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Patrick eyes new funding options for programs hit by alcohol tax vote

Gov. Deval Patrick plans to begin immediately exploring options to replace as much as $43 million in funding for substance abuse treatment and prevention programs that will be lost once the repeal of the state’s alcohol sales tax take effect.

Calling the programs “enormously important,” Patrick told reporters Monday afternoon that he hoped to find a way to fully fund those programs in fiscal 2011, despite losing six months of anticipated revenue from the sales tax after the repeal takes effect in January.

Voters approved a rollback of the 6.25 percent sales tax on alcohol at the ballot box earlier this month, delivering relief to consumers and retailers and cutting off funding to the state’s substance abuse treatment and prevention programs that had been funded in this year’s budget with dedicated revenue from the tax.

Back from a week-long vacation in California, Patrick told reporters at a groundbreaking event for the new Yawkey Commuter Rail Station that he had a meeting planned later in the afternoon with Administration and Finance Secretary Jay Gonzalez to discuss the implementation of the alcohol tax repeal and options for fully funding substance abuse treatment programs through the fiscal year.

He said holding those line items harmless would likely require finding an additional $43 million.
“I’m committed to finding a solution. I just don’t have the solution,” Patrick said.

The state budget for fiscal 2011 earmarked revenue from the 6.25 percent sales tax on alcohol for state-sponsored substance abuse treatment and prevention programs. The state collected $97 million over the final 10 months of fiscal 2010 after the tax hike went into effect. That total had projected to increase to $111 million in fiscal 2011.

Asked whether he would consider raising the excise tax on beer and alcohol to offset the loss in sales tax revenue, Patrick said he hadn’t even considered that an option until the possibility was raised to him by alcohol distributors.

“I don’t have any such plans,” Patrick said, adding, “Please don’t write that it’s on the table, because it’s not something I’ve given any thought to.”

Vic DiGravio, president of the Association for Behavioral Healthcare, told the News Service there was still time to consider all the options before warning beneficiaries of the state’s substance abuse programs that their benefits were in jeopardy of ending. He said there was “no immediate crisis” but called finding a short-term solution to the loss of tax revenue his “primary concern.”

“We are in the process of trying to work with the folks in the Patrick administration and the Legislature to figure out next steps. Our immediate and primary concern is to make sure there are funds available to operate for the rest of the fiscal year,” DiGravio said.

DiGravio said the state’s substance abuse and prevention programs would have enough funding to continue operations through the end of January with revenue from alcohol sales tax collections being collected through the holiday season.

“The reason why the sales tax on alcohol was so important to us and advocates and providers is that it provided a sustainable source of funding for prevention and treatment programs,” DiGravio said.
Better than expected tax collections through the first four months of the fiscal year have left the state approximately $413 million over benchmark. Patrick, however, cautioned immediately after his election that the positive revenue growth should not be interpreted as a license to spend.

“There are people who are dealing with substance abuse demons and they depend on programs to help them and the support for those programs has been voted away by the people of the commonwealth. That is an unfortunate outcome, but that is the outcome,” Patrick said the day after winning a second term. “We’re going to have to figure out some other way. We’re not at a place where there’s some room full of cash where if you just bring forward a worthy idea, we can just write that check.”

During the campaign to repeal the alcohol tax, package store owners and beer distributors accused the state of double dipping on their product by levying a new tax on a product that is already taxed through a state excise tax.

The excise tax on a gallon of beer in Massachusetts is 11 cents, compared with 30 cents in New Hampshire where there is no sales tax.

“Our excise tax is one of the lowest in the country. It hasn’t been adjusted since 1975,” DiGravio said, who added that he has heard no talk of an appetite to raise the excise tax now that Ballot Question One passed.

Sen. Steven Tolman, a Brighton Democrat, and leader of the effort to defeat the tax repeal, said he was distraught over the decision by voters to cut off the funding supply for substance abuse treatment, but declined to speculate on where he would like to the see the money come from to maintain programs.
“I won’t get into what I’ll support right now. When I do decide I want to make sure it’s right rather than shooting from the hip,” Tolman told the News Service. “A lot of people are in need of services and the alcohol industry, through their infinite wisdom and misleading ads, has just cut the cord.”