prioritized based on their current use of city assistance.

Notably, language added to the final version of the legislation urges the city to prioritize distribution of any similar vouchers funded in the future to immigrants, the elderly and disabled, those unemployed as a result of COVID-19, and people already enrolled in assistance programs normally funded under the beverage tax. A spokesperson for the city said there aren't any future vouchers planned, but that could change depending on circumstances. In the meantime, the city is also partnering with United Way of King County and seeking private donations to generate $15 million to help 25,000 lower-income families buy groceries during the pandemic.

The city’s Sweetened Beverage Tax Community Advisory Board supported the legislation, but urged the council to also look at using other revenue sources to fund temporary relief efforts and asked that city leaders consider using some of the money Seattle may receive as a result of the federal response to the pandemic to refund the transferred tax revenue back to the programs normally funded by the sugary beverage tax.

Seattle’s beverage tax was approved in June 2017 and went into effect January 1, 2018. It was originally predicted to bring in around $15 million in its first year but generated roughly $7 million more than that. In 2018 voters in the state banned new local sugary drink taxes, but Seattle’s was grandfathered in. A recent study indicates that the tax has reduced consumption of sodas and other sugary drinks.

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