Santa Fe voters reject soda tax, hand rare win to industry

Voters have rejected a measure that would have raised taxes on soft drinks in New Mexico's capital city, giving a rare victory to the beverage industry after a string of recent defeats at the ballot box.

The ballot initiative failed with 11,533 votes against and only 8,382 votes in favor, the Santa Fe City Clerk's Office announced Tuesday. Opponents warned it would increase the cost of a can of soda by nearly 25 cents.

The vote came after similar taxes were adopted last year in cities from Philadelphia to San Francisco. Outside groups and political committees spent more than $3 million on the special election in Santa Fe, with opponents led by the soft-drink industry and supporters by billionaire Michael Bloomberg, a staunch supporter of taxes on sugary beverages.

A variety of sugar-sweetened beverages fall under the tax proposal, including sport drinks such as Gatorade, iced teas, caffeinated energy drinks and lemonade, while diet soda and pure juices were exempt. The 2-cents-per-ounce tax ties Boulder, Colorado, as the nation's most expensive.

The tax was designed to expand preschool to 1,000 additional children, most of them from poor families. Opponents portrayed the tax as a burden on poor and working-class families who would see prices skyrocket on items like soda, sports drinks and lemonade.

Santa Fe's tax measure thrust the city into two far-reaching debates about affordable preschool and sugary drinks. Proponents of the tax, including Santa Fe Mayor Javier Gonzales, said it was needed to expand high-quality preschool to 1,000 children whose families cannot afford or find it — and improve public health in the process by discouraging the heavy consumption of sugar.

Spending by rival political committees pitted the American Beverage Association and allied local businesses against soda-tax backers including Bloomberg, teachers unions, the American Heart Association and the Roman Catholic Church.

Opponents warned the tax would increase the cost of a can of soda by nearly 25 cents and place a burden on poor and working-class families, driving home their point in mailbox flyers with images of crestfallen children tending to a high-priced lemonade stand.

Opponents also portrayed the Santa Fe city government as flush with cash in mailers decorated with towering bundles of $100 bills, raising the ire of several city councilors who said the city's surplus was far too small expand pre-kindergarten.

"We are not overflowing with cash," City Councilor Signe Lindell said. "It's not right, it's not true."

Efforts by New Mexico to expand early childhood education have stalled amid a state budget crisis and political resistance to tapping state funds. The state currently allocates about $50 million a year to underwrite full- and part-time preschool for about 9,000 children but has been stymied from spending much more by faltering tax revenues.

Early voting started April 12, kicking off weeks of intensive political publicity that blanketed the city with fliers, yard signs and radio ads.

The American Beverage Association funneled more than $1.3 million from the soft drink industry into efforts to defeat the tax. Bloomberg, who tried unsuccessfully as New York mayor to ban large sodas, contributed $1.1 million to the pro-tax political action committee Pre-K for Santa Fe.

Questions about some untraceable political spending dogged campaigns for and against the tax.

On both sides of the debate, targeted video advertisements flooded social media feeds with emotional appeals for and against the tax, featuring restaurant owners, politicians and local parents.

Backers of the tax crowded into a union hall Tuesday to make last-minute calls to registered voters, as tax opponents knocked on doors and stood at busy intersections calling for a "no" vote.

At a polling station, middle school teacher Michelle Chavez, 48, said the tax was appropriate and desperately needed to boost early learning.

"It's basically a sin tax," said Chavez, casting a "yes" vote. "If you don't want to pay the tax, don't buy the soda. Fill up a water bottle."

Paralegal Michelle Romero voted against the initiative, saying the city needed to find money from somewhere else to expand pre-kindergarten.

"The government should learn how to balance their budget in better ways," she said.