Tax repeal dries up alcohol treatment dollars

Local addiction treatment providers are worried that a victory for package store owners could spell doom for many counseling and recovery services.

“The taxpayers decided that they didn’t want to spend an extra 40 cents on a six-pack of beer,” said Ray Tamasi, CEO of Gosnold on Cape Cod, a substance abuse and mental health service provider. “What they weren’t made aware of is that taxpayers pay $4 billion a year for the consequences of alcoholism.”

Earlier this month, voters passed Question 1, scrapping the 6.25 percent sales tax on alcohol products that had been in place since August 2009. The tax had raised more than $100 million, more than half of which was earmarked to fund alcohol recovery programs.

Previously, treatment programs had been funded through the state budget. But with the weak economy forcing massive state budget cuts, the tax was seen as a key revenue source. Now that it’s been removed, and with the state possibly facing a $2 billion deficit, alcohol-abuse treatment advocates are bracing for a crisis, as treatment programs compete for dollars with other public health programs.

“From 2002 to 2003, the budget for funding was devastated and half of the state’s detox beds were eliminated,” said Vic DiGravio, CEO of the Association for Behavioral Healthcare, a statewide organization that advocates for community-based mental health treatment providers. “Those beds haven’t been restored, but having the revenue from the tax was what allowed treatment centers to avoid any further cuts.”

Tamasi said the state Department of Public Health, which manages funding for treatment centers, doesn’t yet know how the tax repeal will affect individual programs such as Gosnold, which helped about 8,000 patients last year. While Gosnold gets some funding from private and public insurance plans, it received $1.4 million in state money this year to fund programs such as the residential treatment offered at the Emerson House in West Falmouth and the Miller House in Falmouth.

Tamasi said he won’t stop core services such as medical detoxification and basic outpatient services, but he fears the overcrowded residential treatment programs will be vulnerable.

“To balance the potential cuts, we’ll have to work hard to get to our donor base and tell them, ‘We’re going to

need extra help now,’” Tamasi said.

Tamasi said the state is the “payer of last resort” for these services. In most cases, private or public insurance covers the cost or the patients pay for rehab themselves. If people can’t pay for their own rehab and are eligible for assistance, the state pays for it. He also said most of the referrals don’t come from judges but from hospitals, doctors, and family members. He doesn’t believe the passage of Question 1 will change that.

According to the National Center on Addiction and Substance Abuse at Columbia University, $4.5 billion is spent nationwide on alcohol-related consequences. Twenty-four percent of that money goes to both justice and child/family assistance, and 22 percent is spent on health-related issues. The rest goes to education and public safety efforts.

P.J. Foster, spokeswoman for the “Yes on One Committee,” said while the political committee supports funding for recovery programs, voters realized that the tax on alcohol put many package stores at a disadvantage, especially those near the border of tax-free New Hampshire.

“These owners reported between 5 and 30 percent lost in revenue from the tax,” Foster said.

Foster doesn’t worry that the repeal will cause recovery programs to shut their doors. “The state has always supported these programs,” Foster said. “There’s no question that they will be funded in the budget for next year.”

The alcohol tax generated more than $140 million since it was implemented, according to Robert Bliss, the director of communications at the state Department of Revenue. More than half of the money has been dedicated to recovery programs. The rest of the money has been earmarked for school construction projects and the MBTA, he said.

Without the tax, DiGravio said the state’s recovery programs will run out of funding by Jan. 1, when the repeal goes into effect. DiGravio said while some nonprofit groups get part of their funding from private sources, the “great majority” of funding for recovery programs came from the alcohol tax.

The tax was vital to the state, he said, because it was a dedicated source of sustainable funding even during bad economic times.

Gov. Deval Patrick told reporters last week that his administration would look for ways to fund about $43 million in treatment programs for the rest of the fiscal year, which ends June 30.

DiGravio said his priority over the next six weeks will be meeting with Patrick and lawmakers to find new funding for the recovery programs. While Patrick opposed the repeal and has said the state needs to find a replacement for the lost funding, DiGravio is worried.

“The state is still struggling with a budget deficit,” DiGravio said. “We know their hearts and values are in the right place, but it’s just about how much they have in the state’s wallet.”