Quick Take:
The battle of Measure Z, Santa Cruz’s proposed tax on sugar-sweetened beverages, is cooking up to be an expensive one with interests as big as the Coca-Cola Co. pouring money into stopping it. And if they can’t get Santa Cruz voters to defeat the tax in November, corporate opponents are expected to challenge the measure in court.
Last Thursday, as the “yes” side formally launched its campaign for Measure Z, a proposed city of Santa Cruz tax on sugar-sweetened drinks, Mayor Fred Keeley warned supporters that the coming fight won’t be typical of a local ballot question.
“If someone thinks this is going to be your normal type of campaign where we send out some mail, get some endorsements, make some arguments, well, that’s not what this is,” Keeley later told Lookout. “The soda industry has so much political power in Sacramento. It’s important to know going into it that this is David vs. Goliath, and we need to buy some rocks.”
The day before the Measure Z support camp kicked off its effort, Sacramento political strategist Steven Maviglio, of Forza Communications, launched “Campaign for an Affordable Santa Cruz,” opposing Measure Z. The hiring of Maviglio, whom Keeley called a “big-swinging deal” in Sacramento, is the opening salvo to what he expects to be an expensive battle.
Measure Z proposes a 2-cent-per-fluid-ounce tax on many sugar-sweetened beverages. The tax, which excludes products like milk, milk alternatives and beverages with less than 40 calories per 12 ounces, would be levied on distributors of the beverages, not directly on consumers. It is expected to raise $1.3 million per year in general tax revenue for the city.
The Campaign for an Affordable Santa Cruz is sponsored by the American Beverage Association advertising committee’s top funders: the Coca-Cola Company, PepsiCo, and Dr. Pepper. Maviglio said the campaign would report fundraising after the Sept. 26 campaign finance filing deadline. Maviglio said the campaign will focus on the proposed tax’s “regressive” nature and its impact on family bottom lines.
“Labor, business, and social justice groups are spearheading a robust campaign to ensure every Santa Cruz family knows this illegal tax will fuel food inflation and force the city to spend an untold amount of their tax dollars on litigation instead of public safety, parks and affordable housing,” Maviglio said via email.
Santa Cruz City Councilmember Shebreh Kalantari-Johnson said the “yes” campaign has set a fundraising goal of $200,000 for mailers and other advertising; however, she believes the campaign’s success will be in proportion to doors knocked and face-to-face interactions with voters.
“We do expect the opposition to pour millions of dollars into this election,” Kalantari-Johnson told Lookout. “What happens with this will have wider implications. I don’t expect us to be able to raise millions of dollars. This will very much be a grassroots effort.”
“We’re going to be outspent, but we will have a strong field campaign,” she said.
Keeley, known for his fundraising prowess, said he is unsure whether the opposition would need millions of dollars.
“At a certain point, $1.5 million and $500,000 have the same effect on a campaign,” Keeley said. “It’s not necessary, or possible, for the ‘yes’ campaign to match the resources of the ‘no’ side. But they don’t have to. They just need a good ballot statement, some good pieces of mail, and volunteers walking the street and getting messaging directly to voters.”
Yet, getting voters to support Measure Z’s sugar tax is only the first battle. If the tax passes, Kalantari-Johnson, Keeley and most supporters expect the final decision to be made by a judge. The argument will be around then-Gov. Jerry Brown’s 2018 Keep Groceries Affordable Act, which prohibits new taxes on grocery items. Maviglio and the opposition have used that legislation to paint Measure Z’s proposed tax as illegal.
“A court challenge is expected,” Kalantari-Johnson told Lookout. “But we believe what the state did was unconstitutional, and that we have every right to pass measures that generate revenue for our city. The soda industry is afraid that if this goes to court, they have a high chance of losing.”
Keeley and Kalantari-Johnson agreed that leading on a measure like this is an expensive, though familiar, position for Santa Cruz. The city has led on initiatives that had broader implications, such as its effort to stop offshore oil and gas drilling in the 1980s, and a recent campaign to end the local sale of flavored tobacco products.
“We’ve done this before,” Kalantari-Johnson said. “This is about not allowing state and industry special interests to drive how we make decisions.”
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