City lawmakers who represent North Baltimore are still split on whether approving a 2-cent bottle tax was the correct move after Pepsi Beverages Company announced it was halting manufacturing at its Hampden plant partly because of the tax.
Kristine Hinck, a Pepsi spokeswoman, acknowledged the tax played a role in the company’s decision to eliminate 77 jobs at the plant on Union Avenue.
“We look at factors we control internally, and also the external environment where we manufacture. Baltimore's beverage tax certainly hasn't helped the situation,” Hinck wrote in an e-mail to North Baltimore Patch. “At the end of the day, we have to look at where our costs are. When there's a beverage tax in place, it impacts our retailers' ability to sell product.”
The company announced Monday that it was halting manufacturing at the plant, but other functions will continue at the site and 318 people will continue to be employed there.
Councilwoman Mary Pat Clarke, D-District 14, supported the bottle tax last year. Although Clarke said she traditionally opposed such taxes, the city’s dire budget situation required the levy to help pay for vital services.
“It was not a false alarm. And I saw it as a stopgap measure we would eliminate as soon as we could when the economy rebounded, but it has not,” Clarke said. “And much to our chagrin we’re looking at a deficit [in fiscal year 2012] we told the budget people to fix with no new taxes or cuts to services. Enough is enough.”
Supporters of the tax, which expires after three years, predicted it would raise $5.7 million to help close a $121 million deficit in the city’s $2.2 billion budget.
Clarke said that she doubted the bottle tax alone could have forced Pepsi to make the decision to shut down manufacturing.
“No doubt a single issue like this doesn’t stand alone as a decision maker, although I may agree it may have been the last straw for a business already considering a shift of venue,” she said.
Clarke, who represents parts of Hampden, added that she was hopeful the city could persuade Pepsi not to halt manufacturing in Baltimore.
“It’s a real loss for us and we need to do everything we possibly can to persuade Pepsi to stick with the community … as we have stuck with them.”
Councilwoman Sharon Green Middleton, D-District 6, also supported implementing the bottle tax last year.
Middleton said she understands that all businesses, from restaurants to manufacturers, have been through a terrible economic cycle. But she said passing the tax was a major component in balancing the city’s budget and continuing services.
“I just know … we were in need of trying to balance the budget and this was one sure way we knew we could help to save city services,” Middleton said.
She also said she supports the tax staying in place through the full three-year term before considering whether or not to allow it to sunset.
Councilman Bill Henry, D-District 4, was among a contingent of council members that did not support the proposed bottle tax.
Henry, whose district is centered along the York Road corridor and abuts Baltimore County, said he was concerned about the tax’s impact on retailers he represents.
“My reason for not supporting the tax was I believed, and I still believe, there were other taxes and other ways of raising revenues to make up the gap, and had less of a negative impact on Baltimore as a whole, ” Henry said.
Henry wanted to hold off on the city passing a bottle tax until the upcoming session of the General Assembly. He wanted to see if it wasn’t possible to pass a statewide bottle tax so it wouldn’t place any particular jurisdiction at a competitive disadvantage.
Henry voted against the 4-cent bottle tax initially proposed by Mayor Stephanie Rawlings-Blake. However he was out of the country when the City Council approved a 2-cent compromise.
Jason Zaiderman, owner of Eddie’s Liquors in Charles Village, said he believes the tax has had a negative impact on retailers.
Zaiderman said his store hasn’t been hurt as badly as others because it isn’t too close to Baltimore County. But he said he has seen customers becoming more price conscientious since the bottle tax went into effect.
The biggest impact has been on large quantity beer sales, such as 30 packs, where the 2-cent tax adds up the most, Zaiderman said.
“People are generally watching what they spend and that’s what it really comes down to,” he said.