Will the soda industry even sue?
Santa Cruz’s controversial soda tax went into effect on May 1, charging 2 cents per fluid ounce on the distribution of most sugar-sweetened beverages in the city.
Its implementation, which comes six months after voters supported Measure Z, drew national and statewide media coverage, because it both marks the U.S.’s first new soda tax in years and technically defies state law that prohibits new local taxes on grocery items — though, in 2023, a court ruling declawed the state’s ability to enforce the law.
Throughout the Measure Z campaign last fall, in which companies like Coca-Cola, Pepsi, Dr Pepper and Red Bull — under the umbrella of the über-powerful American Beverage Association — spent about $2 million trying to kill the tax, the message from the soda industry was clear: If Santa Cruz voters approve Measure Z and the city implements this tax, lawsuits and legal costs will rain down upon the small beachside community from the bottomless pockets of Big Soda.
Since November, I’ve been regularly calling the office of Chris Skinnell, an attorney with San Rafael-based Nielsen Merksamer
Parrinello Gross & Leoni, the firm taking the lead in the industry’s legal battle against Santa Cruz’s soda tax. In January, Skinnell told me there was “good reason to anticipate litigation in the near future” and pointed me to the spring, then later to May, as the time when I should expect something to happen.
Now, midway through May, no lawsuit has been filed, and Skinnell has declined to return my calls. Last week, I received a vague statement from Steve Maviglio, the Sacramento-based consultant who ran the anti-Measure Z campaign, about the industry’s plans:
“We are assessing our next steps as Santa Cruz prepares to implement its illegal tax that was opposed by a broad coalition of small businesses, progressive leaders, labor unions, and social justice organizations as an unfair burden on working families struggling with record-high prices,” the emailed statement read.
No mention of an impending lawsuit, a notable change given that litigious threats played an explicit role in the industry’s campaign rhetoric. Maviglio declined to clarify the statement, saying that “the statement speaks for itself.”
Last week, Santa Cruz’s city attorney, Tony Condotti, told me that although the city is prepared to defend the tax, he wouldn’t be shocked if the industry backed off from a lawsuit.
In taking the issue to court, he said, the industry runs the risk of losing in court and setting precedent that could hurt its case in battling future local soda taxes.
“By filing a lawsuit and losing, it might open up the floodgates” of other California cities looking to pass soda taxes, Condotti said.
Santa Cruz Mayor Fred Keeley, however, doesn’t buy that strategy.
“They didn’t put $2 million into the campaign because they were mildly concerned about it,” Keeley said. “It was a smother-the-baby strategy, but now the baby is alive and kicking and the only remedy here is court. I think they lose a lot of position on this if they don’t sue.”
OF NOTE
Capitola City Council member resigns citing harassment, though some residents have a different story: On Thursday, Alex Pedersen became the second Capitola City Council member to resign since January, when Yvette Brooks stepped down to take a job as CEO of United Way of Santa Cruz County. In announcing his resignation, Pedersen cited how he had endured months of vitriol and harassment, mainly from a group called Concerned Citizens of Capitola, who have accused Pedersen of misconduct for buying a house in Live Oak, outside of city limits. Pedersen acknowledged the purchase, but claimed he still lived in his rental apartment in Capitola.
Two state legislators, two high-tension bills: Last week, I spoke with Assemblymember Dawn Addis about her proposed Polluters Pay Climate Superfund Act of 2025, which seeks to force oil and gas companies to pay for climate disasters, in proportion to the greenhouse gases they’ve emitted in the state since 1990. The complex bill has some momentum, and the benefit of precedent in New York and Vermont, and could reshape how climate disaster recovery is financed in the Golden State.
In the state Senate, John Laird is in the midst of a tightrope walk with Senate Bill 577, which attempts to balance justice for sexual assault survivors and the financial solvency of public entities like school districts and city governments. His bill, which narrows the statute of limitations on certain sexual abuse claims and carves out new ways for school districts and governments to pay settlements, has a hearing later today.
Max Chun on a creeping slowdown in Santa Cruz County development: As my colleague reports in a story out this morning, Santa Cruz has seen a notable slowdown in development starts and applications, which “can likely be attributed to supply chain issues and rising interest rates on construction loans, rather than solely economic uncertainty at the federal level — although that is a factor, too.”
POINTS FOR PARTICIPATION
Santa Cruz’s Downtown Plan expansion to hit city council this week: The project to expand downtown Santa Cruz’s footprint to south of Laurel Street and create a new entertainment district anchored by taller, denser development and a new Santa Cruz Warriors basketball arena has been going on since 2020. On Tuesday, the Santa Cruz City Council will vote on the plan. If approved, the massive rezoning aimed at attracting dense development to the area will need a final sign-off from the California Coastal Commission, likely later this year, before going into effect. A Texas-based developer has already proposed a project in the area in anticipation of the downtown expansion. The city council will take up the vote at 7 p.m. on Tuesday.
Dueling Santa Cruz housing measure petitions will get turned in this week: For months, two competing petitions have been circulating within the city of Santa Cruz’s boundaries. The Workforce Housing Affordability Act — led by Keeley and Housing Santa Cruz County — and the Workforce Housing and Climate Protection Act — led by the Santa Cruz County Association of Realtors. The similarly named acts each propose two of the same kind of taxes — a citywide parcel tax and a real estate transfer tax — but at different degrees and with different intentions, creating a confusing situation for the average voter presented with a petition and a pen. Both petitions are expected to be turned in this week to the city clerk, who will determine if they’ve received enough signatures to qualify for the November ballot. I wrote a fact-check about the two measures last month.
Opposition to lithium-ion battery facilities grows in South County: A group of South County neighbors concerned with a proposal for a new 200-megawatt battery storage facility on apple orchard land just outside Watsonville will host a meeting tonight at 6:30 p.m. at Amesti Elementary School, 25 Amesti Rd. in Watsonville, to discuss the proposal and collect public feedback on the plan. The push against the proposal has grown since the Moss Landing fire in January, when a 300-megawatt facility burst into flames, sending toxic smoke into the air.
The passenger rail project in focus: In Santa Cruz and Watsonville this week, the Santa Cruz County Regional Transportation Commission will host two community workshops on trail route options and possible station locations. The first will take place on Monday in Watsonville, at the Watsonville Civic Plaza’s community room at 6 p.m.; the second will be held Wednesday at London Nelson Community Center in Santa Cruz, also at 6 p.m. – Max Chun
Watsonville tiny village project to get another look: The Watsonville City Council will receive an update from nonprofit Community Action Board regarding the 34-unit “tiny village” project intended to provide shelter for the unhoused on the Westview Presbyterian Church property. Several neighbors and city councilmembers have questioned the nonprofit’s ability to manage the shelter, after it was selected to be the main service provider. That meeting begins at 5 p.m. on Tuesday.
ONE GREAT READ
Some California Democrats want an age cap, by Heather Knight and Laurel Rosenhall for The New York Times
Questions about age and governance have long been a fixture of American politics, but these past few years have put them in sharper relief.
You can go back to former Supreme Court Justice Ruth Bader Ginsberg’s refusal to step down while former President Barack Obama was still in office and her eventual death that opened the door for President Donald Trump to flip the seat for conservatives with the appointment of Amy Coney Barrett. Former Sen. Dianne Feinstein, who stayed in office until she died at 90 in 2023, also comes to mind. But the most immediate example had perhaps the highest stakes of all, when former President Joe Biden decided to run for a second term despite his clear cognitive decline.
Some California Democrats are now pushing for an age cap. In this New York Times story from earlier this month, our own state Sen. John Laird, who is just beginning a second four-year term at the age of 75, makes an appearance.
From the article:
“My staff was having a field day telling me what to say when you called,” he said with a laugh. “‘Wait, I can’t hear you!’ and ‘Wait, my cardiologist is on the other line!’”
Any legislation instating an age cap would, if passed, head to the desk of 57-year-old Gov. Gavin Newsom — and he is not a big fan. He said that politicians need “the qualities of youth” such as imagination and sharpness, but that those attributes do not decline at the same age for each person.