RUNNING HEAD: HOUSE BILL 121

House Bill 121

Ellenor Chance B.S.N., R.N.
Helene Fuld School of Nursing
Nursing 505: Dr. Nayna Philipsen
April 28, 2011

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Introduction
The Center for Disease Control and Prevention [CDC] (2009) reports that alcohol
consumption causes 1278 deaths in Maryland each year. Hubbard et al (2011) states that only
one quarter or Marylanders who have alcohol and drug addictions access treatment. Alcohol
abuse costs the state $3.5 billion each year, while community based resources are facing financial
hardships due to underfunding. During this past legislative session, Delegate Jim Hubbard and
Colleagues introduced HB 121, entitled The Lorraine Sheehan Health and Community Services
Act of 2011, that aims to offset these events by increasing Marylands alcohol excise taxes. This
increase will provide the state with additional revenue that will be divided among community
based programs, Medicaid funding, education, and training of health care personnel (Hubbard et
al., 2011).
This potential change to policy like any shift in legislation, demands a review. This
review will include a discussion of the bills legislative implications, including the policy
problem, background information, identification of stake holders, and rationale for being on the
agenda. This review will also identify the policy goals, objectives, and available options to meet
stated goals. Consideration will be given to the financial implications and criteria needed to meet
stated objectives and lastly an evaluation of the policy with solutions and recommendations will
be presented.
Policy Problem
Johnson, Collins, & Singham (2008) reports that the national recession has had a
devastating effect on the states finances and has increased the number of individuals requiring
various state services, this along with the requirement that states have balanced budgets, has

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increased pressure on the states to deal with the unprecedented revenue shortfalls. During these
times of economic adversity, states look towards budget cuts and tax increases for new revenue.
This is why HB 121, The Lorraine Sheehan Health and Community Services Act of 2011, was
introduced into the Maryland General Assembly during the 2011 legislative session by delegate
Jim Hubbard and colleagues. This piece of policy will increase Maryland alcohol taxes by a dime
per drink and raise $214 million dollars annually in new revenue for the state. Monies generated
from the states alcohol tax increase will be distributed to special programs to fund addiction
treatment, and prevention programs, disability programs, mental health programs, Maryland
Medicaid fund, education, and health care personnel training (Hubbard et al., 2011).
Background
The last time that Maryland had an increase to its alcohol tax was 1979; therefore profit
from taxes has decreased due to inflation and the changing value of the U. S. dollar (Jernigan &
Hughes 2009). Currently, Marylands alcohol taxes are among the lowest in the country at $1.50
per gallon for distilled spirits, $.40 per gall for wine, and $ 0.09 per gallon for beer when
compared to the national average of $3.75 per gallon for distilled spirits, and $ .67 per gallon for
wine, and $ 0.19 per gallon for beer (Franchott, 2010). However, as of July 1, 2011 after the
passing of the Lorraine Sheehan Health and Community Services Act of 2011, alcohol taxes will
be as follows: distilled spirits $2.65, wine $0.59, and beer $0.66 per gallon. Sinelli (2011) states
that increases in taxes will occur regardless of the cost of each drink as the tax is paid at the
wholesale level, by the gallon, and is embedded in the cost of each unit sold. Hence both
buyers and consumers will feel the effects of this increase.

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This raise in tax is also precipitated by, The Center for Disease Control and Preventions
(CDC 2010) report that excessive alcohol use is the third leading lifestyle-related cause of death
for people living in the United States. In Maryland, 1,278 deaths and 7,470 violent crimes a year
are alcohol related, yet alcohol use in the state among teens and young adults is steadily
increasing (CDC 2009). While each year Maryland spends $3.5 billion dollars on alcohol related
deaths and injuries, research has shown that alcohol excise tax increases have the ability to both
increase state revenue and save lives through decreased alcohol consumption across all age
groups (Hubbard et al., 2011; Voas & Fell, 2010; Stehr, 2007; Anthenelli, 2010).
Funds generated from the passed tax increase will be distributed to special programs that
promote health among those with disabilities and low socioeconomic status. These programs
include establishing the Developmental Disability Support Fund, in which funds provided will
support those individuals with disabilities. The bill will also provide funds for establishing the
Addiction Treatment, Prevention, and Recovery Support Fund, which supports those with drug
and alcohol addiction. The Mental Health Care Fund will receive a large portion of new revenue
to develop improved treatment and prevention programs for mental illness. In addition to these
mentioned, monies will also be distributed to the Maryland Medicaid Trust fund, the states
Tobacco Use Prevention and Cessation, and the Health Care Personnel Training Fund as a
program to provide grants for training and educating health care personnel (Sinelli, 2011).
Stakeholders
For each piece of policy entered into legislation there are stakeholders who support and
oppose the policy because of their own special interest. These groups will pay lobbyists to gather
support for or against the piece of legislation in an attempt to have law makers vote favorably.

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Stake holders who support HB 121 include the Maryland Addictions Directors Council,
Maryland Developmental Disabilities Council, Medicaid Matters, and the Maryland Mental
Health Association. These agencies will receive monetary gains when this bill is enacted on July
1, 2011 that will enable them to expand services and fund programs for those individuals in the
state of Maryland who are disadvantaged. Other Lobbyists for this group include the Maryland
Citizens Health Initiative, a nonprofit group that aims to provide quality, affordable health care
for all Marylanders. In contrast, stake holders who oppose the policy include large alcohol
distribution corporations and small businesses who sell alcoholic beverages. They argue that
increasing alcohol taxes would cause owners to make budget cuts in other areas such as jobs.
Lobbyists for these groups include the states alcohol distribution lobby, which in the past have
been successful in halting alcohol excise tax increases in Maryland (Maryland Health Initiative,
2011; Jernigan & Hughes 2009).
The Agenda
Marylands current economic state, coupled with the increasing unemployment rates of
Marylanders has caused legislators to take immediate action by passing public policy to offset
these eventualities and bridge the economic gap. These reasons are why law makers made the
Lorraine Sheehan Health and Community Services Act a priority during the 2011 legislative
session. This bill will generate $214 million in new revenue for the state of Maryland. This
process of excise tax increase is one of the ways that government officials provide states with
additional resources during time of economic hardship. Thus the passing of this legislation was a
priority for lawmakers (Hubbard et al., 2011; Jernigan & Hughes 2009).
Policy Goals/ Objectives

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House Bill 121s goal is to increase alcohol taxes by a dime per drink in Maryland, which
will increase the states revenue and provide money for funding programs that are aimed at
citizen empowerment and job creation. Currently, all monies obtained from alcohol excise taxes
are distributed to the states general fund and administrative cost accounts. As of July 1, 2011,
all monies generated from this increase will be divided as follows: 2.1% to the health care
training personnel training fund, 6.2% to The State Tobacco Use Prevention And Cessation Fund,
15% to The Development Disability Support Fund, 15% to The Addiction, Treatment,
Prevention, and Recovery Support Fund, 15% to the Mental Health Care Fund, 33.95% to the
Maryland Medicaid Trust Fund, and remaining monies will be distributed to the states general
fund (Hubbard et al., 2011a; Sinelli, 2011).
This bill also aims to decrease dangerous alcohol consumption and the financial burden
that is caused within the state by this phenomenon. Research has shown that increasing alcohol
taxes would decrease alcohol related mortality, reduce traffic accident related deaths, decrease
incidence of STDs, hinder alcohol related violence, and discourage underage drinking. There
are plenty of peer reviewed articles on the subject of alcohol excise tax increase benefits, but not
all studies concord that increasing alcohol taxes will decrease alcohol consumption. Most
researchers agree that price and accessibility are parallel to alcohol consumption and that the
consumers intake of alcohol is not totally independent of price (Kypri, Langley, &Connor, 2010;
Nelson, 2008; Wagenaar, Tobler & Komro, 2010).
Policy Options/ Financial Considerations/ Criteria to meet objectives
When implementing this type of policy, it is important to allow time for system change.
Parts of House Bill 121 passed through the legislative phase in April 2011; however, new laws

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will not be implemented until July 1, 2011. Thus, alcohol distributers have approximately three
months to take the necessary actions to implement new tax rates into their pricing model. These
actions include updating purchasing software and cash registers. Some business owners may
have to purchase all new equipment. These owners are not happy with this process because they
will end up spending money updating current technologies to become compliant with new laws.
This is in addition to new tax rates that will be paid to purchase alcoholic beverages. Hence,
they are feeling the effects of this policy two fold (Maryland Health Initiative, 2011).
Evaluations/Solution
Although this bill is intricate, the basic principles surrounding the policy are simple. It
taxes a substance that is proven to cause harm, in attempt to bring new revenues to the state,
during a time of economic burden. To be compliant with new laws, distributors of alcoholic
beverages have to update their technology and pricing models with in the given time frame. The
time frame and expenses of installing new equipment is a problem for many of the distributors.
A solution to this problem could be to give companies more time to become compliant with new
laws, or provide government assistance to cover some of the cost of installing new equipment for
those small business owners who cannot afford to become compliant. These businesses should
have to show proof that they are economically unstable thus showing a need for government
assistance.
In my opinion, we have catered to this industry for too long. It is time to be fair with
alcohol taxes, by taxing a substance that is proven to be harmful, if used in excess and that
burdens the state both financially and socially. This bill not only has financial benefits but more
importantly it promotes the general welfare of the citizens of Maryland. Koski, et al., (2007)

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conducted a study entitled, Alcohol Tax Cuts and Increase in Alcohol Positive Sudden Death,
which concluded that higher alcohol excise taxes were associated with decreased alcohol
consumption and alcohol related deaths. Therefore, every day that we wait to enact these laws,
the state of Maryland loses money, and more importantly lives, to the detrimental effects of
alcohol.

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References
Anthenelli, R. M. (2010). Focus on morbid mental health disorders. Alcohol Research
and Health, 33 (1/2), 109-117. Retrieved April 7, 2011 from:
http://search.ebscohost.com/login.aspx?direct=true&db=hxh&AN=54358209&si
te=ehost-live
Center for Disease Control and Prevention. (2009). Maryland Alcohol Consumption.

Behavioral Risk Surveillance System. Retrieved April 7, 2011 from:

http://apps.nccd.cdc.gov/brfss/display.asp?cat=AC&yr=2009&qkey=4411&state =MD
Center for Disease Control and Prevention. (2010). Alcohol and Public Health.
Retrieved April 7, 2011 from: www.cdc.gov/alcohol.
Franchot, P. (2010). Annual alcohol & tobacco tax annual report. Retrieved April 16, 2011 from:
http://www.marylandtaxes.com/finances/revenue/alcoholtobacco/annual/AnnualReportF
Y2010.pdf
Hubbard, J. W., Anderson, C., aora, S., Barnes, B., Barne, P. K., Bobo, E., Braveboy, A.
N. Zucler, C. J. (2011a). Lorraine Sheehan health and community services act
of 2011. Retrieved from: http://mlis.state.md.us/2011rs/bills/hb/hb0121f.pdf
Jernigan, D. H., & Waters, H. (2009). The potential benefits of alcohol excise tax
increases in Maryland. Johns Hopkins Bloomberg School of Public Health.
Retrieved April 10, 2011 from:
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http://www.jhsph.edu/bin/q/v/Abell%20tax
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Johnson, N., Collins, C., Singham, A. (2008). State tax changes in response to the recession.
Budget and Policy Priorities. Retreived April 15, 2011 from:

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http://www.cbpp.org/files/3-8-10sfp.pdf
Koski, A., Siren, R., Vuori, E., & Poikolainen, K. (2007). Alcohol tax and increase in
alcohol positive sudden deaths- a time series intervention analysis. The Authors
Journal Compilation Society for the Study of Addiction, 102. 362-368.
Doi10.1111/j.1360-0443.2006.01715
Kypos, K., Langley, J. D., Connor, J. (2010). Alcohol in our lives: a once-in- a
generation opportunity for liquor law reform in New Zeland. Drug and Alcohol
Review, 29. 1-4. doi :10.111/j.1465-3362.2009.00139.x
Maryland Health Care Initiative. (2011) . General assembly passes tax hike in final hours.
Retrieved April 20, 2011 from: http://healthcareforall.com/
Nelson, J P. (2008). How similar are youth and adult alcohol behavior? Panel results
for excise taxes and outlet density. International Atlantic Economic Journal, 36,
89-104. Doi: 10.1007/s11293-007-9106-6
Sinelli, M. (2011). Department of Legislative Services Fiscal and Policy Note.
Retrieved April 7, 2011 from:
http://mlis.state.md.us/2011rs/fnotes/bil_0001/hb0121.pdf
Stehr, M. (2007). The effects of Sunday sales bans and excise taxes on drinking
and cross-border shopping for alcoholic beverages. National Tax Journal, 60, (1), 85103. Retrieved from:
Vaos, R. b., & Fell, J. C. (2010). Preventing alcohol related problems through policy
research. Alcohol Research and Health, 33, (1/2), 18-28. Retrieved April 25, 2011

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from: http://search.ebscohost.com/login.aspx?direct=true&AN-5437894&site=ehost.
Wagenaar, A. C., Tobler, A. L., & Komro, K. A. (2010). Effects of alcohol tax and price
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