Quick Take
In Santa Cruz, triumphing against Big Soda to pass the country’s first sugar-sweetened beverage tax since 2018 was only the first hurdle. Now, the city faces a looming legal challenge, and financial backing isn’t as certain as some had hoped.
Beating back the deep pockets of the beverage industry on the way to implementing a soda tax in Santa Cruz was always going to require city officials to have more than a can-do attitude. It’s a battle that requires cash, and a lot of it.
When Measure Z prevailed in November as the first soda tax passed in the U.S. since 2018, supporters celebrated with bated breath. The American Beverage Association never hid its plans, in the event of the tax passing, to sue the city and prevent its rollout.
Steve Maviglio, who led the opposition campaign, warned in the fall that passage of the tax would mean “astronomical” legal costs for city taxpayers “that would rival the money in the campaign.” The measure’s opponents — mainly soda industry heavy hitters Coke, Pepsi, Dr Pepper and Red Bull — spent $1.9 million in an attempt to kill the 2-cents-per-fluid-ounce distribution tax on sugar-sweetened beverages.
Since surviving a legal challenge from the industry would throw open the door for other communities to pass soda taxes, Santa Cruz city officials always expected they’d go into whatever expensive court battle lay ahead with institutional backing from national, health-focused nonprofits. However, 70 days after the election and the lawsuit still looming, the city hasn’t yet received the kind of firm financial commitments it had hoped for.
Mayor Fred Keeley has grown particularly concerned.
On Dec. 17, Keeley, City Councilmember Shebreh Kalantari-Johnson and city executives met with representatives from the American Heart Association and the American Lung Association. The AHA was among the top backers of the Measure Z campaign with $20,000, and supplied a full-time staff member to work on the campaign.
Keeley said he had hoped to receive some financial commitment from both organizations to help mitigate the forthcoming legal costs, but neither, he said, stepped up during the meeting. Keeley, frustrated, told them he felt the city had been lied to.
“I have no reason to believe that we’re not going to be all by ourselves on this,” Keeley told Lookout the following day. “Thinking about where we are right now and they can’t make a commitment? They got what they wanted. I have [no] use for these people.”
Keeley said he later told the organizations that he felt he had a “moral obligation” to defend the voters’ interests in trial court, “but I’m not going to support draining our general fund to support this thing and you’re not there.”
Dr. John Maa, a San Francisco-based surgeon who sits on the board of the directors for the American Heart Association, told Lookout last week that the “AHA, in spirit, would vigorously defend the soda tax,” but that, as a 501(c)(3) nonprofit, “the AHA is not going to invest the kind of money that would fund the cost of major litigation.”
Maa said the organization would help find the money and support through partnerships.
“We will raise the money and get it done, I have no fear about that,” Maa said. “We need to first find the winning arguments. I want to tell the city, don’t waste your time worrying about funding,” and instead focus on winning the debate. “Think bigger.”
Kalantari-Johnson does not share Keeley’s concern, and said she feels confident the city will receive outside support, but that there might be lingering frustration around the campaign’s struggle to raise money during the election. Although it never expected to outraise or outspend the American Beverage Association, the campaign had hoped to draw more than the roughly $80,000 it pulled in through contributions.
When Berkeley passed its first-in-the-nation soda tax in 2014, the pro-tax campaign raised nearly $1 million, thanks primarily to the $650,000 offered by Michael Bloomberg and his charitable arm, Bloomberg Philanthropies. Kalantari-Johnson said the Santa Cruz campaign “had some hope, maybe some assumption, that they would support us.” But after some early conversations with Bloomberg Philanthropies, she said the organization wasn’t interested, and she is still unsure why.
Yet, Kalantari-Johnson said financial and in-kind contributions from organizations such as the Washington, D.C.,-based ChangeLab Solutions, the Children’s Funding Accelerator and Oakland-based In-Advance were keys to winning the election, and expects those same organizations to step up in phase 2 of the battle. However, she said “none of that has been confirmed.”
“We’ve been in touch with various organizations and we’re building our war chest,” Kalantari said. “I feel confident.”
San Rafael-based law firm Nielsen Merksamer is expected to represent the American Beverage Association in the looming lawsuit. Chris Skinnell, an attorney with the firm, told Lookout last week only that “there is good reason to anticipate litigation in the near future but the specifics are not yet public.” He said spring was a “reasonable estimate” for when his firm would file the lawsuit.
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