Methodology

2. Methodology • Telephone survey of 600 randomly-selected Washington voters likely to vote in the November 2014 election. • Interviews were conducted via landline and cell phones • Survey was conducted August 22 – 28, 2013 • The margin of sampling error is +/-4.0 percent at the 95 percent confidence level; margins of error for population subgroups will be higher. • Some percentages do not sum to 100% due to rounding • Structure paralleling prior surveys conducted for Americans for Sustainable Growth

3. Key Findings • Voters start out ambivalent about a tax swap ballot measure, with equal numbers in favor and opposed (40 percent to 40 percent). • The base of support is liberal Democrats, but even they are lukewarm in their initial support. • An explanation increases overall support for the measure to a majority, but only one in five say that they would “definitely” vote “yes.” • A sales tax cut and tax incentives for clean energy are the most popular elements of the measure. • After pro and con messaging, support for the measure settles at 50 percent in favor and 44 percent opposed – though still with more intensity on the “no” side. • Support for the Carbon Washington measure is very similar to that for measures tested by Americans for Sustainable Growth, at least after messaging – though fewer voters are “definitely” committed to a “yes” vote on the Carbon Washington measure.

4. Issue Context

5. A plurality of voters holds favorable views of Governor Jay Inslee and the Washington State Legislature. 30% 50% 39% 40% 3. I'm going to read you the names of some people and organizations active in public life. For each you have heard of, please tell me whether you have a very favorable, somewhat favorable, somewhat unfavorable or very unfavorable opinion of that person or group.

6. Initial Support for the Ballot Measure

7. Ballot Language Tested Initiative Measure 587 concerns taxes. This measure would impose a carbon pollution tax on certain fossil fuels, reduce the state sales tax one percentage point, eliminate the business and occupation tax on manufacturers, and increase certain tax credits. Language mirrors that received from the Attorney General, with the exception of the substitution of this phrase for “greenhouse gas emissions tax.”

8. Voters are evenly split on the initiative, with a significant minority undecided. If the election were held today, would you vote Yes or No on this measure? Total Yes40% Total No40% Q4.

9. Differences are largely ideological, with conservatives offering more opposition. Ballot Question by Ideology (% of Sample) (29%) (32%) (33%) 4. If the election were held today, would you vote Yes or No on this measure?

10. A similar pattern follows by party identification – with both independents and Democrats more opposed. Ballot Question by Party ID (% of Sample) (22%) (25%) (42%) (15%) (33%) 4. If the election were held today, would you vote Yes or No on this measure?

11. Combining these variables puts patterns of support in the sharpest relief. Ballot Question by Party by Ideology Democrats Republicans (% of Sample) (24%) (17%) (10%) (23%) 4. If the election were held today, would you vote Yes or No on this measure?

12. Both male and female voters are divided on the issue. Ballot Question by Gender (% of Sample) (47%) (53%) 4. If the election were held today, would you vote Yes or No on this measure?

13. The youngest voters tend to be the most supportive of the idea. Ballot Question by Age (% of Sample) (34%) (62%) (19%) (9%) (8%) (17%) (38%) (28%) (13%) 4. If the election were held today, would you vote Yes or No on this measure?

14. Older men are the most opposed demographic, based on the ballot question. Ballot Question by Gender by Age Men Women (% of Sample) (19%) (28%) (19%) (34%) 4. If the election were held today, would you vote Yes or No on this measure?

15. Among Republicans and independents, opposition is concentrated among men… Ballot Question by Party by Gender Independents Democrats Republicans (% of Sample) (17%) (26%) (17%) (16%) (14%) (11%) 4. If the election were held today, would you vote Yes or No on this measure?

16. …and also older voters. Ballot Question by Party by Age Independents Democrats Republicans (% of Sample) (18%) (25%) (12%) (22%) (9%) (16%) 4. If the election were held today, would you vote Yes or No on this measure?

17. Voters are even ambivalent in Seattle and East King County. Ballot Question by City and County City County (% of Sample) (11%) (7%) (19%) (30%) (11%) (11%) (6%) (35%) 4. If the election were held today, would you vote Yes or No on this measure?

18. Opposition runs high outside the Seattle media market. Ballot Question by Media Market (% of Sample) (72%) (8%) (11%) (9%) 4. If the election were held today, would you vote Yes or No on this measure?

19. Lower-income voters are modestly more supportive than higher-income ones. Ballot Question by Household Income (% of Sample) (9%) (24%) (22%) (15%) (17%) 4. If the election were held today, would you vote Yes or No on this measure?

20. Ballot Measure Explanation Tested • Now let me give you a little more information about this measure. It would: • Require coal, energy and oil companies and utilities to pay a carbon pollution tax of $30 per metric ton of carbon pollution created by their activities in Washington State; • Gradually increase the amount of the tax each year to keep up with growth, creating incentives for these energy companies and utilities to reduce fossil fuel use and to invest in energy efficiency and use cleaner fuels; • Use the revenue from the carbon tax to cut the Washington state sales tax from 6.5% to 5.5%; eliminate the business tax for Washington State manufacturers; and fund tax credits for low-income families and clean energy investments in Washington State; and • Balance these tax reductions with revenue from the carbon pollution tax, so that the state’s overall tax revenues neither increase nor decrease.

21. After hearing more information, a majority of voters supports the measure. If the election were held today, would you vote Yes or No on this measure? Ballot Question Explanation Total Yes40% Total Yes55% Total No40% Total No36% Q4/5.

22. The explanation most greatly increases support among progressive base voters. (Total % Yes) 4/5. If the election were held today, would you vote Yes or No on this measure?

23. The most common reason for voters to support the measure is its reduction of the sales tax, followed by its positive effects on the environment… In a few words of your own, why would you vote YESon this measure? (Open-End, Asked of Supporters Only, Top Responses Shown) Q6a.

24. Verbatim Comments From Supporters Well, I don’t like the carbon tax – but lowering the B&O tax for business and the sales tax has a positive effect. Anything that lowers our taxes is beneficial, and less pollution in our air is also beneficial. We need to transition from fossil fuels to clean energy. One way to do that is to provide incentives. We have a very regressive tax system where the poor pay a higher percentage of taxes. Maybe this measure will help correct this. Also, it will reduce pollution. Partly because I used to work for a utility company that used fossil fuels, and how they affect the environment. Also I’m a business owner and if there’s any way to lower my taxes I’m all for it. The oil and coal companies need to be taxed for all of the crap they put into the air. Also, it might make them more likely to start doing some research into cleaner energy sources. Q6a. (Open-ended)

25. …while many voters who are against the measure worry that the cost of the tax will be passed on to consumers. In a few words of your own, why would you vote NOon this measure? (Open-End, Asked of Supporters Only, Top Responses Shown) Q6b.

26. Verbatim Comments from Opponents I think I’m confused about this measure. There are too many conflicting statements in it. I’m opposed to any kind of carbon tax. These “green” issues are being forced onto the taxpayer, and these types of taxes drive businesses out of state. Because I think small businesses would be impacted the most…the bigger businesses get credits, the smaller companies wouldn’t. So they would be the ones paying for it. I don’t think it would be a revenue-neutral proposal, I think the tax reduction portion of this measure is intended to get voter approval – but I don’t think it would assist in the state’s budget deficit. Because it is an effort to impose additional taxes on fuel companies, which are going to be translated into additional costs for the consumers. I own utility stock. I don’t think utilities should have to pay for all these things. Q6b. (Open-ended)

27. The most compelling provisions of the measure focus on reducing taxes. The final structure of the measure has not yet been decided. Here are some specific potential provisions of the measure; please tell me whether it sounds like something you would support or oppose. Q9. ^Not Part of Split Sample

28. The carbon tax itself and a cut in business taxes are less broadly popular. 9. The final structure of the measure has not yet been decided. Here are some specific potential provisions of the measure; please tell me whether it sounds like something you would support or oppose. ^Not Part of Split Sample

29. Support for a B&O Tax Cut • In August 2010, voters backed “eliminating B&O taxes for more than 375,000 small businesses” by a 65% to 27% margin. • The wording in the current survey may have left open the notion that large businesses would benefit, which is less appealing.

30. Impact of Messaging

31. Messages Tested • Opponentsof this measure say that it amounts to a multi-billion dollar energy tax, increasing electricity costs for local families and driving up the price of everything from food to the fuel we use to keep warm in winter – including at least a ten cent per gallon increase in gas prices. Even the sponsors of the program admit that it will cost the average state resident $350 per year in higher costs. These higher costs for energy will force large and small employers to lay off employees or even shut down. And we just can't trust the promise from state government that they will use the revenue to reduce taxes on consumers or businesses; we know that taxes will just go right back up again and go to wasteful government programs. Climate change might be an important issue, but this isn't the right way to solve the problem, and it's not what we need right now here in Washington. • Supportersof this measure say we can cut dangerous carbon pollution and increase our state’s energy security by requiring big polluters to pay for the damage their pollution does to our health and the air, water, and climate. Taxing things we don’t want, like pollution, makes a lot more sense than taxing things we do want, like jobs and income. This measure implements this common sense idea by making polluters pay and cutting taxes for local businesses and families. This measure will reduce the state sales taxes by a full percentage point, saving the average local family over $200 per year. It will also fund a tax credit for working families, and entirely eliminate the business tax for local manufacturers, creating incentives for innovation, good-paying local jobs and investments in energy efficiency and clean energy. A similar policy next door in British Columbia has boosted economic growth and local job creation and has successfully reduced carbon pollution; we can do the same here. It’s a win-win for Washington: an opportunity to build a stronger local economy and to protect the world we pass along to our kids and grandkids.

32. After hearing both positive and negative messages, voters remain evenly split over the measure – with a smaller undecided. Do you think you would vote yes in favor of Initiative 587 or no to oppose it? Total Yes50% Total No44% Q7 Split D/Q8 Split C Total.

33. A positive initial framing lifts support for the measure, but does not inoculate against negatives... If the election were held today, would you vote Yes or No on this measure? Total Yes Total No Undecided Q4/Q5/Q8 Split D/Q7 Split D.

34. …while a negative initial frame suppresses support, but not to the degree that the measure can’t bounce back. If the election were held today, would you vote Yes or No on this measure? Total Yes Total No Undecided Q4/Q5/Q7 Split C/Q8 Split C.

35. Segmenting the Electorate by Consistency of Support • Consistent Yes: Voters who consistently indicated they would vote for the measure. • Consistent No:Voters who consistently indicated they opposed the measure. • Swing: Voters who do not fall into any of the other categories – remaining consistently undecided or switching positions. The following slide shows demographic groups that disproportionately fall into one category or the other.

36. Demographic Profile of the Segments

37. Movers – in either direction – have predictable profiles.

38. Comparisons to Americans for Sustainable Growth Ballot Measure Concepts

39. The Carbon Washington ballot label is most realistic, but polls the lowest. AFSG II / Cap and Delegate AFSG I / Cap and Dividend Carbon Washington Total Yes51% Total Yes40% Total Yes55% Total No40% Total No33% Total No35% Q4.

40. Support for the measures is comparable after an explanation, but Carbon Washington lacks intensity. AFSG II / Cap and Delegate AFSG I / Cap and Dividend Carbon Washington Total Yes55% Total Yes60% Total Yes57% Total No36% Total No35% Total No36% Q5.

41. A similar pattern is evident after both pro and con messaging. AFSG II / Cap and Delegate AFSG I / Cap and Dividend Carbon Washington Total Yes50% Total Yes52% Total Yes52% Total No44% Total No42% Total No42% Q7/8 Total.

42. None of the measures has a significant advantage among GOP voters – all start bad and get worse. (Total Yes Among Republicans) AFSG I Carbon WA AFSG II Q4/Q5/Q7 Split D-Q8 Split C Combined.

43. The Carbon Washington question polls better among conservatives initially, but differences shrink with messaging. (Total Yes Among Conservatives) Carbon WA AFSG I AFSG II Q4/Q5/ Q7 Split D-Q8 Split C combined

44. Conclusions

45. Conclusions • Given current ballot language, the ballot measure would have a very challenging path to victory. • Low initial poll numbers would invite funded opposition, and with disproportionate funding on the “no” side majority opposition is clearly in reach. • At the same time, the poll suggests a number of factors that could enhance support for the measure – particularly by strengthening the ballot language: • Clarify that business tax cuts would benefit small businesses, rather than all businesses. • Clarify that tax incentives in the measure would encourage greater use of clean energy and energy efficiency. • Simplify the measure, perhaps by reducing the total number of tax increases it includes – perhaps cutting the tax credit for working families. • In addition to these changes, it is clear that the measure would require a very well-funded “yes” campaign to remain in contention – not necessarily with as much funding as the “no” campaign, but with enough to get its message out.