Oakland soda tax campaign funding tells two different stories

Roger Saechao spent Saturday morning knocking on doors.

On the front steps of houses in Oakland, he kept his spiel short, explaining Measure HH as it appears on Oakland’s November ballot: A one-cent-per-ounce tax on distributors of sugar-sweetened beverages.

Wearing a Warriors championship hat and a black T-shirt with the slogan “The People vs. Diabetes,” he often found he had to combat what he calls “false propaganda” that Measure HH is a tax affecting all groceries, rather than a tax on unhealthy drinks that could fund health and nutrition initiatives across Oakland. One woman he talked to reported receiving a mailer every week about a “grocery tax.”

“People are tired of hearing it called a grocery tax,” Saechao said. “They’re more for it when they know what it’s about.”

As a fellow for The Organizing and Leadership Academy (TOLA), a four-month Oakland-based program that trains students to be grassroots leaders, Saechao, 25, doesn’t have money to donate to the campaign, but he has the time to serve as a district leader for the campaign supporting a soda tax.

“This is really grassroots,” he said. “We’re going up against a billionaire industry.”

Attempts to pass “sin taxes” on sodas have historically been unsuccessful. While pro-tax campaigns have been endorsed by major health organizations, they’re usually outmatched by funding from sugary drink makers. Measures to tax or add warning labels to sugar-sweetened beverages have been defeated in the California, Arizona, Vermont, Rhode Island, Washington and Hawaii legislatures, as well as in a handful of cities across the nation. Richmond and San Francisco have had sugary drink taxes on previous ballots, but only Berkeley’s passed by public vote in 2014.

In Oakland this fall, the American Beverage Association is once again pouring millions into a campaign that could affect soda sales, but the pro-tax side is putting together a fundraising patchwork that includes small contributions from local doctors and dentists, some donations from health organizations, and a few large contributions from a handful of philanthropic billionaires.

Historically, beverage makers have been the big spenders, but, according to current campaign disclosures, the financial battle in Oakland has tipped in favor of those supporting the tax.

The campaign against Measure HH—which includes up to $9.5 million pledged in television ads for three separate citywide taxes in the Bay Area—has one donor: the American Beverage Association (ABA), the trade group for major soda producers including Coca-Cola, PepsiCo, and the Dr. Pepper Snapple Group. As of September 20, all of the $600,000 in donations to the “No Oakland Grocery Tax” campaign have come from the ABA.

“Obviously, we’re going to be certainly contributing more to keep our advertising going,” said Joe Arellano, an independent consultant and spokesman for the ABA and No on HH campaign.

By contrast, Measure HH supporters have rounded up less than $23,000 in small donations from their various funding streams, according to their latest disclosures to date. Recently, however, they received a major boost.

Former New York City Mayor Michael Bloomberg made three donations this month to the Citizens for Healthy Oakland Children, the group supporting the tax, totaling more than $1.3 million, according to campaign disclosure statements. The largest donation to date was reported received on September 14. Bloomberg has backed successful soda tax measures in  Berkeley, Philadelphia, and Mexico. In New York City, he attempted to ban sodas larger than 16 ounces, which was later overturned by an appellate court.

His self-funded ads, independent of the Citizens for Healthy Oakland Children, have recently begun airing in Oakland, accusing the opposition of lying about the tax’s true purpose. A spokesman for Bloomberg declined to comment for this story.

In addition to Bloomberg’s financial support, campaign literature also lists Yes on HH major donors as the California Dental Association (CDA), the American Heart Association, and the Action Now Initiative (ANI), the social welfare organization founded by former hedge fund CEO John Arnold and his wife Laura. The American Heart Association donated $5,000 so far, while the CDA and ANI have yet to file disclosure forms. So far this year, ANI disclosed spending $60,000 on a similar measure in San Francisco

As of September 20, of the 62 donors to Citizens for Healthy Oakland Children, more than half disclosed being employed somewhere in the Bay Area healthcare field.

Dr. Jeffrey Ritterman, who donated $100 to support implementing the tax in Oakland, knows this battle firsthand. As the former chief of cardiology at Kaiser Permanente’s Richmond campus, he saw what sugar was doing to his patients. In 2012, while on the Richmond City Council, he led the campaign for a soda tax in Richmond. According to campaign disclosure documents, the pro-soda side paid $2.7 million to defeat the measure, which went down with nearly 67 percent of the vote against it.

When he began his campaign, the science on the adverse health effects of excess sugar consumption wasn’t as clear as it is now, including its connection to diabetes, heart disease, obesity, dementia and some kinds of cancers, Ritterman said. Today, he says, “we’re in the midst of a scientific revolution” that these diseases are caused by the excess sugar in the American diet.

“If this were an infectious disease, there would be no question. We’d quarantine the sodas,” said Ritterman, now a professor at Touro University in Vallejo. “The simple answer is that we need to do to sugar-sweetened beverages what we did to tobacco: demonize it and make it clear these are immense public health measures.”

Both sides of the Measure HH can profit from sugary beverage consumption: The soda makers make their living from sales, while doctors and dentists can make money treating the diseases they can cause. But medical professionals who have pledged money supporting the passage of Measure HH say that’s not how they want to practice medicine.

Dr. Jared Fine, the former dental health administrator for the Alameda County Public Health Department, donated $250 in January. As a dentist for more than three decades, he said, a tax to curb soda consumption is “a no-brainer.”

“Sugar in liquid form is the most insidious form,” he said. “This epidemic of diabetes didn’t grow overnight.”

Dr. Dana Hughes—a health policy researcher, UC San Francisco professor, and third generation Oaklander—hosted a fundraiser at her house on Sunday. She’s donated $250 of her own money to support the tax because of what she calls the “health deficit” created by the over-marketing of sugary beverages to low-income families.

“I see this as an opportunity, signaling to the beverage industry that we’re concerned about their practices,” she said. “I’m not being paid to do this and I’m Oakland.”

Dr. Bertram Lubin, president and CEO of UCSF Benioff Children’s Hospital Oakland, said he donated $500 in favor of the soda tax because sugar affects the low-income families his facility serves more than it does others. “It’s related to the health of children,” he said. “They consume more sugar than their weight every year.”

Overall, low-income individuals and minorities consume the most soda, which is linked to higher rates of obesity and type 2 diabetes, according to the U.S. Centers for Disease Control and Prevention (CDC). According to a 2014 report by Change Lab Solutions, nearly a third of children and almost two-thirds of teens in Alameda County drink one or more sugary drinks per day.

If there’s any single profession that wants the tax to pass, it’s your dentist. Independent Bay Area dentists accounted for a third of all donations in support of HH, according to campaign disclosure forms.

For Dr. Joanne Lagos, an Oakland dentist in private practice with a master’s degree in public health, her donation of $550 to support the tax is donating to both a political and public health campaign, since it warns people of the dangers of soda consumption. She says she’ll donate more if needed.

Her main concern isn’t for the people who enjoy a soda occasionally, but rather for the children who start their day with one. “People can ignore this or say ‘I’m not voting for this’ or ‘I don’t drink sodas,’ but the truth of the matter is that it’s going to affect everyone,” she said. “I’m just hoping it passes. It’s going to save a lot of lives.”

The CDC estimates the medical cost of obesity was $147 billion in 2008. The medical cost of diabetes was $176 billion. As rates of these diseases continue to rise, so does the overall burden on the American healthcare system. Every year, more than 5,000 new cases of type 2 diabetes are diagnosed in Americans younger than 20 years old, with the rates highest among children aged 10 to 19, according to the CDC.

In 2009, federal lawmakers considered a federal excise tax on sodas. In response, those with interests in soda sales spent more than $40 million on lobbying, a major spending spike a 2015 report on campaign finance disclosures compiled by the Center for Science in the Public Interest (CSPI) called “clearly indicative of a focus on the tax issue.” There was another smaller spike—up from $10 million to $14 million—in the soda industry’s lobbying in 2014 when another attempt at a federal excise tax was introduced into the U.S. House of Representatives, the report states.

With a federal tax out of reach, local governments have sought to implement their own taxes. But local measures like Measure HH have been hard-fought as smaller initiatives have met opposition with deep pockets. In Berkeley during the 2014 election season, soda makers spent more than $2.4 million of the $3.3 million spent during the campaign, Berkeley’s most expensive ballot item in the city’s history.

Proponents of these taxes have routinely been outspent by the ABA. According to the CSPI report, the ABA, Coke, Pepsi, and the Dr. Pepper Snapple Group spent at least $106 million between 2009 and 2015 to defeat city, state, and federal public health initiatives aimed at reducing sugary drink consumption. With this money, soda companies “enlisted armies” of lobbyists, “blanketed” areas with advertisements, and “waged astro-turf campaigns to beat ballot initiatives,” the researchers wrote.

The taxes on this year’s ballots in Oakland, San Francisco, and Albany are modeled after Berkeley’s: the tax would be paid by the distributor, the proceeds deposited into the city’s general fund, and an advisory committee would give recommendations to the city council about how the funds should be used, mainly to support programs for improving children’s health. Because earmarked funds require a two-thirds vote, cities are opting for this model because it only requires a majority vote to pass.

The anti-tax campaign argues distributors will move the tax onto grocers and corner store owners, who will then raise prices on all grocery items. Arellano says the store owners, including those appearing in their campaign’s ads, aren’t concerned about who is funding the messaging, but rather how it affects their day-to-day operations.

“[The tax] is not on the drinks. It’s on the distributor and it can be pushed onto anything they want,” he said. “This is being sold as something it is not. We believe we have the facts on our side.”

Arellano said about 300 Oakland small businesses are against Measure HH, making theirs a “grassroots” campaign. They use the recent addition of other major funders to the pro-tax side as a point of contention in their messaging. “The politicians and out-of-state billionaires behind Measure HH don’t want you to know this is a tax on groceries,” stated a recent email to the campaign’s subscribers.

Backers of the tax disagree. “Through this campaign, they’re calling it a certain type of tax that it’s not,” said Eileen Espejo, senior managing director of Children Now, a children’s health and education policy non-profit based in downtown Oakland. Espejo said she donated $100 to the Coalition for Healthy Oakland Children because research has shown these types of taxes work at preventing diseases caused by the overconsumption of sugar. A recent study published in the American Journal of Public Health suggests Berkeley’s tax reduced soda purchases by up to 21 percent. Mexico’s tax, which passed in 2014, contributed to a 6-percent drop in soda sales the first year it was enacted, although soda sales have recovered since then.

Another study, published in the journal Health Affairs, estimates a federal sugar-sweetened beverage excise tax would prevent more than half a million cases of childhood obesity by 2025. The researchers—from the Harvard T.H. Chan School of Public Health, Columbia University, George Washington University, University of Michigan, and Albert Einstein College of Medicine—wrote that for each dollar invested, the net savings to society would be $30.78. The successful implementation of one-cent per ounce sugar-sweetened beverage excise taxes in Berkeley and nationally in Mexico “indicate the growing political feasibility of this approach,” the researchers wrote.

And many small-dollar donors supporting Measure HH welcomed funding from outside of Oakland, such as from Bloomberg or the Arnolds, because it is meant to support the fight against childhood obesity. “This kind of support adds validity behind the public health argument and discredits the opponents’ side of view,” Hughes said.

In Richmond in 2012, the opposition called the proposed soda tax “regressive”—meaning it’ll disproportionately affect the poor—and are using the same term in Oakland this year, Ritterman said. “Big Soda is going to do whatever they have to do,” he said. “The truth is that they’re being backed into a corner because they’re peddling a product that’s unhealthy.”

Back at the Measure HH campaign headquarters in North Oakland, Saechao said his biggest concern with the issue is that 46 percent of Oakland children are either diabetic or at risk of developing the disease.

But after four hours of going door to door, he said he felt he had some potentially opinion-changing conversations with voters. “Today was actually pretty good,” he said.

“There is a lot of work ahead of us,” he continued. “Because it happened in Berkeley, it can happen in Oakland.”