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*** UPDATED x2 - County responds - Cook County was warned in June *** Feds warn of suspension of SNAP administrative aid over Cook’s pop tax

Thursday, Aug 10, 2017

* Tribune

Cook County’s sweetened beverage tax could land the state in hot water with the feds, resulting in roughly $87 million in federal food stamp money being withheld if the problem isn’t fixed, Illinois officials said Thursday.

The problem: While Cook County has informed retailers that purchases made with federal food stamp benefits are exempt from the soda tax under federal law, it’s also allowed retailers to tax those purchases and provide refunds as a workaround for stores that haven’t been able to properly update their point-of-sale systems.

As a result, the U.S. Department of Agriculture’s Food and Nutrition Services, the federal agency overseeing the food stamp program — officially known as the Supplemental Nutrition Assistance Program, or SNAP — earlier this week warned the Illinois Department of Human Services that federal money could be withheld. The state passed along that warning to the county on Wednesday.

The full letter is here.

*** UPDATE 1 ***  The US Department of Agriculture’s letter to IDHS reveals that it “advised Cook County via phone call on on June 28, 2017 that this option for managing the tax was unacceptable.” Click here to read the letter.

A spokesman for the Illinois Retail Merchants Association says IRMA also told the county this same thing and used it as part of its lawsuit.

*** UPDATE 2 *** From the county president’s office…

The Cook County Department of Revenue has been in collaboration with the retail community since the approval of the Sweetened Beverage Tax last November. We have worked with the retail community to address their concerns and have implemented regulations to provide further guidance.

The regulation addressing Sweetened Beverage purchases made with SNAP benefits was put in place to further address the tax-exempt nature of sweetened beverage purchases made with SNAP benefits. In drafting the regulation, the Department of Revenue discussed the regulation changes with the USDA on June 27th. After speaking with USDA on June 27th, the County was not aware that Regulation 2017-3 was unacceptable. We believed that USDA was taking our regulations under consideration and would communicate back with the County if there was a concern.

If we were specifically told that the Regulation 2017-3 was unacceptable, we would have worked with USDA, just as we had been doing since January, to further modify as needed. It was never our intention in drafting the sweetened beverage regulations to put federal SNAP funding for the state in jeopardy, nor do we think Regulation 2017-3 jeopardizes the State’s participation in SNAP. At this time, we believe we are in compliance with existing SNAP rules. We do however recognize that USDA’s powers against the State in this regard are substantial and we will work collaboratively with both the State and USDA to address USDA’s concerns.

* Related…

* Rep. Wheeler files bill to prohibit governments from retaliation lawsuits

* Cook Co Commissioners file pop tax repeal after taxpayers revolt

* Editorial: Madam President, abolish the soda tax

- Posted by Rich Miller        

42 Comments »
  1. - wordslinger - Thursday, Aug 10, 17 @ 12:43 pm:

    Looks like BTIA has some competition at the county.

    This pop tax has been FUBAR from the get-go. My friendly bartenders tell me it’s incomprehensible.


  2. - Oneman - Thursday, Aug 10, 17 @ 12:45 pm:

    I am sure the county will be happy to come up with the money after all this is all about the children, not revenue…


  3. - Ron Burgundy - Thursday, Aug 10, 17 @ 12:47 pm:

    So when the state sues the county for the $87m it would lose, will Pres. Preckwinkle accuse them of being overly litigious?


  4. - Almost the Weekend - Thursday, Aug 10, 17 @ 12:48 pm:

    So Preckwinkle sues the feds now for $87 million dollars right?


  5. - Sue - Thursday, Aug 10, 17 @ 12:48 pm:

    If Preckwinkel was honest with herself she would be offering her resignation. This has been a debacle and the revenue numbers will probably be nominal.


  6. - Wylie Coyote - Thursday, Aug 10, 17 @ 12:49 pm:

    This is going to rank right up there with the city’s red-light camera fiasco.


  7. - Amalia - Thursday, Aug 10, 17 @ 12:49 pm:

    Toni, Toni, Toni! she just keeps getting more and more famous/infamous. Liability. Julianna Stratton’s mentor.


  8. - blue dog dem - Thursday, Aug 10, 17 @ 12:55 pm:

    Lucky for us the number of SNAP recipients has been drastically reduced through the brilliant work of the last administration.


  9. - City Zen - Thursday, Aug 10, 17 @ 12:58 pm:

    ==This pop tax has been FUBAR from the get-go. My friendly bartenders tell me it’s incomprehensible.==

    Which of the 86 FAQ’s were they unable to understand?

    https://www.cookcountyil.gov/content/frequently-asked-questions-faqs


  10. - Chicago_Downstater - Thursday, Aug 10, 17 @ 1:08 pm:

    The implementation should be delayed until they can figure out a workable fix–no sense jeopardizing SNAP benefits for extra revenue–but the Board should stick to their guns & not abolish the “soda tax.”

    The fact of the matter is if the County doesn’t raise taxes through a sweetened beverage tax, then they’ll have to raise it elsewhere…unless you want cuts. Nothing the Board does is gonna be popular AND responsible at this point.

    Honestly, if I was Periwinkle I’d say give me a specific alternative or pony-up for that Pepsi. Perhaps that’s why I’m not a politician.


  11. - Rocky Rosi - Thursday, Aug 10, 17 @ 1:10 pm:

    This will be to much for her to over come in 2018 if she runs for re-election. Richard Boykin will be the next CC President.


  12. - Biker - Thursday, Aug 10, 17 @ 1:17 pm:

    Will the letter be sent on Thursday, August 10th or Friday, August 11th?/snark


  13. - Biker - Thursday, Aug 10, 17 @ 1:26 pm:

    But to address the likely outcome of this, wasn’t the point to try to move the needle on healthy habits, especially for low income households, i.e. potentially SNAP benefit households? It would seem this outcome would have the reverse effect, whereby only low income folks would choose the sugary drinks from a cost perspective due to the tax disparity.


  14. - Arthur Andersen - Thursday, Aug 10, 17 @ 1:28 pm:

    Kind of unfortunate that the proverbial peas are on DHS’ knife to come up with an “Action Plan” when they didn’t create the problem and don’t have a 14-day option to force the County into a solution.


  15. - The Good Lieutenant - Thursday, Aug 10, 17 @ 1:34 pm:

    ===But to address the likely outcome of this, wasn’t the point to try to move the needle on healthy habits, especially for low income households, i.e. potentially SNAP benefit households? It would seem this outcome would have the reverse effect, whereby only low income folks would choose the sugary drinks from a cost perspective due to the tax disparity.=== Yes. But we already know the real truth was revenue hence the threat to sue IRMA.


  16. - Cubs in '16 - Thursday, Aug 10, 17 @ 1:38 pm:

    How about making soda (pop for the northerners) a disallowed purchase with SNAP funds? I mean, the second letter in the acronym stands for nutrition after all.


  17. - Sweet - Thursday, Aug 10, 17 @ 1:40 pm:

    That’s awesome the taxpayers should see higher refund this year


  18. - DuPage - Thursday, Aug 10, 17 @ 1:42 pm:

    These kind of details are what the legal departments are supposed to look into before issuing the orders to merchants. Meanwhile, merchants just across the county line say “thank-you” to Ms. Preckwinkle.


  19. - Responsa - Thursday, Aug 10, 17 @ 1:47 pm:

    This would all be laughable were it not so costly and confusing to absolutely everybody involved. The money retailers have spent just trying to program their point of sale scanners to follow the evolving “rules” is but one small aspect of the overall fubar-ness. People I’ve spoken with are literally shocked at how poorly this was rolled out by Preckwinkel’s staff and unfortunately for her it is all playing out first person, real time, center stage for most grocery shoppers in Cook County. It’s not something hidden behind the scenes.


  20. - Steve - Thursday, Aug 10, 17 @ 1:57 pm:

    Mistakes were made.


  21. - Judgment Day - Thursday, Aug 10, 17 @ 2:04 pm:

    Not going to solve this one in 2 weeks.

    Imagine how it will look if (when) the following occurs:
    1) Cook County passes new soda tax.
    2) IRMA files lawsuit. Fails in end & Toni goes after IRMA for ‘damages’.
    3) Toni drops lawsuit after she figures out that a vast portion of the electorate aren’t in her corner over this new tax.
    4) US Dept. of AG drops a bomb on Illinois DHS & gives them 14 days to either (a) fix their mess (and it’s not even their mess, it’s Cook County); or (b) Pull the tax until they can get it straightened out.

    Side Note: Maybe now we know why Toni dropped the lawsuit against IRMA.

    Options(?????):
    1) Suspend tax for foreseeable future, keep the federal money coming in, make lots & lots & lots of “mea culpa’ to the IRMA, State of Illinois, the Feds, send all the layoff notices back out, find a way to fund all those extra expenses to modify/change out everybody’s POS systems, and last, but not least fire everybody who brought this crazy idea to her.

    Toni, a question: “Why are you seemingly going out of your way to duplicate (on a smaller scale) the fiasco that was www.healthcare.gov? Didn’t you learn anything from that rolling train wreck of a program implementation?”

    This is what we would call “Well, it seemed like a good idea at the time” moment.


  22. - City Zen - Thursday, Aug 10, 17 @ 2:06 pm:

    ==How about making soda (pop for the northerners) a disallowed purchase with SNAP funds?==

    Good question for those lobbyists at the federal level.


  23. - Anon - Thursday, Aug 10, 17 @ 2:10 pm:

    The State is certainly in no position to complain here. They stole as much from local governments and called it an administrative fee for collecting local sales taxes because they can’t balance a budget on their own. Now Cook County controls the State’s fate on this money. The County shouldn’t bother to fix the problem until the State stops stealing home rule sales taxes from locals.


  24. - Amalia - Thursday, Aug 10, 17 @ 2:12 pm:

    crack legal advice, Toni. hmmm, wonder who is in charge of that? You were notified and still you did the wrong thing. Meanwhile, many of us were the recipient of bleating emails telling us how public defenders would be let go and “call your commissioner.” are you so blind to how to manage government that you simply resort to raising money without truly knowing how to administer things? Has all your sucking up to him actually turned you into Joe Berrios?


  25. - Robert the 1st - Thursday, Aug 10, 17 @ 2:26 pm:

    Any items with a “sin tax” should not be eligible for purchase with assistance programs.


  26. - Anonymous - Thursday, Aug 10, 17 @ 2:32 pm:

    Preckwinkle should campaign on removing “sweet drinks from snap. After all the tax was done for “health reasons


  27. - Responsa - Thursday, Aug 10, 17 @ 2:34 pm:

    That it was Toni’s own vote that broke the tie and passed the tax makes it so much worse for her. Even when the tax is ultimately repealed which I believe it will be, where do Cook County consumers and Cook County beverage retailers go to recoup their losses from this epically failed rollout?


  28. - Anon - Thursday, Aug 10, 17 @ 2:35 pm:

    Karma has a funny way of rearing it’s ugly head.

    You get county officials who are just ravenous for more revenue lying to the public about the purpose of the tax that no one wants, and now thankfully all involved will likely their jobs for trying to get “cute” and tax pop instead of just raising the revenue they needed in traditional manners.

    Couldn’t have happened to a better group of people, and hopefully this will be a lesson to other bureaucrats about the perils of these types of nit-picky taxes done under the guise of “public health” when it was really about nothing more than the health of the county’s wallet.


  29. - blue dog dem - Thursday, Aug 10, 17 @ 2:36 pm:

    Seems to me, Cook Co legal whizbangs should have spent some time on this rather than the time it spent responding to Justice Dept rulings on sanctuary status.


  30. - Angry Republican - Thursday, Aug 10, 17 @ 2:42 pm:

    Gee, maybe Todd Stroger was right all along about the sales tax rate. He should run against Toni in the primary.


  31. - 1871 - Thursday, Aug 10, 17 @ 2:47 pm:

    =The County shouldn’t bother to fix the problem until the State stops stealing home rule sales taxes from locals.=

    SNAP benefits are federal benefits that pass through the state to SNAP recipients. It is not state money. Are you suggesting that Cook County willfully ignore (again) a federal request and be responsible for Illinois low income residents-including low income Cook County residents- not receiving their SNAP benefits they rely on to buy groceries?


  32. - Postbot 5998 - Thursday, Aug 10, 17 @ 3:10 pm:

    Maybe next time they should listen to the respected trade association with actual expertise instead of the do-godder nanny state folks who want to wage war on a popular product.

    Fake Toni “Hey Todd, hold my beer and watch this”


  33. - Anon - Thursday, Aug 10, 17 @ 3:21 pm:

    =SNAP benefits are federal benefits that pass through the state to SNAP recipients.=

    This is true. However, the money in question from the feds is not SNAP benefit money. The money in question is administrative money that the State would use to administer the program. They could just as easily fund from GRF as from federal sources for that purpose. No low income resident will lose their benefits unless the State decides not to find another funding source. State budgets should not be balanced on the backs of local governments.


  34. - California Guy - Thursday, Aug 10, 17 @ 3:30 pm:

    Why would SNAP users be exempt from the tax in the first place? Are SNAP purchases exempt from regular sales tax?


  35. - Responsa - Thursday, Aug 10, 17 @ 3:35 pm:

    ==Gee, maybe Todd Stroger was right all along==

    heh. let’s not get carried away, here.


  36. - 8657 - Thursday, Aug 10, 17 @ 3:36 pm:

    = Are SNAP purchases exempt from regular sales tax?=

    Yes.


  37. - DuPage Saint - Thursday, Aug 10, 17 @ 4:21 pm:

    Two things: Height of arrogance and Pride before a fall.


  38. - anon2 - Thursday, Aug 10, 17 @ 4:53 pm:

    Todd was excoriated for his sales tax hike. Toni came in and got a pass when she first reduced it and then reinstated it.


  39. - cover - Thursday, Aug 10, 17 @ 5:20 pm:

    = They could just as easily fund from GRF as from federal sources for that purpose. =

    Did that $14 billion backlog suddenly disappear?


  40. - Arthur Andersen - Thursday, Aug 10, 17 @ 5:39 pm:

    To the update: Balderdash. Madam President, your story holds water like a colander. The USDA told your people they had a problem the day after they claim everything was copacetic.

    Now, you need go no farther than the comments section of this blog to see you have a problem and you are not in compliance, so why cling to a bogus story?

    Fix the problem. Cut bait on this ridiculous soda tax.


  41. - cannon649 - Thursday, Aug 10, 17 @ 8:06 pm:

    Bad law - may go down as the worst in 50 years

    Hard to do after parking meters and Skyway


  42. - Ron Burgundy - Thursday, Aug 10, 17 @ 10:11 pm:

    –State budgets should not be balanced on the backs of local governments.–

    And local governments shouldn’t pass faulty laws that blow holes in the budgets of state budgets, or suffer the consequences.


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