The Davis City Council voted Tuesday to consider the possibility of placing a soda tax on the June 2016 ballot, as well as other potential taxes to raise revenue for city improvements.
City leaders say they need additional money for public works projects, and they are considering three major taxes for the ballot – the sugar-sweetened beverage tax being the most controversial.
Other possibilities include a higher hotel tax and a new parcel tax; the City Council opted Tuesday against a proposal to raise utility taxes. The City Council has until mid-February to officially determine which revenue-generating measures to put on the June ballot.
If placed on the ballot as a general tax, the soda measure would need majority support from voters. If the money is devoted to a specific purpose, it needs support from two-thirds.
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Nearly a dozen representatives from the local business community showed up at council chambers Tuesday to oppose the potential measure, which would add a 1-cent tax per each ounce of sugar-sweetened beverage purchased in stores and restaurants within the city. Opponents included the California Restaurant Association, the restaurant and bar committee of the Davis Downtown Business Association, Regal Cinemas, and several local restaurants and convenience stores.
On Tuesday, the council asked city staff to do more community outreach and conduct additional research on the possible implications of the beverage tax.
“We need to look into it,” said Councilwoman Rochelle Swanson. “Just because Berkeley did it doesn’t mean we need to do it.”
Swanson referred to the successful Berkeley beverage tax passed in November 2014, which affects soda, energy drinks and heavily pre-sweetened tea, as well as the “added caloric sweeteners” used to produce them, such as the syrup used to make fountain drinks. That policy excludes infant formula, milk products, and natural fruit and vegetable juice.
The proposed Davis tax is similar, though staff has not yet determined what specific drinks would be affected. Proponents have said it would reduce community obesity while also raising funds for the city.
But business owners see the tax as an affront and fear its success will make it difficult for mom and pop restaurants and stores to stay afloat.
“We’re punishing customers for the decisions they make,” said Adam Andrews, owner of Froggy’s Grill in Davis, who spoke against the beverage tax. “This is disposable income that folks should have the right to spend as they choose. (The tax) is a cash grab and an easy target.”
Harold Goldstein, executive director of the California Center for Public Health Advocacy, who helped bring the proposal to the table, called the business community’s sales concerns “ridiculous” and urged the public to consider soda’s role in a growing American health crisis. His organization was a major supporter of the Berkeley soda tax and other anti-sugar policies statewide.
U.S. sales of sugary sodas have declined in recent years as health advocates have warned about the long-term effects of consuming too many sweetened beverages. The amount of soda sold nationally has gone down 14 percent since 2004, according to a 2015 report from industry tracker Beverage Marketing Corporation. The organization predicts that bottled water consumption could surpass soda consumption in the United States by 2017.
“In the last 15 years, there’s been a dramatic change in people’s understanding of the central role that sugary beverages play in the obesity and diabetes epidemics,” Goldstein said. “Quite a number of us have been thinking about the opportunity to use a tax on sugary drinks to give kids what they need to be healthy ... and keep Davis on the cutting edge around the state.”
City staff estimate that the beverage tax would bring in an estimated $800,000 to $1 million during its first year of implementation. The hotel tax would raise $130,000 for each 1 percentage point increase. The parcel tax would raise $28,000 for each dollar increase.
The Davis City Council earlier this year passed a measure requiring local restaurants to make milk and water the default beverage for kids’ meals served with drinks.
“I believe the health of our community and children is paramount,” said Jackie Richardson, a Davis mother who was one of the few to speak in favor of the tax. “This measure is part of that. Make the health of our children more important.”
If it succeeds, the measure would be the second of its kind in California.
In the same November 2014 election in which Berkeley approved its soda tax, a 2-cents-per-ounce tax on sugar-sweetened beverages in San Francisco fell short of the two-thirds support necessary. The American Beverage Association California PAC spent $9.2 million toward defeating San Francisco’s Measure E, according to city campaign finance data.