Revenue Allocations from Soda Taxes in Oakland and San Francisco Continue to Diverge from Advisory Committees’ Recommendations

In 2016, San Francisco and Oakland residents passed sugary drink taxes, which officially went into effect in 2018. According to the original ballot measures, the taxes were intended to reduce soda consumption and, through tax revenues, fund programs that improve the health of populations disproportionately impacted by soda consumption and diet-related disease. SPUR has been tracking how the tax revenues are allocated. Five years on, here’s where the money has gone and where voters can expect it to go in the future.

 

How Oakland and San Francisco Soda Taxes Work

The sugar-sweetened beverage distributor taxes (SSBTs) passed by Oakland and San Francisco are general taxes. General taxes are easier to pass at the ballot box than special taxes. Special taxes require a 66% plus one vote, but general taxes require only a 50% plus one vote.

Unlike the revenue from a special tax, the revenue from a general tax does not have to be allocated to programming specified in the ballot measure. Instead, revenue from a general tax goes into the city’s general fund and is allocated every year by city leadership. The ballot measures for the Oakland and San Francisco soda taxes established advisory committees to compile recommendations on how the tax revenue should be allocated. San Francisco’s 16-member committee and Oakland’s 9-member committee also collect data on and monitor their city’s soda consumption.

Both cities’ advisory boards meet monthly to compile their annual recommendations for revenue spending. They then share those recommendations with city leadership to highlight the importance of integrating the recommendations into the budget.

Every year, each committee spends hundreds of hours making recommendations and attempting to ensure that they are taken into consideration in the budgeting process.

Over the last five years, neither the Oakland nor the San Francisco advisory committees’ recommendations have been adopted in full. SPUR has tracked the disparities, finding that the latest budget for San Francisco strays furthest from the recommendations.
This year, both cities faced a significant budget deficit. Each mayor handled budgeting differently, but both viewed their city’s soda tax revenue as true general operating funds rather than as funds for mitigating the harms of the soda industry.

 

How Oakland Allocates Its Soda Tax Revenue

The City of Oakland has struggled to provide publicly available financial information in any detailed and easily comprehensible way. Last year, the city launched its budget transparency tool aimed at improving access and visibility, but it proved difficult to use. Nevertheless, the mayor’s final budget does reveal how Oakland’s soda tax revenue is allocated, if you know what you’re looking for.

 

Comparison of Advisory Board’s Budget Recommendations and Mayor’s Proposed Sugary Drinks Distributor Tax Budget, Oakland, FY 2023–2024

The Sugar-Sweetened Beverage Community Advisory Board’s recommendations were accompanied by a memo supporting its recommendations. The final budget primarily funds city agency positions. Only 30% goes toward community investments. This is the inverse ratio included in the Community Advisory Board recommendation.

 

Most of Oakland’s soda tax revenue is being used to fund the salaries of city staff in various city departments, including the Human Services Department City Administrator’s Office, Oakland Parks, Recreation and Youth Development Department, and the Economic and Workforce Development Department. In fact, this year, more than double the number of full-time employees will be funded by revenue from the tax than in the previous year (51.37 FTE this year compared with 19.17 last year).

Additionally, $2 million, representing about 35% of the total budget, has been allocated to community grants, which is about half the amount recommended by the community advisory board. This continues a five-year trend.

 

How San Francisco Allocates Its Soda Tax Revenue

The SDDTAC spent more than 900 hours deliberating and determining its recommendations this year. The 16-member advisory group took into account prior years’ spending and allocations as well as public comment. It even utilized a quantitative data tool to analyze each of the potential funding categories.

Comparison of Advisory Board’s Budget Recommendations and Mayor’s Final Sugary Drinks Distributor Tax Budget Budget, San Francisco, FY 2023–2024

The 2023–2024 budget includes nearly $11 million in soda tax revenue. Most of the revenue allocations depart from the committee’s recommendations.

 

Mayor Breed’s budget reduces six line items and fully cuts funding for six additional line items of the twenty total line items proposed by the advisory committee. Most notably, the mayor’s budget over-funds the Requity program (San Francisco Recreation and Parks Department youth recreation program) by $1.2 million, allocating a little more than $2 million for this program. This one program will receive 20% of the expected total soda tax revenue. The use of significant soda tax revenue to fund the Requity program has persisted since San Francisco’s soda tax took effect.

 

What Do Past Soda Tax Revenue Allocations Mean for Future Allocations?

Our analysis shows that Oakland and San Francisco leaders have never adopted in full the recommendations of their respective soda tax advisory boards. They might take the recommendations under advisement, but they ultimately allocate the funds as they see fit. As long as the soda taxes are general taxes, this trend is likely to continue. If city residents, community-based organizations, and advocates want to see a change, they will need to put additional pressure on decision makers to follow their recommendations. But the only certain way to ensure that soda tax revenues fund specific programming rather than other city needs is to bring the taxes back to the voters to pass as special taxes.