Initiatives draw cash

The soft drink industry has pumped a monsoon of money - $10 million so far - into a Washington state initiative that would repeal new taxes on soda pop, bottled water, candy and some canned-meat products.

The pop tax is 2 cents on a 12-ounce bottle; rates differ for the other products. Backers of Initiative 1107 say the taxes are unfair and could cost consumers at the grocery store as well as jobs at the state’s 30 local bottling plants.

Opponents – led by labor groups that want to preserve the taxes for health care and education – have raised just $268,000. They say the industry is trying to buy the election with a misleading campaign intended to preserve its profits.

“There is a lot going on in Washington state this fall. You have a major Senate race and a lot of initiatives. It’s going to be a crowded field. You need to make sure you have the resources to make sure your messages get through,” Kevin Keane, a senior vice president and spokesman for the American Beverage Association, said Friday. “We don’t know what we’re going to need yet. We want to make sure we have it.”

The campaign comes on the heels of a $9.4 million lobbying effort by the Washington, D.C.-based beverage association that stopped a pop tax proposal this year in the New York Legislature. The association also spent more than $4 million on a 2008 ballot campaign overturning Maine’s soda tax, and Keane said it has won lobbying campaigns against soda taxes in New Mexico, Wisconsin, Illinois, California and Philadelphia.

The beverage group is the single biggest donor to any initiative campaign this year – a season when ballot measures are plentiful in Washington. Six initiatives to the people and three referenda from the Legislature are on the Nov. 2 ballot, and the whole lot has drawn $20.7 million in donations – close to a state record, according to the state Public Disclosure Commission.

Backers of I-1105’s liquor wholesaling measure raised $2.2 million; I-1100’s liquor retailing proposal raised $1.2 million; and I-1098’s income tax on high earners raised $1.9 million, with help from Bill Gates Sr. The Building Industry Association of Washington has donated half of the $1 million raised for Initiative 1082, which proposes to let private companies sell workers’ compensation insurance in Washington; I-1082 opponents have raised $703,536, mostly from trial lawyers.

“All of these are cases of a battle in Olympia (at the Legislature) spilling onto the ballot,” said Todd Donovan, a political science professor at Western Washington University who has written books about initiatives and sees the ballot measures becoming tools of powerful interests. “The only people that can afford to get on the ballot are these well-financed groups that can’t get what they want in Olympia.”

If supporters of I-1107 spend all $10 million raised, it will be the most ever spent in favor of a ballot measure in the state – topping $9.5 million spent by doctors, insurers and hospitals to promote a medical malpractice measure, I-330, in 2005. The most spent to fight a ballot measure was $11.6 million – by insurers and allies who fought Referendum 67’s consumer protections in 2007.

Donovan said the donations might look large, but industries that contribute heavily to ballot measure campaigns in other states often consider them investments that pay off on the bottom line.

The Yes on 1107 campaign already has spent $2.8 million, most of it for paid signature gatherers and advertising to qualify it for the ballot. Keane said it’s not clear how much will be spent, but the large donations let the campaign be flexible when state limits and donation deadlines take effect later.

Keane said the Yes on 1107 campaign also is being transparent with its actions and that the campaign is a state effort, despite its funding sources. Some of the association’s money comes from dues the member bottlers pay, he said.

Seattle-based campaign spokeswoman Kathryn Stenger tried to play up that the campaign has local donors. But PDC records showed just five individual donors – whose contributions totaled $225.

By contrast, the beverage association’s most recent donations were for $3.5 million on Aug. 2 and $3.5 million on Aug. 13. The beverage industry’s donations also are the largest on record for a single organization in any Washington state campaign.

On the other side of the tax fight is Citizens to Protect Our Economic Future, which raised its funds mostly from labor and health care groups. Its top contributions include $70,000 from the Washington Federation of State Employees, $60,000 from the Community Health Network of Washington and $41,000 from Service Employees International Union’s state council. The Washington State Hospital Association gave $30,000, and the Washington Education Association $22,000.

These groups’ members stand to benefit if I-1107 fails and the taxes stay on the books – in effect letting lawmakers and Gov. Chris Gregoire avoid deeper spending cuts. Possible new cuts include state government jobs and funding for the Basic Health Plan, public schools, nursing homes and other services.

Debate over the taxes already is testy.

Sandeep Kaushik, a spokesman for the opposition, said that with its big donations, “the American Beverage Association is making it clear they intend to try to buy this election by funding a highly misleading and deceptive campaign. Their entire campaign has been about repealing the so-called food and grocery tax when in fact what is really at issue here is small, mostly temporary taxes on nonessential items.”

Kaushik said repealing the taxes would cause deeper state budget problems and “even deeper cuts in funding for our schools and health care and other priorities.”

But I-1107’s Stenger said the taxes in question hit consumers in the grocery store – including those buying energy bars, some candy and even some chicken-noodle soups. Her campaign group is calling itself the Stop the Food & Beverage Tax Hikes committee; its website is stopgrocerytaxes.com.

But it appears few of the taxes in question – about $4 million a year of the $108 million that will be repealed if I-1107 passes – fall on food processors, and about $31 million a year of them fall on sales of candy, according to an analysis by the state Office of Financial Management. The candy tax is permanent, but the other taxes expire after three years. (The sales tax on bottled water will become permanent if voters approve a separate measure, Referendum 52, which calls for school energy upgrades.)

Keane and Stenger disputed that the state needs the money.

“That’s up to voters; they may not agree that their government is the right size, and it couldn’t do with more watching the budget waistline,” Keane said. “Taxing anything in the grocery cart – especially in this economy, especially when it’s just going to pay for more government – is a line we believe consumers don’t want to cross.”

Stenger said the campaign is backed by an in-state coalition of Washington bottlers, retailers and workers who have a lot at stake. She said bottlers could lose sales and have to lay off workers if the temporary taxes are allowed to stay in place.

Despite reports and rumors that Yes on 1107 was getting to launch a television ad campaign, Stenger and Keane declined to say what is in store.


Editor's note: Typo was corrected for the ballot number of the liquor wholesaling measure, I-1105.