Investment Tycoon vs. Industry Lobbyists
TELLURIDE – Telluride voters will begin casting their ballots for the November municipal election Friday. They will consider a countywide tax on residential utility bills to fund carbon-reduction initiatives; those voters inside the Telluride town limits will decide on changes to the home-rule charter amendments that could alter the way the town conducts elections. They will also fill four open council seats from seven candidates.
But the ballot question garnering the most controversy asks voters whether the town should embark on a groundbreaking new regulation. Ballot question 2A, which asks voters if the town should place an excise tax on sugary beverages sold in town to fund programs aimed at educating children to make healthier lifestyle choices, has generated not only heated discussion inside Telluride, but interest from powerful outside forces.
In fact, both campaigns, for and against the tax, are funded exclusively by outside groups.
The Colorado Beverage Association, an industry lobbying group, has spent $20,000 funding the “No on 2A” campaign, a hastily assembled local group of concerned citizens and business owners. Possibly suggesting how seriously the industry takes the threat of taxing sugar, Charlie Sheffield, a lobbyist with the Colorado Beverage Association, has been in Telluride assisting the No on 2A campaign in the months leading up to the election.
But with a stroke of the pen, billionaire and part-time San Miguel County resident John Arnold, a former Enron executive, who with an $8 million bonus from that company established what became a behemoth Houston-based hedge fund, has single-handedly bankrolled Kick the Can Telluride, a local 2A advocacy group, with a $50,000 donation.
Some Telluride residents who pride themselves on their small-town democracy have reacted with dismay to the role these outside groups have played, fueling even stronger feelings than might otherwise be expected, both for and against the proposed tax.
“I just despise the notion of [outside] interests nudging their way into our election,” said Telluride mayor pro tem Bob Saunders. “This election is for our voters to decide.”
While 2A would place a one-cent per one fluid ounce tax on sugar-sweetened beverages (generating estimated annual revenues of $200,000), affected business-owners complain there are multiple hidden costs associated with the tax. For one, they say they’re encumbered with excessive red tape already from complying with the Telluride and state tax systems.
The designers of the tax say they have anticipated these costs, by structuring the measure so that shopkeepers will receive a 10 percent reimbursement of the sum of the excise taxes they pay.
Business owners question that amount.
“Ten percent just won’t cut it,” said local grocer Bob Harnish.
“I contacted [our store’s] IT guy regarding how the store will comply with this, and he said our system just could not calculate the penny-per-ounce tax,” Harnish said. “Our IT guy even contacted his superiors, who said the same thing.” Compliance with the tax requires a total software overhaul, Harnish said, which adds to his costs and thus hurts his business.
Harnish is also worried about what the tax will do to sales.
“Folks visiting from out of town that land in Montrose might hear about Telluride’s soda tax and might be persuaded to do all their grocery shopping for their ski vacation in Montrose, instead of right here,” Harnish said. “Merchants located on the way to Telluride may place signs saying something like ‘No Soda Tax Here,’ again, taking business away from town.”
While he does not have a fixed-figure estimate of how much he stands to lose, should the proposed excise tax win at the ballot box, Harnish contends the tax is unfair to business.
“We are the fundraisers for these programs. I’ve sponsored little league teams and other kids’ programs in the past,” he said, “but this is unfair.”
A common argument against the tax contends that Telluride children are already healthy, and don’t need more money for programs that soda tax detractors say the town’s schools and the adjacent ski mountain already provide.
“I’ve worked with children my entire life, and I know that Telluride children are a lot healthier than most,” said Town Councilor Ann Brady, who worked in the Colorado public school system for more than thirty years, including a long stint as superintendent of the Telluride School District. “I know a lot of their parents, and I know they wouldn’t feed their children soda,” she added. Brady voted against sending the question to the ballot.
Telluride children are offered many educational and physical fitness opportunities. In 2011, the town was awarded a three-year, $1.6 million United States Department of Education Physical Education Program grant, offering hundreds of Telluride children the opportunity to participate in a dozen programs and apply for scholarships to enroll in the Telluride Academy. PEP encourages children to choose active lifestyles and to watch what they eat.
Over the years, PEP grant-funded programs have become popular – 82 percent of Telluride schoolchildren have participated in at least one program, to the delight of their parents, many of whom use the programs as after-school care.
Over 100 Telluride schoolchildren are currently enrolled in a PEP-funded karate program; 97 participants belong to the program’s gardening club, where they learn sustainable food-growing techniques in a grow dome; and 76 scholarships have been awarded to the Telluride Academy programs.
But on October 1, 2014, PEP funding for these programs and scholarships will run dry.
And that’s a concern for Elisa Marie Overall and Bridget Taddonio, who administer the PEP grant and are the co-founders of Kick the Can Telluride. They argue that Telluride children are not as healthy as many believe.
To receive the federal grant, Taddonio and Overall have conducted a twice-a-year body mass index survey of Telluride elementary, intermediate and middle school students (high school students’ BMIs are incorporated into Taddonio and Overall’s survey). Their surveys are reviewed by a third-party statistician, and subject to audit by the Department of Education, have shown that one in five Telluride children range from being overweight to obese. While Telluride’s overweight and obesity rate aligns with the national average, it also contributes to the State of Colorado’s stubbornly high (23 percent) childhood overweight and obese rate. Colorado has the second-fastest-growing childhood obesity and overweight rates in the nation, according to the Colorado Department of Public Health and Environment.
And this is the essence of Kick the Can Telluride’s argument. Kick the Can organizers (who borrowed the name from a California Center for Public Health Advocacy-based campaign proposing an excise tax in that state) point to dozens of medical studies directly linking the consumption of sugary beverages to the nation’s obesity epidemic. According to a 2012 fact sheet from Yale University’s Rudd Center for Food Policy and Obesity, children and teenagers are consuming an increasingly high amount of sugar per year, with sugary beverages accounting for over 30 percent of overall sugar consumption of male and females ages 2 to 18.
This is a major concern for Dr. Jeff Ritterman, a cardiologist from Richmond, Calif., one of two speakers at last week’s Kick the Can-sponsored community forum.
“Liquid sugar, as in sodas and sports drinks, is the worst culprit in the obesity epidemic,” said Ritterman. He cited health problems associated with Metabolic Syndrome, which includes obesity, high blood pressure, high fats (triglycerides) circulating in the blood, low good cholesterol (HDL) and pre-diabetes. “All of these come from sugary drinks,” Ritterman said. “Consuming just one of these drinks per week significantly increases the chances of developing these problems.
To illustrate the health dangers associated with soda consumption, Ritterman displayed a slide, from a 2012 American Heart Association study of more than 42,000 people, that links consumption of sugar-sweetened beverages to significantly increased development of serious health problems.
To date, the American Heart Association, American Academy of Pediatrics, American Public Health Association, American Medical Association, Institute of Medicine, American Academy of Family Physicians and Centers for Disease Control and Prevention favor an excise tax similar to the one proposed in Telluride, Ritterman said.
A penny-per-ounce tax could be the “single most effective measure to reverse the obesity epidemic,” Dr. Thomas Frieden, director of the CDC has stated publicly.
As a city councilor in Richmond, Ritterman introduced a tax on sugar-sweetened beverages, but voters in the 2012 election defeated the measure. A similar ballot question in El Monte, Calif. that same year that was vastly outspent by a $4.5 million campaign spearheaded by the beverage industry was struck down by voters as well.
“Not one single country has managed to turn around its obesity epidemic,” Ritterman said, quoting Dr. Margaret Chan, director general of the World Health Organization. “This is not a failure of individual willpower. This is a failure of political will to take on big business.”
But elected officials in state legislatures understand the problems posed by sugary beverages. While Richmond and El Monte failed to pass a town excise tax, 11 states have proposed sugary drink excise and/or sales taxes. Washington, D.C. and Colorado have removed sugared beverages from their lists of groceries exempt from sales taxes (but because of the structure of sales taxes, the revenues generated by these beverage taxes do not fund health programs). If passed, 2A would be the first town-level excise tax levied on sugar-sweetened beverages in the United States.
But even if it fails, the fact that legislation in 11 state chambers and a who’s-who of medical associations supports taxing these beverages is emblematic of a growing national concern about the health effects from America’s growing appetite for sugar.
And as the nation’s healthcare system shifts from an emphasis on treating illness to preventive care under ObamaCare, the economic and health costs associated with America’s insatiable appetite for sugar-sweetened beverages will likely come under more intense scrutiny from legislators, medical professionals and concerned citizens alike, causing the beverage industry to devote increasing resources to try and nip campaigns like Kick the Can in the bud.