Cash-strapped El Monte wants to tax sugary soft drinks
El Monte is moving forward with a plan to seek a tax on sugary sodas to ease its financial problems.
The proposal, one of the first of its kind in California, would add a 1-cent tax per ounce to the price of "sugar sweetened" drinks sold within the city. El Monte's council members voted unanimously to place the measure on the November ballot, saying that it would provide much-needed revenue for the city government and combat the health problems caused by sodas and other sweet beverages.
Business leaders are starting to challenge the sugary drinks tax, arguing that it would hurt El Monte's economy.
"It is irresponsible for a city with 13.7% unemployment to impose a new business tax on beverages that will threaten local grocers, restaurants and movie theaters and the jobs they provide in the community," said Bob Achermann, executive director of the California/Nevada Soft Drink Assn. "Singling out one item in the grocery cart for an additional tax is discriminatory and regressive, and it makes no sense."
Mayor Andre Quintero, who first introduced the tax plan earlier this year, said he was not surprised by the backlash. A similar plan proposed at the state level by Assemblyman Bill Monning (D-Carmel) failed last year after opposition from the California Chamber of Commerce, California Restaurant Assn. and other food industry advocacy groups.
"Oh, yeah, we anticipate the industries that sell these products to put up a fight," Quintero said. "If this is successful here and it works, then it might be successful in other cities. They're not going to want anything like this to take hold anywhere."
The San Gabriel Valley suburb, which has about 113,000 residents, has been hit hard by the recession. The city has reduced its workforce by more than 100 employees, deferred raises for some workers and cut the benefits received by council members.
But city officials said they still need new revenue to cover a half-cent sales tax that is set to expire in 2014. The sugary drinks tax, they said, would make up for that funding gap, providing as much as $7 million in annual revenue.
The City Council voted to declare a fiscal emergency Tuesday, which allowed it to approve a special election for the tax measure. (El Monte usually holds its city elections in November of odd-numbered years.) However, El Monte officials said they are not yet on the brink of bankruptcy.
"We're taking a precautionary, anticipatory step so we don't have a significant financial event in the future," finance director Julio Morales said.
He was adamant that El Monte would not follow in the footsteps of cities such as Mammoth Lakes, San Bernardino and Stockton, which have filed or are preparing to file for bankruptcy protection this year.
Photo: Bloomberg News