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January 04, 2017

City controller: Cigarette tax revenue to fall millions below initial projection

The city of Philadelphia is not on target to make what it was expecting to in cigarette tax revenue to benefit the school district, according to the city controller's office.

The latest economic report shows that based off of what the city has generated so far in fiscal year 2017 – that's from July until December – the revenue is expected to fall about $26 million below the initial projection.

The report from City Controller Alan Butkovitz said that the city generated $24.8 million in the six-month timeframe off the $2-per-pack tax that began in 2014.

That means the city should see about $49.6 million by the end of the fiscal year with a $4.1 million a month average, a far cry from the $77.5 million the city had its eyes on by the end of fiscal year 2016, steadily declining to reach $72.7 million by the end of fiscal year 2019.

The city generated $58.8 million in fiscal year 2016 and $50.2 million in fiscal year 2015, according to the office

The city needs to make about $5 million a month to meet its target to help the district, according to the controller's office.

There has been a 23 percent decline in cigarette sales that could be caused by smokers in Philadelphia traveling outside the city for a pack of smokes, according to the report. 

Mike Dunn, a city spokesperson, said that the district is guaranteed $58 million from the tax and that the state has a safety net in place if revenue falls short of that amount.

He also said via email that the district projected $60 million from the tax and that the $77.5 million figure was an earlier projection that wasn't included in the budget.

"...the decline noted by the Controller will have no significant impact on the School District’s budget," Dunn said via email.