SANTA CRUZ >> Measure Z, the sugar-sweetened beverage tax in the city of Santa Cruz, seemed likely to pass after the initial vote counts.

According to the Santa Cruz County Elections Department, as of early Wednesday morning, 10,660 votes have been counted in favor of the ballot initiative, or about 52%, and 9,992 votes, or approximately 48%, were counted against the passage of Measure Z, a difference of 668 votes.

The group backing the initiative is called Yes on Measure Z for a Safe and Healthy Santa Cruz and is led by Santa Cruz City Councilmembers Martine Watkins, Sonja Brunner and Shebreh Kalantari-Johnson. The campaign provided this statement to the Sentinel Wednesday morning.

“While recognizing that votes are being counted, we are proud of this early lead,” the statement said. “We want to thank our local front-line community organizations tirelessly addressing the health crises stemming from the over-saturation of sugary drinks in our community. Dientes is just one example and a true community treasure. Its staff has volunteered countless hours backing Measure Z. We thank you and all of our volunteers and supporters.”

The campaign opposing Measure Z called Campaign for an Affordable Santa Cruz is sponsored by the American Beverage Association Ad committee’s top funders, which includes corporations such as The Coca-Cola Co., PepsiCo and Affiliated Entities, and Keurig Dr Pepper.

The spokesperson for the opposition campaign, which raised about $2 million, is Steve Maviglio, principal of the Sacramento-based strategic communications firm Forza Communications.

“The fact that the vote is this close shows that even in the most progressive communities in California voters are standing up to a regressive tax that has never been shown to improve public health,” said Maviglio Tuesday night.

Measure Z was placed on the November ballot by the Santa Cruz City Council at its June 25 meeting. If passed with a simple majority vote by city residents, the general excise tax of 2 cents per fluid ounce would be paid by distributors of sugar-sweetened beverages in the city. The tax is estimated to generate about $1.3 million annually for the city’s general fund and would include a small business exemption for those with less than $500,000 in gross annual revenues.

According to the impartial analysis of Measure Z on the city’s website, a seven-member community oversight panel would be established if the initiative were to pass in November. The panel would consist of members from sectors such as health care, dental, wellness, education and youth organizations. It would recommend how to use the revenue brought in by the tax to promote community health and wellness, as well as for general revenue purposes.

Some beverages would be exempt from the tax such as beverages containing less than 40 calories per 12 fluid ounces of beverage, milk products, drinks with natural sweeteners such as honey, baby formula, alcoholic drinks and beverages intended for medical use or as a meal replacement.

Although placed on the ballot over the summer, the history of the sugar-sweetened beverage tax in the city goes back to 2018. At that time a 1.5-cent-per-ounce sugary drink tax ballot initiative, championed by Watkins and others, was approved by the Santa Cruz City Council to go to a vote by city residents that November.

The ballot initiative was brought to an end however when then-Gov. Jerry Brown signed the Keep Groceries Affordable Act into law in June 2018, months before the election. The law prevents taxes on grocery items and included a penalty provision for any charter city that attempted to implement a sugary drink tax, or other grocery-related tax, that would take away all of a city’s sales and use tax revenue.

Soon after the act’s passage, then-Santa Cruz City Manager Martin Bernal suggested the measure be taken off of the 2018 ballot in fear of the penalty and it was removed from the ballot by the City Council.

In 2020, a lawsuit was filed by Jarvis, Fay & Gibson, LLP on behalf of Watkins and Fresno-based nonprofit Cultiva La Salud, which advocates for health equity in the San Joaquin Valley. ChangeLab Solutions and the American Heart Association also supported the legal action. In fall 2021 the court ruled that the penalty provision of the Keep Groceries Affordable Act of 2018 was unconstitutional and unenforceable. The decision was then appealed by the state.

In March 2023, the California Third District Court of Appeals upheld that the penalty provision in the law was unconstitutional and unenforceable, and that charter cities such as Santa Cruz can put sugary drink tax initiatives to a vote without fear of financial penalties.

Although the penalty provision for violating the act is not enforceable, the law remains on the books, and Maviglio and those in the opposition campaign assert that the proposed initiative is illegal.

For information, visit votescount.org.