CALIFORNIA ELECTIONS : PROPOSITION 163 : Lawmakers Keeping Quiet on Repeal of Snack Tax

A year and a half ago, part of the answer to the state’s dire need for higher revenue was extending the sales tax to snack foods, candy and bottled water, passed by the Legislature and signed by Gov. Pete Wilson.

Today, with the signatures of nearly a million Californians standing behind Tuesday’s ballot measure to repeal the tax, no one--not the governor nor a single lawmaker who voted for it--has stepped forward to support keeping the tax.

Public opinion polls after the tax went into effect in July, 1991, quickly showed it was extremely disliked by businesses and consumers.

Lawmakers, their futures threatened in an atmosphere of anti-incumbency fever during an election year, got the message. Now, no legislator is opposing Proposition 163, the measure to repeal the snack food tax.

“You voted for (the tax in the Legislature) because it was part of a package to balance the state budget,” said Assemblyman John Burton (D-San Francisco), “but it’s a very unpopular tax with the voters. It wouldn’t make much sense to put any money into a deal to retain such a tax”--a sentiment with which no one apparently disagrees.

The latest campaign reports filed with Secretary of State March Fong Eu show that opponents, if there are any, have contributed not one penny to the defeat of Proposition 163. Nor did they submit an argument against the measure for publication in the official voters’ guide.

Proponents, meanwhile, taking no chances, have poured more than $2 million into the campaign for Proposition 163.

Most of that money came from interested business groups affected by the snack tax, including $412,947 from the California Grocers Assn. Issues Political Action Committee and $365,000 from the California Bottled Water Assn.’s PAC.

The effort to erase the tax started earlier this year during the legislative session. Assemblyman Richard E. Floyd (D-Carson), who admits he voted for the tax to get the 1991-92 budget passed, tried to persuade his fellow lawmakers to repeal it. He had decided that his vote for it “was a mistake,” he said in a recent interview.

The repeal idea failed to catch fire in the Assembly. Floyd’s bill couldn’t even get a hearing in committee.

But then he turned to the initiative process. His forces collected more than 986,000 signatures of registered voters on petitions to place the question on the fall ballot. He needed only 615,958 valid signatures to qualify.

Since then, legislators have done nothing to stop a repeal.

“We have no organized opposition,” said Floyd, “so I think we will win at the polls. The snack tax is regressive. It’s a poor folks’ tax.

“The elite eat untaxed baked Alaska for dessert. The poor have Oreo cookies and they are taxed.”

To tax bottled water is also unfair, Floyd said. Some senior citizens are ordered by their doctors to drink it instead of tap water. “It’s like a prescription,” he said.

Asked why his legislative colleagues--after voting for the tax in the Legislature and backing off when it turned out to be unpopular--wouldn’t support his repeal bill, the Southern California lawmaker replied, “Lack of intestinal fortitude. They were worried about the size of the (1992) budget deficit.

“If the tax was repealed, some of their pet projects would have had to pay for it. I’m not worried about pet projects--just poor people.”

Repeal of the snack tax by the voters would reduce state government revenues by about $210 million in 1992-93 and local government revenue by approximately $70 million, according to the state ballot pamphlet.

In subsequent years, the total revenue losses would be about $330 million for the state and approximately $120 million for local governments. Those sums would be in addition to an already projected state budget deficit of $2 billion by June, 1993, which is based on the expectation that California’s economy will continue to lag.

A separate part of the July, 1991, package, a sales tax on magazines, has already been repealed by lawmakers. If voters strike down the snack food tax as well, it would still leave in place other aspects of the tax package, including increases in sales tax rates, higher income taxes on wealthy individuals and other new revenue sources, such as increases in vehicle license fees.

Asked for comment on Proposition 163, Wilson’s director of communications, Dan Schnur, said the governor--whose signature was needed for the tax to be enacted--has taken no position on the initiative measure.

“He would strongly favor a legislative repeal of the snack tax--if it were done in tandem with corresponding spending reductions so the state budget stays in balance,” Schnur said.

“If the initiative is passed by the voters, the Legislature must come up with necessary funds to replace the lost revenues.”

Other large donors to the Proposition 163 campaign were Nabisco Brands, $185,000; Frito-Lay Inc., $184,033; Snack Food Assn., $101,050; Hershey Corp., $95,000; See’s Famous Old Time Candies, $84,679, and the National Confectioners Assn. of the U.S., $83,913.

Still more contributors were California Automatic Vendors Council PAC, $45,000; Borden, Inc., $25,000; PepsiCo Inc., $25,000; E.J. Brach Corp., $25,000, and Kraft General Foods with $20,000.

Imposition of the snack tax caused considerable confusion for both suppliers and consumers, Floyd said.

In fact, one of his ballot pamphlet arguments against continuing it is that the snack food tax has been an “administrative nightmare.”

“Small pies are taxed--large pies are not. Granola bars are taxed--whole granola is not. Pretzels are taxed--peanuts are not. Bottled water is taxed--tap water is not,” the Southern California legislator wrote. “This is nonsense. And it ought to be stopped.”

If approved by the voters, the ballot proposition also would lock into the state Constitution a prohibition on future state and local governments imposing sales or use taxes on bottled water, candy and snack food products.

Overall, the Floyd campaign contribution report said his “Don’t Tax Food & Water Committee” has collected $1,875,976 and spent $1,472,213. Three other smaller committees supporting Proposition 163 reported receiving an additional $197,964 in contributions and spending $133,763.

The biggest single expenditure was $563,500 that went to Kimball Petition Management to help obtain the necessary signatures to qualify the measure for the ballot. Television commercials for the proposition also are now running in Los Angeles, San Francisco and San Diego.