Soda Tax Proposed By California City Officials Draws Criticism, Could Solve Budget Problems

City officials in El Monte, California have proposed a soda tax that would collect money on any sugary beverages sold inside city limits.

Officials proposed the plan because the city is facing severe financial problems that could require it to join Stockton, San Bernardino and Mammoth Lakes in bankruptcy court.

While lawmakers in El Monte say bankruptcy is not looming at this time they believe the soda tax could help prevent insolvency in the future as Fitch downgraded parts of El Monte’s debt in May 2012.

El Monte’s council members will determine on Tuesday if a declaration of a fiscal emergency is needed, if that proposal passes a special election this fall could lead to a soda tax.

Officials are hoping to collect one cent per ounce for any “sugar sweetened” drinks sold, enough to generate $7 million in annual revenues for the city of almost 113,000 residents.

El Monte was hit hard by the recession, watching as many businesses in the area folded including several car dealerships which were long considered one of the city’s backbones. Earlier this year El Monte fired a large portion of its government workforce from 410 employees to just 290.

The proposal could be met with complications because of the city’s failure to address high compensation packages for many of its top workers. For example Former Police Chief Thomas Armstrong was given $430,000 in his final year, a combination of salary and pay for unused time off, he is also receiving a pension of more than $200,000 per year.

City officials also hope that aside from raising money the soda tax will lend itself to better health decisions for its citizens, thereby cutting down on health related medical expenses.

El Monte, California is not the only city planning a soda tax, New York City Mayor Michael Bloomberg has tried to ban soda over 16 ounces and taxes have failed to pick up support in both Hawaii and Pennsylvania.

Officials expect soda company’s to draw as much negative attention to the plan as possible.