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Bad News is Good News, and Why We Should Not Exempt Alcohol: Budget Conference Starts

Bad News is Good News, and Why We Should Not Exempt Alcohol: Budget Conference Starts

June 7, 2009

The budget is everything in state government, even in good years. This year it's the entire universe. The House and Senate budget conferees have started their work, and Governor Patrick submitted his revised budget to the legislature. Now we must continue our efforts to make sure that Massachusetts continues to make progress on better health and health coverage for everyone.

The revised Governor's budget (the executive summary repeatedly uses the word "austere") takes into account a $1.5 billion drop in estimated tax revenue for next year. The Governor's new health recommendations are here, and it includes a commitment to maintaining eligibility for everyone in Commonwealth Care, rejecting the termination of 28,000 members proposed in the Senate. We appreciate the administration's prioritizing of avoiding wholesale cuts in coverage eligibility. They recognize that these cuts only shift costs onto an already strained safety net.

The continuing economic bad news has some good news for the budget. As unemployment increases, the state is expected to move up a notch in the federal recovery bill's medicaid assistance formula. Under the ARRA, states can get an increased Medicaid match rate if their unemployment rate increases over the base. We're now at the second of three tiers, and probably will enter the top tier later in the year. This will mean perhaps an additional $50 million next year, depending on which quarter we pass over the threshold. These funds are intended to help states maintain health benefits, and we urge the legislature to target these funds to avoiding cuts in MassHealth, Commonwealth Care and the Health Safety Net.

We also reiterate our support for removing the sales tax exemption on alcohol, as proposed by the Senate. Eliminating the sales tax exemption on alcohol is estimated to bring in about $80 million. The Senate has earmarked the new funds for vital substance abuse treatment and prevention programs. These programs save much more than their cost, and are a critical investment in both our health system and the state's economy.

We also know that an increase in the price of alcohol will yield many social benefits:

A large body of research has thoroughly documented the many public health and safety benefits of alcohol tax increases, including reductions in underage drinking, road traffic injuries and fatalities, educational failures, sexually transmitted diseases, crime, domestic violence, child abuse, and possibly marijuana and tobacco abuse." (study details and more here)

-Brian Rosman