Two years ago, the Santa Cruz City Council passed a resolution to put a 1.5-cent-per-ounce tax on distribution of sugary beverages in Santa Cruz on the November 2018 ballot. But two days later, then-Governor Jerry Brown signed Assembly Bill 1838, which prohibited new taxes on sugary drinks until 2031. The bill was a compromise with the beverage industry, which lobbied for the legislation in exchange for withdrawing a statewide ballot initiative that would have made it more difficult for local governments to raise critical revenue through taxes and fees. The city council, fearing fiscal devastation if Santa Cruz incurred the penalties described in the new law, withdrew their proposal.
On Monday, a lawsuit filed in the Sacramento Superior Court contends that the 2018 law illegally penalizes charter cities that exercise their constitutional right to run their own affairs, including taxation. Martine Watkins, a Santa Cruz resident who serves on the city council, and Cultiva La Salud, an organization that pursues health equity in the San Joaquin Valley, are named as plaintiffs. ChangeLab Solutions and the American Heart Association support the lawsuit.
An article in the Santa Cruz Sentinel describes the impact of the preemptive law: “In Santa Cruz, revenue from a sugary beverage tax would have been spent on programs for parks, recreation, facilities and wellness.” Watkins said, ”We haven’t even had the chance to have our voters weigh in on . . . this ballot measure.” Watkins also mentioned that cities that were able to pass sugary drink taxes prior to the moratorium have been able to use the tax revenue for food and basic supplies programs that promote community health during the COVID-19 pandemic.