Philadelphia Mayor Jim Kenney says the new beverage tax will increase annual city revenues by $91 million.

Philadelphia got the green light to proceed with a new tax on sugary drinks after a judge dismissed efforts by the beverage industry seeking to halt the policy.

Common Pleas Court Judge Gary Glazer on Monday rejected a suit filed by the American Beverage Association and other opponents aimed at blocking the 1.5 cent-per-ounce tax on distributors of soda as well as energy drinks, sports drinks, flavored water and pre-sweetened coffee.

The tax, approved in June and set to take effect Jan. 1, is expected to increase annual city revenues by $91 million and be used mainly for educational spending including pre-kindergarten expansion.

Mayor Jim Kenney has also stated that the new revenue will be used for debt service on $300 million in new borrowing for enhancing parks, libraries and recreation centers.

"I urge the soda industry to accept the Judge's ruling and do the right thing for the children of Philadelphia, many of whom struggle in the chilling grip of pervasive poverty," Kenney said in a statement. "The industry has chosen not to challenge beverage taxes in other municipalities and there is no reason to continue pursuing it here."

Philadelphia general obligation bonds are rated A-plus by S&P Global Ratings, but were revised by the credit agency to negative from stable in November due to weak reserve levels and rising retirement costs. Pennsylvania's largest city is rated A2 by Moody's Investors Service and A-minus by Fitch Ratings.

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