TO: FROM: RE: DATE:

American Beverage Association The Mellman Group, Inc. Attitudes In Baltimore Related To Financing School Construction May 30, 2012

The Mellman Group conducted a survey of 600 likely 2012 voters in the City of Baltimore for the American Beverage Association. The poll was conducted by telephone May 17-21, 2012, and used a registration-based sample. The margin of error for this survey is +/-4%. The margin of error is larger for subgroups.

Our recently completed survey shows majorities reporting that recent stories about problems with city operations give them very serious concerns about the citys ability to manage its finances. Still, there is majority support for some of the proposals being considered to fund school construction, including using taxes from slots and casinos, increasing the tax on billboards, and using proceeds from speeding tickets and red light cameras. However, strong majorities of over sixty percent are opposed to increasing the beverage container tax or increasing taxes on soda and other drinks the two proposals that garner the broadest and strongest opposition. Reports Of Financial Mismanagement In The City Raise Very Serious Concerns Of late, there have been a number of reports in local news media describing mismanagement of Baltimore city finances. The best known of these are overcharging for water bills and the troubled negotiations for the upcoming Baltimore Grand Prix IndyCar race. Nearly half (49%) of voters say they have heard a great deal about the problems with water bills and 33% say they have heard a great deal about the handling of the race. Nearly four in five (79%) have heard either a great deal or some [After each:] Does this raise very serious concerns, Very Somewhat about problems somewhat serious concerns, not too serious concerns, Serious + Very with water bills or no concerns at all about mismanagement by Concerns Serious and more than six Baltimore City officials? in ten (64%) have As you may know, Baltimores public works department has heard about the overbilled nearly one in 10 customers on their water bill, 79% 94% potential loss of leading to over $4 million in refunds to 38,000 customers. the IndyCar race, As you may know, Baltimore lost out on more than $10 while over a third million in property tax revenue over the last several years 62% 86% are aware of the because some 200 luxury condos were assessed well below renovation of the their value. school district As you may know, there has been criticism of city officials headquarters handling of the Baltimore Grand Prix IndyCar race, with (35%) and luxury allegations of city money not being reimbursed, promised 55% 85% condo owners revenues not materializing, and mishandling of negotiations paying lower tax for the upcoming race, which could lead to the cancellation of the event and lost revenues and business for the city. rates than other As you may know, the city recently spent $500,000 to homeowners 52% 83% upgrade offices at the school districts headquarters. (36%).
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The Mellman Group, Inc. (May 2012)

All four of the reports generate serious concerns for a majority of voters. A massive 94% of voters say that overcharging nearly 40,000 Baltimoreans on their water bills raises serious concerns about mismanagement by Baltimore City officials, with 79% saying it raises very serious concerns. Eighty-six percent (86%) report that the under-taxation of luxury condo owners raises serious concerns about mismanagement, 62% of them very seriously, and the results are similar for the mishandling of negotiations for the IndyCar race (85% serious concerns) and the six-figure office renovation (83%).

Increasing The Beverage Tax Is The Most Unpopular Of Every Revenue Option Tested When voters are given a list of ways to fund school construction one thing becomes clear increasing the tax on bottled beverages is not popular. (Note that the following proposals were tested before the reports of financial mismanagement to ensure that information would have no impact on respondents views on the proposals.) All respondents were told that As you may know, it is estimated that Baltimore City schools need $2.5 billion dollars over 10 years for school construction and renovation to repair and rebuild schools in the City. Then they were read a list of proposals and asked of each whether they favor or oppose that particular proposal, along with whether they felt that way strongly or not so strongly. We tested two versions of a bottle tax increase. One version listed the kinds of bottled beverages that would be affected, while another described it simply as an increase in the beverage container tax enacted last year. Neither is popular. One-third of Baltimore voters (33%) favor and 64%

The Container Tax Garners The Most Opposition

Net
work with local developers in a public-private partnership to build new school buildings use the tax revenues from slots and casinos undertake a forensic audit of the citys finances and school board spending sell or lease unused govt property increase the tax on billboards mandate that funding from speed cameras be used for Baltimore schools and education mandate that funding from red light cameras be used for Baltimore schools and education institute a tax check-off that allows individuals, foundations and businesses to pay more voluntarily stop the special tax breaks given to real estate developers increase the energy tax on commercial and industrial users impose a fee on the non-profit hospitals that do not have to pay property taxes have the city issue new bonds increase the beverage container tax enacted last year

-11% -13% -12% -13% -18% -18% -20% -22% -23% -35% -46% -52% -62%
OPPOSE

FAVOR

82% +71 83% +70 82% +70 80% +67 74% 74% 74% 70% 66% 57%

+56 +56 +54

+48
+43 +22 0 -11 -31

46% 41% 31% 33%

increase the tax on regular/diet soft drinks, energy drinks, iced tea, bottled water, beer, and alcohol passed last year -64%

-31

The Mellman Group, Inc. (May 2012)

oppose the first version, while 31% favor and 62% oppose the second version, with 3% and 6%, respectively, not offering an opinion either way. Additionally, substantial numbers of those opposed have strongly held views. A full majority (53%) is strongly opposed to increasing the tax on regular and diet soft drinks, energy drinks, iced tea, bottled water, beer, and alcohol, while 45% are strongly opposed to the simpler version. By contrast, only 21% and 19%, respectively, strongly favor the two proposals. Examining the combined results of the two split samples to allow for higher confidence in the results, we found that 35% of Democrats, 29% of independents, 20% of Republicans, 30% of men, 34% of women, 35% of whites, and 32% of African-Americans support increasing the bottle tax. Indeed, among no demographic subgroup does support for a container tax increase earn even plurality support. This lack of support for an increase in the bottle tax is all the more striking when compared to support for the other proposals we tested. More than four out of five voters favor using the tax revenues from slots and casinos (83%), undertaking a forensic audit of City and School Board spending to identify spending cuts (82%), working with local developers to build new school buildings (82%), and selling or leasing unused government property (80%). Nearly threequarters favor increasing the tax on billboards and mandating that funding from speed cameras and red light cameras be used for schools and education (74% each). Seven in ten (70%) support instituting a tax check-off allowing taxpayers to pay more on a voluntary basis. Two-thirds (66%) favor stopping special tax breaks given to real estate developers. And nearly six in ten support increasing the energy tax on commercial and industrial users (57%). Even the least popular of the alternate proposals find more favor from voters than an increase in the bottle tax, including issuing new bonds (41% favor) and imposing a fee on nonprofit hospitals that do not pay property taxes (46%). It is clear that the Mayor and City Council have a number of options at their disposal to raise the funds needed to build, renovate and repair Baltimores school buildings that are supported by Baltimore voters. Increasing the container tax is not one of them.

Conclusion In short, Baltimore voters are very concerned about reports of financial mismanagement within the city. In this context, majority opposition to increasing the beverage container tax looms even larger. Both descriptions of a potential bottle tax increase garner far more opposition than any other proposal tested. This opposition is even more noteworthy in comparison to voters apparent willingness not only to accept but to give strong majority support to most of the other tax and revenue proposals tested.