Smart Steps, Treating Baltimore's Drug Problem

A New Commitment To Treatment
Although Baltimore has had severe drug problems for many years, the city’s investment in treatment lagged badly until the mid-1990s. In 1995, the city government devoted only $350,000 of its own revenues to drug treatment.[107] Early in his last term, then Mayor Kurt Schmoke launched a major treatment expansion, increasing Health Department funding for treatment and shifting federal grant funds from other city agencies into treatment services.[108] By the time Schmoke left office in 1999, Baltimore was budgeting $2.5 million for treatment, seven times more than in 1995.[109]

Since the early 1990s, Baltimore’s legal, business, medical and religious communities as well as grassroots political organizations, media, and philanthropic foundations have forcefully advocated improving the city’s treatment system.

Ų In 1990, the Bar Association of Baltimore City published its landmark report, The Drug Crisis and Underfunding of the Justice System in Baltimore, which concluded that “effective drug abuse treatment is the only answer to reducing drug related criminal cases.”[110]

Ų In its 1995 report Smart on Crime, the Greater Baltimore Committee (GBC)—a “who’s who” of the region’s business leaders—called drug treatment an underutilized, potentially powerful weapon against crime.[111] For the 1999 mayoral and city council elections, the GBC urged all candidates to endorse its call “to fully fund effective drug treatment on request.”[112] More state funding for treatment was one of the GBC’s top priorities for the year 2000 session of the Maryland General Assembly.[113]

Ų In their 1996 Baltimore Oracles’ Report, leaders of the city’s premier medical and health research institutions underscored the importance of drug treatment in addressing the public health and crime problems confronting Baltimore.[114]

Ų Drug treatment on request topped the 1999 election agenda of the Greater Baltimore Interfaith Clergy Alliance (GBICA), which represents more than 200 congregations in the region.[115] The GBICA has offered to work with Mayor O’Malley to strengthen community-based treatment services in neighborhoods throughout the city.[116]

Ų Baltimore clergy have also joined forces with labor and neighborhood leaders in the influential 15,000-member coalition known as BUILD (Baltimoreans United in Leadership Development).[117] BUILD’s precinct-level organizing around Maryland’s 1998 elections included a call for increased state funding for drug treatment.[118]

Ų In June 1999, more than 1,000 residents from 175 neighborhoods across the city convened a Neighborhood Congress to identify solutions to Baltimore’s most pressing problems. Based on numerous neighborhood-level meetings organized by the Citizens Planning and Housing Association prior to the June convention, participants made “improving the quality and quantity of drug treatment” one of their major goals, and established a Crime and Drugs Solution Work Group to help build community and political support for treatment.[119]

Ų The Baltimore Sun—the city’s major newspaper with a daily circulation of 327,000[120]—has editorialized frequently since the early 1990s on the need to boost the city’s investment in drug treatment.[121] The Sun succinctly expressed its views in a 1996 editorial: “Successful treatment will dwindle the ranks of addicts, and the dealers who depend on their trade.... Drug crimes won’t stop until Baltimore successfully treats the illness that is their genesis.”[122] The Sun’s editorial agenda for the year 2000 General Assembly session urged Governor Glendening and state legislators to back Mayor O’Malley’s treatment expansion plans with substantial new funding.[123]

Ų Local foundations have advocated more public funding for treatment in Baltimore and have contributed their own dollars. In 1993, the Abell Foundation called attention to the city’s meager spending on treatment in its report, Baltimore’s Drug Problem: It’s Costing Too Much Not To Spend More On It.[124] Since then, the Abell Foundation has pushed local policymakers towards a more energetic treatment response. Encouraged by city leaders’ advocacy of treatment on request, philanthropist George Soros chose Baltimore as the site for his Open Society Institute’s (OSI) first office to concentrate exclusively on the problems of a single city. OSI-Baltimore began work in 1998, with Soros pledging to spend $25 million over five years, with a focus on drug treatment and related needs, such as workforce development.[125] The Abell Foundation and OSI-Baltimore, together with the United Way of Central Maryland and the Harry and Jeanette Weinberg Foundation, have made nearly $8.5 million in grants to improve the city’s treatment system.

Treatment’s New Political Prominence
During the 1990s, calls for the city to invest more in treatment—coming from groups representing a broad range of expertise and constituencies—reinforced Mayor Schmoke’s outspoken leadership on the issue. During the 1999 mayoral election campaign, all the leading candidates promised to implement treatment on request.[126] Since then, Mayor O’Malley has made securing substantial new state treatment funding the city’s top priority in Annapolis.[127]

By 2000, treatment on request—defined as placing every person who seeks treatment (voluntarily or by court order) in a program within 48 hours—had become a mainstream issue in Baltimore politics.

From the outset of his term, O’Malley signaled his support for expanded treatment by reappointing health commissioner Peter L. Beilenson, who served as point-person on drug treatment in the previous administration.[128] O’Malley won office on a platform focused on improving public safety.[129] But neither the new mayor nor the new police commissioner, Edward T. Norris, expect police sweeps and arrests to curb the demand for drugs that drives much of the city’s crime.[130] For that, the O’Malley administration is counting on drug treatment.[131] Beilenson has staked his job on the matter, pledging to resign if Baltimore’s crime rate is not cut in half within three years of obtaining the new funding required to ensure ready access to high-quality drug treatment.[132].

Baltimore’s ambitious plans to expand treatment will require substantial assistance from the state government.

Partnership with the State
Unlike most other U.S. cities,[133] Baltimore is not part of any county; it is the largest independent city in the nation.[134] To varying degrees, the governments of the states and counties in which the nation’s other big cities are located either perform or finance a range of government services[135] —including health-related services such as alcohol and drug treatment.[136]

The distinctive relationship between Baltimore and the state is reflected in the city’s budget: 45 percent of Baltimore’s general revenue comes from the state, more than double the average of 19 percent among the nation’s other big cities (based on fiscal years 1993-1994, the most recent period for which comparative data are available).[137] Independent of any county, Baltimore’s reliance on Maryland is especially pronounced with respect to the state’s funding for health care and hospitals—including support for alcohol and drug treatment—which amounts to 6.7 percent of the city’s general revenue, more than five times the amount allocated by other states for health care and hospitals in the nation’s other big cities.[138] Given that Baltimore’s own city-generated revenues are flat—projected to grow only 1 percent over the next year[139] —much of the new investment required to upgrade the city’s public treatment system will have to come from the state government.

Disagreements between the city and the state often make headlines, but the growing convergence of city and state interests is the more significant story. For example, Mayor O’Malley’s request for $25 million in additional treatment funding from the state was only partially fulfilled, with the General Assembly approving an additional $8 million in the FY 2001 budget. Although considerably less than requested, the $8 million represented Baltimore’s largest single-year treatment funding increase from Maryland’s Alcohol and Drug Abuse Administration (ADAA) since ADAA was created in 1989. Combined with the $18.97 million federal-state block grant allocation to Baltimore and $4.85 million from other state sources, Baltimore will receive 46 percent more state treatment funding in FY 2001 than in FY 2000.[141] Moreover, several developments suggest that this funding increase may be the first step toward increased state support in the future.

Maryland’s Treatment Task Force
In 1998, the General Assembly created a Task Force to Study Increasing the Availability of Substance Abuse Programs in Maryland, chaired by Lt. Governor Kathleen Kennedy Townsend and Baltimore County Delegate Dan Morhaim.[142] The “Drug Treatment Task Force” is composed of four other state delegates, two state senators, and numerous experts in addiction treatment, health services and criminal justice. In December 1999, the Task Force issued an interim report, which found that insufficient treatment capacity throughout Maryland was primarily due to “insufficient funding for treatment by the State.”[143] The Task Force recommended providing treatment on request for Maryland’s uninsured and underinsured, 24 hours a day, seven days a week.[144]

Maryland will receive $4.4 billion over the next 25 years as part of the national tobacco settlement.[145] Governor Glendening and the General Assembly have agreed to earmark annually a portion of the tobacco money for alcohol and drug treatment,[146] a step that few other states have taken.[147] The $8 million in new treatment funds for Baltimore in FY 2001 were drawn from the tobacco settlement revenue.

The state government is also enjoying the benefits of a strong economy, which generated an $800 million budget surplus entering FY 2001.[148] The nationwide economic recession in the early 1990s led to cuts in state funding for treatment in Baltimore, cuts that have only recently been overcome. The ADAA federal-state block grant fell from $16.9 million in FY 1991 to $14.8 million in FY 1992, and did not surpass the FY 1991 level until FY 2000.[149] Maintaining a budget surplus should afford Annapolis the opportunity to address unmet needs, including drug treatment.[150] Important one-time-only investments in treatment made possible by a budget surplus could include expenditures for staff development, evaluation and research infrastructure, and the purchase of property suitable for residential treatment.

Tapping Maryland’s Alcohol Excise Tax Revenue to Invest in Treatment
The state’s revenue from alcohol excise taxes is an additional, still untapped, source of funding for treatment. Maryland’s alcohol excise tax revenue—which totaled $24 million in FY 2000—accrues to the state’s general fund.5/[151] On a per capita basis, Maryland’s alcohol excise tax revenue ($4.62 per resident) is lower than in all but six other states, and amounts to only one third of the national average.[152] Maryland’s alcohol excise tax revenue is dwarfed by alcohol’s annual economic cost to the state. Based on national economic cost estimates generated by NIDA and NIAAA, alcohol abuse costs Maryland residents about $5 billion per year in medical care, motor vehicle crashes and other accidents, criminal justice spending, and lost earnings due to illness and premature death.[153]

According to a 1998 national survey sponsored by the Robert Wood Johnson Foundation, four in five Americans favor increasing alcohol taxes by 5¢ per drink if the revenue is used to prevent underage drinking and to fund alcohol treatment programs.[154] If Maryland increased its alcohol excise tax rates by as little as 1¢ per drink, the state could generate an additional $18 million annually, revenue which could be devoted to prevention and treatment.[155]

The case for raising alcohol excise tax rates in Maryland is clear, both as a way to discourage underage drinking, as well as a way to raise new funds for treatment.

More ambitiously, a phased implementation of a 5¢ per drink increase—a penny per year over five years—would magnify the preventive impact of higher alcohol prices, as well as generate substantially more revenue to invest in treatment. By the fifth year, revenue could surpass $100 million—a projection that takes into account the modest decline in alcohol consumption likely in the event of a phased 5¢ per drink tax increase.[156] Investing even half of this new revenue in treatment would provide an enormous boost in Baltimore and statewide.

Any attempt to raise alcohol excise tax rates must clear high political hurdles, given the influence of the alcohol industry in Maryland.6/[157] But even without raising excise tax rates, the state could dedicate the annual revenue to treatment[158] rather than placing it in the state’s general fund, where it amounts to less than three-tenths of one percent of total revenues ($9.3 billion in FY 2001).[159]

Tensions Between City and State
Hopes in Baltimore for the infusion of state aid on the scale requested by Mayor O’Malley have been tempered by the comparatively modest amount approved by state lawmakers for FY 2001. (The Baltimore Sun’s editorial report card on the General Assembly’s year 2000 session gave Governor Glendening and the legislature a grade of “D+” for their final treatment budget.)[160] Although Baltimore is slated to receive nearly 50 percent more treatment funding from the state in FY 2001 than in FY 2000, city leaders and treatment proponents stress that the FY 2001 budget must be seen as only the first step toward larger, sustained increases in the state’s support for treatment in the years ahead—a harbinger of more to come, not a high-water mark. They are also concerned that the shift in the state’s Medicaid program from fee-for-service to managed care (which began three years ago) reduces revenue for treatment, and creates new obstacles for Medicaid clients who wish to obtain treatment.[161]

Critics argue that managed care—which saves money by reducing services and discouraging use of specialists—is a poor fit to the health needs of people with addictions; to save money on the care of these patients, a health plan must make treatment more accessible.[162]

Maryland’s Drug Treatment Task Force has expressed concern about the impact of Medicaid managed care (known in Maryland as HealthChoice) on access to treatment, noting frequent complaints about the refusal of managed care organizations (MCOs) to authorize treatment and to reimburse treatment programs for appropriate services already provided. Since 80 percent of the 488,000 Maryland residents enrolled in Medicaid have joined HealthChoice (including 80 percent of Medicaid-enrolled Baltimore residents), the MCOs’ questionable performance in providing treatment to those in need has become an important issue.

The Maryland Department of Health and Mental Hygiene (DHMH) is analyzing data provided by HealthChoice MCOs, and preliminary findings suggest that concerns about managed care’s impact on access to treatment are warranted.[163] Among Medicaid-insured individuals eligible for HealthChoice, the total number of treatment services received fell by 66 percent between FY 1996 and FY 1999.[164] Anecdotal evidence that it is particularly difficult to secure MCO authorization for methadone maintenance—typically a long-term treatment—is supported by DHMH’s preliminary analysis, which shows a 72 percent drop in methadone services.[165] (The MCOs’ own figures show a less dramatic but still significant 29 percent decline in overall treatment services over the same period.)[166]

Treatment Also a High Priority in Maryland’s Other Counties
Baltimore is not alone in seeking greater state support; the state’s other counties consider treatment funding a priority as well. The Maryland Association of Counties (MACo) made additional state funding for treatment one of its top four initiatives for the 2000 General Assembly session.[140] Treatment officials in Maryland’s other jurisdictions know that Baltimore is contending with more severe problems than elsewhere in the state, and applaud the city’s treatment expansion. At the same time, Baltimore treatment officials know that the burdens on the city’s treatment system will be eased to the extent that the state’s other counties improve their own treatment capabilities.

On the Cutting Edge Nationwide
Baltimore’s commitment to treatment on request has placed the city at the forefront of drug policy innovation. In 1998, treatment was available for only one in three of an estimated 5 million Americans with severe drug problems (not including alcohol).[167] Alcohol and drug abuse cost all levels of government (federal, state and local) $125 billion in 1997;[168] only $7.3 billion of this amount was spent on treatment.[169] The neglect of publicly-supported treatment nationwide for the past 25 years has left programs swamped and unable to perform to potential.[170] Scarce resources have meant that many people seeking help must be turned away, discouraging them from thinking of treatment as a real option. This is the historical context in which Baltimore is now seeking to improve its own treatment system.

Public-sector treatment has been especially burdened in other big U.S. cities which, like Baltimore, were hit hard by crack cocaine in the late 1980s and high-potency heroin in the mid-1990s.7 San Francisco, expressly committed to providing “treatment on demand,” has significantly increased treatment funding in recent years and recorded a 10 percent increase in the number of patients in treatment between 1996 and 1999.[171]

Only in San Francisco has treatment gained public and political support comparable to that in Baltimore in recent years. However, San Francisco—like Baltimore—remains well short of its treatment goal. Each city provides treatment to less than a third of those considered to be in need.

Differences in the scale of the drug problems facing Baltimore and San Francisco, as well as considerable differences in social and economic levels, portend a more arduous road ahead for Baltimore. The size of the population in need of treatment is greater in Baltimore, even though Baltimore has about 115,000 fewer residents than San Francisco. By many measures a wealthier, less distressed city than Baltimore, San Francisco has greater resources: The city’s Department of Public Health has a treatment budget of $48 million compared to Baltimore Substance Abuse Systems’ (BSAS) $27 million treatment budget.

Detroit and Washington, D.C. also face severe drug problems, with social and economic difficulties similar to Baltimore’s. Under a 1993-1998 Target Cities grant from the federal Center for Substance Abuse Treatment (CSAT), Detroit prioritized coordinating its existing treatment services and strengthening linkages with other health and human service agencies through a case management system.[172] Detroit’s improved management of treatment increased the number of patients in treatment from 8,100 in 1995 to 11,900 in 1999.[173] Even so, Detroit’s public-sector treatment system serves only 10 percent of the 116,000 Detroit residents considered to be in need of treatment.[174]

By comparison to Baltimore, Detroit and San Francisco, the treatment system in Washington, D.C. has languished. During the mid-1990s, budget cuts and contracting problems reduced the District’s publicly-funded treatment capacity by half.[175] Fresh leadership—including a new mayor, an invigorated D.C. Council, a new health department director, and a new Addiction Prevention and Recovery Administration (APRA) administrator—has given the city’s treatment efforts direction and energy lacking in recent years. Since 1998, funding increases have allowed APRA to recover some of the capacity lost during the mid-1990s, but the number of slots in key modalities such as methadone maintenance and residential treatment remain below 1994 levels.[176]

Public Opinion and Treatment: An Important Caveat for Baltimore
Support for treatment is strong in Baltimore compared to other places. According to a 1999 household survey conducted by the Center for Substance Abuse Research (CESAR) at the University of Maryland, one in five Baltimore residents believe that treatment “should receive the most money and effort in the fight against drugs.”[177] This compares to only one in twenty-five adults nationwide who think that “providing treatment programs for drug addicts” would “do the most to reduce the drug problem,”[178] according to a 1995 Gallup poll. Nonetheless, Baltimore residents gave drug interdiction twice as much support as treatment; two in five believe that reducing the flow of drugs into the country should be the top priority.[179] These findings suggest that sustained public support for greater investment in treatment cannot be taken for granted.

5 The revenue generated by the state’s excise tax on cigarettes also accrues to the state’s general fund. In 1999, Maryland raised the cigarette tax to 66¢ per pack of 20, twelfth highest in the country and higher than any other jurisdiction in the region. A fall 1997 statewide survey for Maryland Citizen Action found strong support for increasing alcohol taxes as well. Sixty-four percent of likely voters favored increasing alcohol taxes as a way to pay for a comprehensive array of programs for child well-being. By comparison, 68 percent of likely voters favored increasing the state’s tax on cigarettes, a preference eventually written into law with passage of an 83 percent cigarette tax increase in 1999. The state has projected a 55 percent increase in cigarette tax revenue for FY 1999 and FY 2000, despite a 15 percent decline in the number of packs sold.

6 The alcohol industry is as firmly a bipartisan political donor in Maryland as it is in the rest of the country. Seven of the eight candidates elected from Maryland to the U.S. House of Representatives in 1998 accepted alcohol industry political action committee (PAC) money during the 1997-1998 campaign cycle, including all four Democrats and three of four Republicans.

7 The cities compared to Baltimore in this section—San Francisco, California; Detroit, Michigan; and Washington, D.C.—all have serious drug problems of their own. They are similar to Baltimore in terms of size and (except for San Francisco) socioeconomic and demographic characteristics.

[107]. J. Shenk. “An old city seeks a new model.” The Nation, 269(8):22-28, September 20, 1999.

[108]. R. Mathews. “Schmoke to add drug programs.” The Baltimore Sun, January 14, 1997.

[134]. U.S. Census Bureau. 1994 County and City Data Book, 12^th Edition. 1994. Among the 50 states, only four (Maryland, Missouri, Nevada and Virginia) have cities that are independent of any county. After Baltimore, Washington, D.C. is the next largest independent city (population 523,124), although D.C. is anomalous in also being separate from any state. The only other independent cities with 200,000 or more residents are Virginia Beach, Virginia (population 432,380); St. Louis, Missouri (population 339,316); and Norfolk, Virginia (population 215,215).

[135]. C. O’Cleireacain. The Orphaned Capital: Adopting the Right Revenues for the District of Columbia. Washington, D.C.: Brookings Institution Press, 1997. In discussing the federal government’s role as the “state” to the District of Columbia, O’Cleireacain makes several broad points about the relationship of states to their local jurisdictions that are particularly important with respect to Baltimore’s reliance on the Maryland state government.

“Through municipal home rule legislation, states delegate varying degrees of responsibilities to local governments. Most American cities share those responsibilities with overlapping or contiguous counties...

No two American cities are alike in their revenue or spending responsibilities, but they share the common characteristic that when trouble hits, there is a state government to which they can turn and that has the authority to take charge... [E]ven with home rule, ultimate responsibility for local services in the American federal structure rests with the state government...

State aid represents a form of revenue sharing within the state, which is a larger and more diverse economy than any locality.”

[136]. D. Andrulis & N. Goodman. The Social and Health Landscape of Urban and Suburban America. Chicago, IL: American Hospital Association Press, 1999. Of the 76 local health departments serving the nation’s 100 largest cities, only 15 are city government departments; the remaining 80 percent of departments are either part of county governments (43) or run jointly by city and county governments (18).

[137]. U.S. Census Bureau. Except for Baltimore and Washington, D.C., each of the other 24 U.S. cities with at least 500,000 residents in 1998 was part of one or more counties. Comparative fiscal data for FY 1993-1994 prepared by the Census Bureau are available for 20 of these 24 big cities, as well as for Cleveland, which in 1998 had fallen to 495,817 residents but in 1990 had a population of 505,616 and was therefore included in the Census Bureau’s fiscal analysis of big cities. In Baltimore, state funding amounted to 44.9 percent of the city’s general revenue, a higher proportion than in any other city. Among the 21 other cities analyzed, state funding amounted to a mean average of 18.9 percent, with a median of 12.5 percent.

[138]. U.S. Census Bureau. In Baltimore, state “health and hospitals” funding amounted to 6.70 percent of the city’s general revenue. Among the 21 other cities analyzed, state “health and hospitals” funding amounted to a mean average of 1.22 percent, with a median of 0.37 percent. Only in San Francisco (8.36 percent) and Philadelphia (7.15 percent) did state “health and hospitals” funding amount to a greater proportion of city revenue than in Baltimore. The Census Bureau’s “health” function category is defined as “provision of services for the conservation and improvement of public health,” and the examples of specific functions covered explicitly include “alcohol and drug abuse prevention and rehabilitation.”

[139]. Mayor Martin J. O’Malley. “State of the City.” Address by the Mayor to the Baltimore City Council, January 24, 2000. According to O’Malley, Baltimore’s “revenues are flat, projected to grow only one percent next year... But to merely keep services at the same level, we will have to increase spending by six percent. Without change, without adjustment, without better coordination between departments, this government will face a $153 million deficit in three years.”

[140]. Maryland Association of Counties (MACo). “Initiatives for 2000 Session.” Received by Drug Strategies in December 1999 from MACo Legislative Director Michael Sanderson.

[141]. Baltimore Substance Abuse Systems, Inc. (BSAS). 2000.

[142]. State of Maryland Task Force to Study Increasing the Availability of Substance Abuse Programs. Interim Report by the Committee on Availability and the Committee on Effectiveness. December 1999. The Task Force was established by the General Assembly in 1998 through passage of legislation HB149 within Chapter 778 of the Laws of Maryland.

[143]. State of Maryland Task Force to Study Increasing the Availability of Substance Abuse Programs. Interim Report by the Committee on Availability and the Committee on Effectiveness. December 1999. Both the Committee on Availability and the Committee on Effectiveness “believe that presently there is insufficient capacity to meet the need of those who both need and are amenable to receiving treatment. Committee members believe that the primary cause of this lack of treatment capacity is that there is insufficient funding for treatment by the State.”

As of November 2000, the Task Force was preparing to recommend “investing at least an additional $300 million into the drug treatment system over the next ten years” (on the web at http://maryland-adaa.org/html/taskforce)

[144] State of Maryland Task Force to Study Increasing the Availability of Substance Abuse Programs. Interim Report by the Committee on Availability and the Committee on Effectiveness. December 1999. According to the Task Force’s interim report, “Substance abuse treatment should be available on request (24 hours a day—7 days a week) for the growing numbers of uninsured and underinsured (those with either limited or no access to public and private insurance—i.e. the indigent and working poor) in the State.”

[145]. T. Waldron. “Spending set from tobacco suit.” The Baltimore Sun, April 9, 2000.

[146]. K. Kennedy Townsend & D. Morhaim. “State must take charge on drug addiction.” The Baltimore Sun, February 1, 2000.

[147]. “SA treatment has minor presence in debate over settlement funds.” Alcoholism & Drug Abuse Weekly, 12(6), April 17, 2000. According to Lee Dixon, Director of the Health Policy Tracking Service at the National Conference of State Legislatures (NCSL), “few states have appropriated [tobacco settlement] money for alcohol and drug addiction.”

The Center for Social Gerontology (CSG) in Ann Arbor, Michigan, maintains a website with information on how states have decided to use their portions of the national tobacco settlement funds. As of June 2000, only five states in addition to Maryland had decided to devote a portion of their tobacco settlement funds to alcohol and drug treatment: Iowa, Kentucky, Maine, Mississippi and Utah. Certain states (California, New York, and Texas) have passed the tobacco revenue along to local districts (whether counties or health districts) empowered to decide on its uses.

[148]. State of Maryland Comptroller of the Treasury, Bureau of Revenue Estimates. June 2000.

[149]. Maryland Department of Health and Mental Hygiene, Alcohol and Drug Abuse Administration (ADAA), Grants and Contracts Management Division.

[150]. Editorial. “A time of plenty in Maryland State House.” The Baltimore Sun, April 9, 2000. In the Sun’s view, “the immensity of [Maryland’s budget] surplus gives the governor and lawmakers a rare opportunity to address major unmet needs in social services, transportation, education, drug treatment and the criminal justice system.”

[151]. State of Maryland Comptroller of the Treasury. Consolidated Revenue Report: Fiscal Year 1999. November 2000.

[152]. U.S. Census Bureau. In FY 1999, the national average alcohol excise tax revenue per capita was $14.33. The only six states with lower alcohol excise tax revenues than Maryland ($4.62 per resident) were Idaho ($4.60), Missouri ($4.53), West Virginia ($4.47), Iowa ($4.15), Oregon ($3.64) and Wyoming ($2.64).

[153]. National Institute on Drug Abuse (NIDA) and National Institute on Alcohol Abuse and Alcoholism (NIAAA). The Economic Costs of Drug and Alcohol Abuse in the United States, 1992. September 1998. NIDA and NIAAA estimate that alcohol and drug abuse cost the nation $276 billion in 1995; adjusting for population growth and inflation increases this estimate to $328 billion in 1999.

Rather than estimate Maryland’s share of the $328 billion national alcohol drug-related economic burden in strict proportion to its share of the national population (1.90 percent in 1999, which yields a $6.244 billion cost estimate for Maryland), a multiplier can be used that provides a better measure of the extent of alcohol and drug abuse in Maryland compared to other states. For example, based on SAMHSA’s Uniform Facility Data Set (UFDS), over the five-year period 1993-1997 Maryland accounted for 2.58 percent of U.S. treatment clients (low 2.54 percent, high 2.62 percent). Given research showing that the majority of those in need of treatment are not actually in treatment at any given time, the proportion of the national population in treatment accounted for by residents of the different states is an admittedly imperfect proxy, but it probably yields a truer cost estimate than would multiplying strictly by a state’s share of the national population. Multiplying the 1999 national cost estimate ($328.65 billion) by Maryland’s proportion of those in treatment (2.58 percent) yields a $8.479 billion cost estimate for Maryland, which can be rounded to $8.5 billion. This figure is offered not as a precise calculation but as a plausible estimate of the magnitude of the economic impact of alcohol and drug abuse in Maryland.

According to NIDA and NIAAA, 60.3 percent of national costs of alcohol and drug abuse are attributable to alcohol. Applying this percentage to the total 1999 Maryland cost estimate of $8.479 billion yields $5.113 billion in costs due to alcohol, which can be rounded to $5 billion.

[154]. E. Harwood et al. Youth Access to Alcohol Survey. Minneapolis, MN: Alcohol Epidemiology Program, University of Minnesota, September 1998.

[155]. Raising alcohol excise tax rates by a penny or two per drink would have the added benefit of bringing Maryland’s taxes more into line with the average rates in the jurisdictions that border Maryland. Currently, Maryland’s beer excise tax rate is only 56 percent of median rate (16¢ per gallon) in the five bordering jurisdictions (Delaware, Pennsylvania, Virginia, Washington, D.C., and West Virginia); Maryland’s wine excise tax rate is only 41 percent of the median rate (98.5¢ per gallon) in the five bordering jurisdictions; and Maryland’s liquor excise tax rate is only 57 percent of the median rate ($2.62 per gallon) in the five bordering jurisdictions. Moreover, a 2¢ increase would put per-drink alcohol tax rates at about the same level as the state’s new cigarette tax rate of 3.3¢ per cigarette.

Maryland’s current alcohol excise tax rates amount to 0.84¢ per 12 ounces of beer, 1.56¢ per 5 ounces of wine, and 1.76¢ per 1.5 ounces of liquor. Based on the method described by the Center for Science in the Public Interest’s 1996 report, State Alcohol Taxes and Health: A Citizen’s Action Guide, Drug Strategies has calculated the impact of on alcohol sales and revenues if Maryland were to raise each of its excise tax rates by 1¢ per drink, by 2.5¢ per drink, or by 5¢ per drink (phased in over five years—see Note 152.) The CSPI formula for estimating the impact of tax increases on sales volume and tax revenues assumes a price elasticity of - 0.35, meaning that for every 10 percent increase in price, consumption will decline by 3.5 percent. CSPI also assumes a 7.5 percent mark-up on the tax increase by merchants.

As provided by the Maryland Comptroller of the Treasury’s Alcohol and Tobacco Tax Unit, FY 1999 sales volume and tax revenue figures served as the baseline for calculations measuring the impact of tax increases.

beer:     sales volume = 94.472 million gallons; excise tax revenue = $8.845 million
wine:    sales volume = 9.682 million gallons; excise tax revenue = $3.906 million
liquor:   sales volume = 7.441 million gallons; excise tax revenue = $11.157 million

Initial per-gallon prices used in the calculations were based on figures from Jobson’s 1995 Beer Handbook updated for inflation.

beer:     $9.54 per gallon
wine:    $26.12 per gallon
liquor:   $96.60 per gallon

CSPI’s general formula and the calculation for a 1¢ per drink increase in Maryland’s beer excise tax rate follow.

New Volume    = Current Volume (1 + (Price Elasticity)(Price Increase)/(Current Price))
New Volume    = 97.482 million gallons (1 + (- 0.35)($0.1075 / $9.54))
New Revenue   = 97.082 million gallons (19¢) = $18.446 million

Calculating a 1¢ per drink excise tax increase for beer, wine and liquor yields a 0.39 percent decrease in overall alcohol sales volume in the first year (- 445,000 gallons) and a 76.31 percent increase in tax revenue (+ $18.243 million). Rather than the $23.908 million in alcohol excise tax revenue actually collected in FY 1999 or the $24.2 million projected by the Maryland Board of Revenue Estimates for FY 2001 on the basis of current tax rates, Maryland would collect $42.151 million.

Calculating a 2.5¢ per drink excise tax increase for beer, wine and liquor yields a 1.02 percent decrease in overall alcohol sales volume in the first year (- 1,174,000 gallons) and a 199.51 percent increase in tax revenue (+ $47.702 million). Rather than the $23.908 million in alcohol excise tax revenue actually collected in FY 1999 or the 24.2 million projected for FY 2001, Maryland would collect $71.610 million—triple the FY 1999 amount.

[156]. See Note 151 for a description of the formula used to calculate the impact of alcohol excise tax increases on sales volume and tax revenue in Maryland. Calculating a 5¢ per drink excise tax increase for beer, wine and liquor, phased in over a five-year period, yields a 1.93 percent decrease in overall alcohol sales volume by the fifth year (- 2,208,000 gallons) and a 391.35 percent increase in tax revenue (+ $93.563 million). If Maryland were to raise its alcohol excise tax rates by 1¢ per drink each year over five years, in the fifth year the state would collect $117.471 million in alcohol excise tax revenue, rather than the $23.908 million actually collected in FY 1999 or the $24.2 million projected for FY 2001.

[157]. The Center for Responsive Politics (on the web at www.opensecrets.org/pacs). Several large alcohol PACs accounted for the bulk of the alcohol campaign contributions in Maryland and nationwide. The National Beer Wholesalers Association, the Wine & Spirits Wholesalers of America, and Joseph E. Seagram & Sons made 84 percent of the $22,250 in alcohol industry political action committee (PAC) donations to the Maryland delegation to the U.S. House of Representatives. The same three groups made 68 percent of the $1.9 million in alcohol PAC donations to successful candidates for the House nationwide.

The alcohol industry’s presence in Maryland’s electoral politics—at least among candidates for federal office—is defined more clearly by comparison to political campaign contributions by the tobacco industry. During the 1997-1998 cycle, only three of the eight members (37.5 percent) of Maryland’s delegation to the House took tobacco PAC money, which totaled $9,700—less than half the $22,250 bestowed by alcohol PACs.

[158]. Fiscal Planning Services, Inc. Dedicated State Tax Revenues: A Fifty-State Report. Bethesda, MD: Fiscal Planning Services, June 2000. The general objection to earmarking is that it prevents comprehensive budgeting by removing revenues and expenditures from the review that occurs in the appropriations process. The question is whether the degree of budgeting inflexibility imposed by any particular earmark is “sufficiently balanced by the guaranteed level of funding it provides programs.” Nationwide and in Maryland, the trend since the 1950s has been away from earmarks: in 1954, the average among the 50 states was 51 percent of tax collections earmarked; by 1997, the average had fallen to 22 percent. Maryland itself was slightly below the national average in 1997, with 18.2 percent of the state’s total tax collections earmarked. Even if Maryland raised its alcohol excise taxes enough to increase annual revenues four-fold (to about $100 million) and then dedicated the entire amount to treatment, the state’s overall budgeting flexibility would scarcely be affected, with the proportion earmarked increasing by barely a percentage point. In terms of balancing the state’s interests, this very slight constraint on budgeting flexibility would be more than compensated for by the funding stability lent to treatment programs in Maryland, especially given the cost savings that effective treatment generates for society and for government.

The Comptroller of the Treasury’s Alcohol and Tobacco Tax Division, which collects alcohol and tobacco excise taxes, is funded through the state government’s annual appropriations process, not directly by the revenue that the Alcohol and Tobacco Tax Division collects. Dedicating some or all of the state’s alcohol tax revenue to treatment would therefore not compromise the operations of the Division, so this potential logistical obstacle to dedicating alcohol excise tax revenues is not an issue in Maryland.

[159] Maryland Board of Revenue Estimates. Estimated Maryland Revenue: Fiscal Years Ending June 30, 2000 and June 30, 2001. December 1999. The Board of Revenue Estimates projects $9.386 billion in General Fund revenue for FY 2001.

[160]. Editorial. “Disappointing report card for General Assembly.” The Baltimore Sun, April 16, 2000.

[161]. U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration (SAMHSA), National Estimates of Expenditures for Mental Health and Substance Abuse Treatment, 1997. July 2000. Concerns about managed care’s impact on access to treatment among Medicaid recipients are underscored by the downward trend nationwide in treatment spending in the private sector, where the managed behavioral care model is already in place. Between 1987 and 1997, private insurance spending on alcohol and drug abuse treatment declined by an average of 0.6 percent per year, even as private insurance spending on all health care rose by an average of 5.4 percent per year over the same period.

[162]. The Abell Foundation. “Crisis of Access II: Fewer Addiction Services Delivered through Managed Care: Medicaid Managed Care Weakens Public Addiction Treatment System.” The Abell Report, 13(5), November/December 2000.

[163]. K. Shatzkin. “Drug abuse help ebbs: State data show fewer people treated under managed care.” The Baltimore Sun, October 16, 2000.

[164]. Maryland Department of Health and Mental Hygiene, Office of Planning, Development and Finance. HealthChoice Substance Abuse Analysis. September 27, 2000. “Total units of substance abuse services” declined from 157,893 in FY 1996 to 54,423 in FY 1999, a 65.5 percent drop. Over the same period, the number of Maryland Medicaid enrollees diagnosed with substance abuse problems fell by 11.3 percent and the number of enrollees who received any treatment service declined by 25.6 percent (falling from 8,001 in FY 1996 to 5,949 in FY 1999).

[165]. Maryland Department of Health and Mental Hygiene, Office of Planning, Development and Finance. HealthChoice Substance Abuse Analysis. September 27, 2000. Between FY 1996 and FY 1999, Maryland Medicaid enrollees’ total number of weeks in methadone maintenance treatment fell by 72.4 percent, from 71,044 weeks to 19,579 weeks.

[166]. Maryland Department of Health and Mental Hygiene, Office of Planning, Development and Finance. HealthChoice Substance Abuse Analysis. September 27, 2000. Measured in “total units of substance abuse services,” the HealthChoice MCO’s own figures show a 28.7 percent decline (157,893 to 112,628) between FY 1996 and FY 1999. The 112,628 MCO figure used here includes an extrapolation of the data provided by one of the participating MCOs. For FY 1999, Americaid had provided only one month’s worth of treatment services data. Multiplying the one-month figure (768 service units) by 12 yields an estimated 9,228 units of service for the fiscal year.

[167]. J. Epstein & J. Gfroerer. “Changes Affecting NHSDA Estimates of Treatment Need for 1994-1996.” Analysis of Substance Abuse and Treatment Need Issues. Substance Abuse and Mental Health Services Administration (SAMHSA), May 1998.

[168]. National Institute on Drug Abuse (NIDA) and National Institute on Alcohol Abuse and Alcoholism (NIAAA). The Economic Costs of Drug and Alcohol Abuse in the United States, 1992. September 1998. NIDA and NIAAA estimate that alcohol and drug abuse cost the nation $276.375 billion in 1995; adjusting for population growth and inflation increases this estimate to $300.627 billion in 1999, including $181.539 billion in alcohol-related costs and $119.088 billion in drug-related costs. NIDA and NIAAA estimated that 38.65 percent of 1995 alcohol-related costs and 46.16 percent of 1995 drug-related costs were borne by governments (federal, state and local). Applying these percentages to the 1997 costs estimates yields $70.165 billion in alcohol-related costs and $54.971 in drug-related costs borne by government, or a total of $125.136 billion.

[169]. U.S. Department of Health and Human Services. Substance Abuse and Mental Health Services Administration (SAMHSA). National Estimates of Expenditures for Mental Health and Substance Abuse Treatment, 1997. July 2000. In 1997, the federal government spent $4.125 billion and state and local governments spent $3.220 billion on alcohol and drug treatment, for total government expenditures on treatment of $7.345 billion (including Medicare and Medicaid). This figure represents just 5.87 percent of the estimated total economic burden ($125.136 billion) imposed on government by alcohol and drug abuse, as described in the preceding note. In other words, only 6¢ of every alcohol and drug-related dollar spent by government is devoted to treatment.

[170]. State of Maryland Task Force to Study Increasing the Availability of Substance Abuse Programs. Interim Report by the Committee on Availability and the Committee on Effectiveness. December 1999. According to the Task Force, the following comment by one county health department director reflects a sentiment held by a number of substance abuse professionals in Maryland: “I would like to note that a tremendous frustration and hindrance in providing substance abuse services in the county is the inability to pay counselors and offer applicants salaries in line with the level of education and experience required for this position. I believe that by paying higher salaries to keep and obtain qualified employees, our agency could more efficiently and effectively provide services.”

Based on an 1998 national survey by the National Association of Addiction Treatment Providers, the average salary for a certified counselor with a BA or BS degree was $26,517, and the minimum was $20,100. Maryland treatment providers indicate that most of their personnel are receiving lower end salaries.

[171]. San Francisco Department of Public Health, Community Substance Abuses Services (CSAS). In 1999, CSAS recorded an unduplicated count of 14,040 individuals in treatment, a 9.7 percent increase over the 12,803 individuals in treatment in 1996.

[172]. P. Zold-Kilbourn et al. “Improving Substance Abuse Treatment for Indigent Clients in Detroit.” Journal of Psychoactive Drugs, 31(3):233-239, July-September 1999.

[173]. Detroit Department of Health, Bureau of Substance Abuse.

[174] Detroit Department of Health, Bureau of Substance Abuse. City of Detroit Admissions to Substance Abuse Treatment: The Treatment Episodes Data Set 1998-1999. January 2000.

Michigan Department of Community Health. Composite Prevalence Estimates of the Need for Substance Abuse Treatment Services in Michigan. May 1999.

[175]. District of Columbia Department of Health, Addiction Prevention and Recovery Administration (APRA). APRA’s total number of inpatient, residential, outpatient, methadone maintenance and aftercare treatment slots fell from 4,467 in FY 1994 to 2,219 in FY 1998, a 50.3 percent decline.

[176]. District of Columbia Department of Health, Addiction Prevention and Recovery Administration (APRA). Funding increases allowed APRA to add 620 methadone maintenance slots and 198 residential slots between FY 1998 and FY 2000. Even so, APRA’s capacity in these critical modalities remained 9 percent and 17 percent, respectively, below FY 1994 levels.

[177]. G. Yacoubian, Jr. & E. Wish. What Maryland Residents Think About Drugs and Crime: Summer/Fall 1999 Maryland Household Opinion Poll. College Park, MD: CESAR, May 2000.

[178] Cable News Network/USA Today poll of adult Americans conducted by the Gallup Organization. September 1995.

[179]. G. Yacoubian, Jr. & E. Wish. What Maryland Residents Think About Drugs and Crime: Summer/Fall 1999 Maryland Household Opinion Poll. College Park, MD: CESAR, May 2000.