Big Bucks in Bay Area Battles Over Soda Tax Point to National Stakes

What difference can a city tax make of 1 cent per ounce on distributors of sugary drinks? Plenty, if you look at the flood of money going into two Bay Area ballot measures proposing that tax.

Campaign contributions for and against soda taxes in San Francisco and Oakland rose to more than $46 million, making these local contests two of the most expensive in California this election. The vast majority of that money comes from just three out-of-state funding sources, according to campaign finance reports, pointing to the high stakes and potential nationwide reach of these election battles.

The American Beverage Association, representing giants like Coca-Cola and PepsiCo, has spent $28.7 million fighting the taxes in San Francisco and Oakland. Meanwhile, billionaires Michael Bloomberg of New York and Texans John and Laura Arnold have injected more than $17 million into the pro-tax campaign advertisements, mostly during recent weeks.

The East Bay town of Albany, with just 19,000 residents, is also proposing a similar soda tax. The ABA has spent $185,000 to fight that measure, while supporters have raised only about $6,200, with the biggest donation from the American Heart Association.

All three Bay Area measures aim to raise significant funds -- about $15 million in San Francisco, $6 million in Oakland and $220,000 in Albany per year -- for health and education programs to reduce the consumption of sugary drinks and stem a growing Type 2 diabetes epidemic.

Cities that might be considering a similar tax in other states are paying attention, say political observers. Voters in Berkeley became the first in the U.S. to pass a soda tax in 2014. Will larger cities like San Francisco and Oakland follow?

Jessica Levinson, a professor at Loyola Law School in Los Angeles whose work focuses on campaign finance and ethics, said the "extraordinary" amount of money fueling the Bay Area soda tax contests has to do with the nationwide ramifications of this issue.

"The American Beverage Association has spent a lot of money on these municipal measures, but I think they understand that they probably have more to lose if this passes," Levinson said. "If there's a soda tax in San Francisco and/or Oakland, then it will send a signal to cities throughout the state and probably throughout the nation."

For months, the ABA-funded "No on Grocery Tax" campaign has blanketed voters with mailers and ads that often feature small-business owners of color saying the tax could hurt them and low-income residents. They argue that distributors will pass on the cost of a soda tax to small-business owners, who might raise the prices of other food products they sell to stay competitive.

Jason McDaniel, a political science professor at San Francisco State University, said the ABA's strategy aims to drive a divide among progressives along race and income differences on a key issue for many Bay Area voters: cost of living.

"They are giving people reasons to sort of be on different sides of the issue. That might make the decision harder for some voters, and therefore more likely to vote no," said McDaniel.

Berkeley's soda tax has not worked like a tax on groceries, according to research by UC Berkeley's School of Public Health and the Oakland-based Public Health Institute. The city has now spent -- as promised -- over $2 million in added tax revenue on nutrition and health programs in public schools and lower-income areas.

Following Berkeley's model, Proposition V in San Francisco and Measure HH in Oakland would create an advisory board made up of residents and public health experts to recommend to the City Council how to spend additional tax revenues. Measure O1 in Albany would also seek public input to spend additional funds.

The campaigns pushing for soda taxes this year in all three cities are relying heavily on volunteers going door to door to garner support in diverse, low-income neighborhoods, where the soda industry heavily markets its products. African-Americans, Latinos and people of Native American descent are more likely than whites to suffer from Type 2 diabetes, obesity and other illnesses strongly linked to overconsumption of sugar, according to the Centers for Disease Control and Prevention.

The soda tax measures exempt 100 percent juice, milk, baby formula and drinks for medical purposes.