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Battling big soda

Santa Fe would be jumping on a national trend along with other communities around the country – all considered politically liberal, like the City Different – if it becomes the seventh U.S. city to impose a tax on sodas and other sugar-sweetened beverages.

The 2-cent-per-ounce tax that the City Council voted last week to put before voters in a May 2 special election would match the largest such levy imposed so far.

Forty soda tax proposals across the country were defeated before Berkeley, Calif., broke the streak in 2014 when more than three-quarters of voters approved a 1-cent-per-ounce tax on sugary drink.

The trend gained traction last year when five more cities and Cook County, Ill., approved a tax.

The epicenter was the San Francisco Bay area, where Albany, Oakland and San Francisco joined neighboring Berkeley by also imposing a 1-cent-per-ounce tax via ballot measures approved on Election Day in November.

That same day, 54 percent of voters in Boulder, Colo., approved a 2-cent-per-ounce soda tax.

That’s the highest tax imposed on sugary drinks so far. and the measure being pushed by Santa Fe Mayor Javier Gonzales would match it.

Also in November, the Cook County Commission approved its 1-cent-per-ounce tax for the Chicago area by a 9-8 vote.

Philadelphia’s City Council passed its 1.5-cent-per-ounce tax on sugary drinks last summer. Mayor James Kenney originally proposed a 3-cent-per-ounce tax. That was negotiated down to 1.5 cents and the council approved the measure by a 13-4 vote. Revenues are to go toward expanding pre-K programs, as well as improving parks, recreation centers and libraries.

In other cities, the money goes to programs that promote good nutrition, and combat obesity and diabetes, or to the general fund. In some cases, advisory boards are set up to decide how the funds are distributed.

Revenue for the Santa Fe tax, which supporters expect will raise $7 million a year, would be targeted exclusively for early childhood education programs that the mayor hopes will make pre-K free or affordable for every family in the city.

Opposing reports

In every case where a soda tax has been enacted, the effort to approve the tax was met with stiff opposition by groups supported by the American Beverage Association.

The ABA reportedly spent more than $10.6 million in an unsuccessful bid to defeat Mayor Kenney’s proposal in Philadelphia.

Coincidently, Santa Fe Mayor Gonzales shared the stage with Kenney during a panel discussion last Saturday in Austin at a South by Southwest symposium on governing. The topic was immigration policy, but Gonzales said he and Kenney talked soda tax behind the scenes.

“We were able to spend some time talking about how things were going there,” Gonzales said. “I asked if they are getting the (tax) revenues they anticipated and his answer was yes, and in many cases they exceeded projections.”

But what about those news reports of the devastating effects the tax was having on businesses, jobs and the economy?

The Philadelphia Inquirer reported that Pepsi-Co declared a 43 percent drop in business since the tax was imposed Jan. 1 and, on March 1, the local Pepsi operation announced that up to 100 employees would be laid off at three plants. A Teamsters union official warned that “major layoffs” of grocery store workers were inevitable. An owner of six supermarkets predicted that 300 jobs would be lost.

Gonzales said Mayor Kenney isn’t buying it.

“He was emphatic in his belief that nothing about the tax was having the kind of impact the soda industry was putting out. He didn’t believe at all what they were saying,” he said, adding that Kenney reminded him that Pepsi-Co made a $6 billion profit last year and its CEO makes $25 million a year. “I left feeling good that, despite what we’ve heard about the sky falling in Philadelphia, in fact it’s not.”

The ABA is part of Better Way for Santa Fe and Pre-K, one PAC opposing the Santa Fe tax proposal. The coalition also includes about 130 restaurants, grocery stores and organizations – including the Santa Fe Chamber of Commerce and the local Coca-Cola distributor, which employs about 80 people – according to Better Way’s David Huynh

“All you have to do is Google ‘Philadelphia and soda tax,’ and you will see the impact the tax there is having on everyday working families,” said Huynh this week.

When told of the conversation between the Santa Fe and Philadelphia mayors, Huynh responded, “It sounds like Mayor Kenney decided to join Donald Trump in believing that press coverage is fake news … . There is clear evidence that the soda tax is having a negative impact in Philadelphia, whether the mayor (Kenney) wants to admit to it or not. Facts are facts.”

A fight looms

Better Way ran radio ads and sent out mailers to city voters prior to last week’s vote by the council to put the soda tax on the ballot. Having lost that round, the group took out full-page advertisements in the Sunday editions of both the Journal and the Santa Fe New Mexican. It was the start of what figures to be an active, and expensive, spring of electioneering leading up to the May 2 vote.

Tax supporters may also be able to raise a substantial war chest, both from small donors and billionaires who have become engaged in the soda tax effort on a national basis, based on what’s happened in other cities.

In Boulder, about the same size as Santa Fe, more than $2.5 million was spent in the campaign, more than $1 million of that by the ABA. But a pro-tax group raised almost as much, with $200,000 provided by Bloomberg Philanthropies, a charitable group headed by former New York City mayor Michael Bloomberg that focuses its efforts on funding arts, projects, environmental causes, public health initiatives, government innovation and education. It has also helped fund pro-soda tax campaigns in other cities.

Bloomberg donated more than $18 million to support the 2016 soda tax propositions in both San Francisco and Oakland. In San Francisco, billionaire John Arnold and his wife Laura Arnold also gave $3.3 million in support of the tax.

According to the Center for Responsible Politics, the ABA spent $690,000 on lobbying efforts in 2008, but that had increased to $8.67 million by the 2010 election cycle. Media reports from the Bay Area say that the soda industry spent $10 million to defeat a referendum on a soda tax in San Francisco in 2014. The soda industry then spent $20 million on its failed attempt to beat the vote there last year.

Mayor Gonzales met with representatives of the Bloomberg group in New York in November. He said it was to find out what lessons they’ve learned through their efforts, but he has not been in contact with them since.

Pre-K for Santa Fe, a political action committee supporting the tax and including some of the same political veterans that helped get Gonzales elected mayor, has been in contact with Bloomberg Philanthropies.

Sandra Wechsler, a spokeswoman for the group, said Pre-K for Santa Fe has solicited advice from Bloomberg Philanthropies about how to approach the Santa Fe campaign. Asked if Pre-K for Santa Fe will get any funding from the group, she said, “We don’t know. We’d certainly been honored to have their support, but at this point we don’t know.”

Bloomberg Philanthropies acknowledged, but did not respond to, phone messages and emails from the Journal this week.

On Wednesday, Pre-K for Santa Fe sent out an email soliciting donations.

“In these next forty-eight days, we’re going to see a lot of misinformation from the Soda Industry. And they’re going to have an endless supply of money to back it up. We’re asking for your help,” it says. “We will need your support, and that of all of your friends and family. This is going to be a fight, unlike anything Santa Fe has seen before.”

Smart Progress New Mexico is another group against the tax. It was formed by a group of small-business owners. Loveless Johnson, a spokesman for Smart Progress New Mexico, calls it a grassroots group. “We’re not associated with Big Soda. We’re just a local group, so the message we’re doing is very localized,” he said.

Santa Feans should know soon how much the soda tax fight is costing. There are three campaign spending reports due to be filed by PACs prior to the election, the first on March 23, and one afterward.

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