Initiatives draw large donations

The national soft drink industry put another $4.2 million into the Initiative 1107 campaign last week, raising its ante to $14.4 million for the tax-rollback measure.

The American Beverage Association in Washington, D.C., has contributed all but $325 of I-1107’s money. The cash is to pay for a public-education campaign ahead of the Nov. 2 election, I-1107 spokeswoman Kathryn Stenger said Wednesday.

I-1107 is aimed at rolling back temporary taxes on soda and bottled water and a permanent sales tax on candy. It also would restore a business and occupations tax rate for makers of some processed food products that contain meat, fruit or vegetables; these food-makers got a preferential rate several years ago as a result of a court ruling.

“We’re preparing to run a full-scale statewide campaign. It’s going to include information to voters that their grocery carts are going to be taxed to the tune of $300 million over the next three years,” Stenger said.

Stenger did not provide details of the planned advertising effort.

But opponents funded by labor and health care groups say the I-1107 campaign is the most misleading and deceptive the state has seen in years – falsely implying the debate is over taxes on food.

Spokesman Sandeep Kaushik said the food-related taxes are small – including a temporary, 2-cents-per-can tax on soda pop and fall mostly on non-essential items – and pay for health care, education and services needed by the elderly.

“I think this reinforces what we’ve been saying all along – that it’s clear the beverage association understands that in an equal debate, they would lose. So they’ve decided to try to buy the election with extraordinary record amounts of cash,” Kaushik said. “We’ve never seen anything like this before in Washington state. It just demonstrates that their concern is not what is best for Washington’s families. They are interested in protecting their massive profits and spend extraordinary amounts to preserve them.”

The Citizens to Protect Our Economic Future group raised $304,229 to fight the repeal measure and wants to raise more, Kaushik said. Opponents are fueled by donations from labor groups – including the Washington Federation of State Employees and Service Employees International Union – that want to preserve the taxes for health care and education spending.

If I-1107 spends all $14.4 million raised, it will be the most ever spent in favor of a ballot measure in the state – easily exceeding the $9.5 million spent by doctors, insurers and hospitals to promote a medical-malpractice measure, Initiative 330, in 2005. The most spent against a ballot measure was $11.6 million – by insurers and allies who fought Referendum 67’s consumer protections in 2007. I-330 was defeated; R-67 passed.

In another notable campaign-finance development, the national beer industry put in $2 million more last week for efforts to defeat two measures that would end the state-run liquor monopoly. A $1 million donation from the Beer Institute in Washington, D.C., and $1 million from the Virginia-based National Beer Wholesalers Association bring contributions from national and state beer and wine advocacy groups to more than $4 million.

The targeted liquor measures include Initiative 1100, which is backed by Costco and would let large stores enter the liquor market, and Initiative 1105, which allows private wholesalers to distribute liquor.

I-1100’s campaign has raised $1.2 million, and I-1105 has raised $2.2 million. Opponents to the liquor measures have raised $4.7 million, including donations from labor unions; beer and wine vendors are concerned about competition from liquor on grocery shelves.

Opponents in the I-1107 tax-repeal fight find it galling that the beverage industry is claiming the issue is about repealing taxes on groceries.

State lawmakers did not add a new tax on food but adjusted the tax rate for certain food processors in response to a court ruling that created a preferential tax rate for more processors than lawmakers intended, Kaushik said. The preferential tax originally was meant for canned-meat products, Kaushik said.

But Stenger, of I-1107, said the result is that lawmakers increased taxes on some Washington businesses during a recession and put them at a “competitive disadvantage” with food processors in other states. She said the tax change hits a canned product containing noodles, chicken and vegetables made by Nalley and would cause Seattle-based Continental Mills to pay taxes on a Krusteaz blueberry-pancake mix that it does not pay on the same mix made in its Kentucky plant.

Democratic lawmakers approved nearly $800 million in new revenues, including taxes, to help close a budget gap. Taxes targeted by I-1107 are predicted to raise $272.3 million for state government and $58.2 million for local governments through June 2013.

But the new tax rate on food processing would raise a small share of that – about $1 of every $25 raised – from taxes targeted by I-1107.

The soda industry has spent heavily to turn back tax measures in other states, including repealing a soda tax in Maine in 2008 and repelling legislative proposals in other jurisdictions including New York this year. The New York campaign cost a reported $9.4 million, according to news accounts.

Brad Shannon: 360-357-1688 bshannon@theolympian.com www.theolympian.com/politicsblog