"This industry is aiming a nuclear weapon at government in California and saying, 'If you don't do what we want, we are going to pull the trigger and you are not going to be able to fund basic government services,' " said Sen. Scott Wiener, a Democrat from San Francisco, which has a soda tax.
The Legislature's action drew a strong rebuke from public health advocates who view soda taxes as a crucial front in their efforts to contain obesity and the health complications it causes.
But local government officials, terrified by the prospect of having their hands tied on all future tax increases, reluctantly backed the legislation.
"I've been in politics a long time, and sometimes you have to do what's necessary to avoid catastrophe," said Sacramento Mayor Darrell Steinberg, who is pushing a local sales tax increase that would be at risk if the ballot measure passed.
The governor said only a handful of communities are looking to tax soda, but the ballot measure would affect all 482 cities in California.
"Mayors from countless cities have called to voice their alarm and to strongly support the compromise which this bill represents," Brown wrote in a memo explaining his decision.
The California measure bans any new taxes on groceries, including beverages, through 2030, but allows four cities in the San Francisco Bay Area to keep soda levies already on the books.
The beverage industry has used aggressive campaigning to beat back soda taxes and other measures. But some soda tax efforts are now receiving better funding. Former New York City Michael Bloomberg, a billionaire who unsuccessfully tried to limit the size of sugary drinks sold in the city to 16 ounces, has funded some local efforts.
Philadelphia, Seattle and Boulder, Colorado also have taxes on sugary drinks.
After Brown signed the legislation, the California Business Roundtable withdrew a ballot measure that would have raised the threshold for any tax increases by local government.
Nancy Brown, chief executive of the American Heart Association, asked for a meeting with Gov. Jerry Brown after The Sacramento Bee reported beverage industry lobbyists dined with Brown and his wife, Anne Gust Brown, at the governor's mansion in Sacramento this month.
A spokesman for Brown, Evan Westrup, said the governor did not negotiate the deal and the dinner was unrelated.
Public health officials said taxes are the most effective tool they have to discourage people from drinking soda, sports drinks, sweetened coffee and tea, and other sugary beverages.
Beverage companies spend billions promoting their products that public health professional can't match, said Kristine Madsen, a physician and associate professor of public health at UC Berkeley.
She led a study that found a 20 percent reduction in consumption of sugar-sweetened beverages in low-income neighborhoods in the year after the city's tax took effect. Sales in grocery stores dropped 8 percent — a figure that was not fully offset by higher sales in neighboring towns.
Associated Press food industry writer Candice Choi contributed.