www.baltimoresun.com/news/maryland/politics/bs-md-ci-mayor-defends-bottle-tax-20131015,0,1561172.story

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Mayor defends bottle tax, suspends grocery program after Santoni's closing announcement

Santoni plans run for House of Delegates

By Luke Broadwater, The Baltimore Sun

6:48 PM EDT, October 15, 2013

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Facing criticism from a struggling local business, Mayor Stephanie Rawlings-Blake defended the city's bottle tax Tuesday as essential to rebuilding Baltimore's schools. But the mayor acknowledged she would have to suspend a program that delivers fresh produce to poor neighborhoods because of the closing of the supermarket, Santoni's.

Santoni's, an 83-year-old Highlandtown grocer, announced this week it would close its doors at the end of this month solely because of the city's bottled-beverage tax. Rob Santoni Jr., the company's chief financial officer, said he is in talks to bring in another supermarket and plans to run for a House of Delegates seat in Baltimore County to give small businesses a stronger voice in Annapolis.

"I feel very confident that it will be a supermarket in a short time," Santoni said of the East Lombard Street store. "It just won't be us."

Santoni blamed the bottle tax for reducing the store's sales by about 18 percent since its adoption in July 2010, and he said he believes Rawlings-Blake has no idea how badly she's hurting local businesses.

"She knows this is bad policy," he said.

The mayor said she would "absolutely not" consider lowering or repealing the tax in light of Santoni's pending closure. She called the tax on beverages — which increased from 2 cents to 5 cents per bottle in July — one of the "tough calls" she's had to make during tough economic times.

"While I'm sad to see Santoni's go, I respectfully disagree with the premise that the bottle tax is solely to blame," Rawlings-Blake said. "No one likes more taxes, but kicking the can down the road when it comes to our schools is no longer an option."

The mayor also pointed to the opening of five new grocery stores in Baltimore in the past three years as evidence that the tax is not driving business from the city. Three more grocers are on the way, she added.

The bottle tax brought in about $5 million a year since it was enacted in 2010. City finance officials expect it to generate more than $10 million this year after the hike. The mayor pledged that the bottle tax will help fund part of the city's annual contribution to a joint state-city plan to fund $1.1 billion in school construction in Baltimore's schools.

Del. Curt Anderson, chairman of the city delegation, said the pledge "instantly made our request credible" to achieve state funding for schools.

"If the city didn't have the money, we never would have gotten this bill passed," he said.

Santoni said he believes the school funding simply gives the mayor political cover for a tax that hurts small businesses.

"She's always been a politician. She's never walked on this side of the tracks," he said. "She doesn't know the damage it's doing to others who aren't going out of business."

Santoni's had been the city's partner in a program to provide groceries to low-income areas without immediate access to fresh produce. The mayor said Tuesday the city would need to temporarily suspend that program, called a "virtual supermarket," while officials look for a new business partner.

Santoni's had agreed to waive delivery fees while taking fresh vegetables and other produce to people in designated "food deserts" who ordered groceries online. The program had served about 450 people at locations such as the Perkins Homes.

"We are working to get it up and running as soon as possible," Rawlings-Blake said. "It's critically important. We're hoping we can find another grocer to work with us."

Santoni said he wished the city "good luck in finding another one that will do it at break-even or marginal benefit."

"That was one of our great services," he said of the partnership. "We didn't make any money on that."

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