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    Shoveling Up II: The Impact of Substance Abuse on Federal, State and Local Budgets

    Published: May 2009

    Substance use and addiction costs the U.S. billions of dollars each year. This report examines just how much our failure to prevent and treat addiction costs federal, state and local governments and taxpayers, and where those costs fall.

    Key Takeaways

    This three-year study found that substance use and addiction cost federal, state and local governments at least $467.7 billion in 2005. Of every dollar that federal and state governments spent on substance use and addiction in 2005, 95.6 cents went to paying for the wreckage; only 1.9 cents went to prevention and treatment, 0.4 cents to research, 1.4 cents to taxation or regulation and 0.7 cents to interdiction. Additional findings include the following:

    • The largest amount of federal and state government spending on the burden of substance use and addiction, $207 billion (58 percent), was for health care. The second largest amount, $47 billion (13 percent), was spent on the justice system, including incarceration, probation, parole, and criminal, juvenile and family courts.
    • State governments spent almost 16 percent of their budgets to deal with substance use and addiction, up from 13 percent in 1998. If substance use and addiction were its own state budget category, it would rank 2nd behind spending on elementary and secondary education.
    • Local governments spent $93.8 billion on substance use and addiction, outstripping local spending on transportation and public welfare.
    • Of the $3.3 trillion in total federal and state government spending, 11 percent was spent on tobacco, alcohol and other drug use and addiction and their consequences.


    For the government:

    • Invest in prevention and early intervention efforts.
    • Educate the public about addiction as a disease.
    • Clarify the difference between risky substance use and addiction.
    • Implement standardized workplace prevention programs covering tobacco, alcohol and other substances.
    • Increase taxes on alcohol and tobacco.
    • Eliminate mandatory sentencing laws on substance-involved offenders.

    Research Methods

    This report is based on a review of more than 900 publications, a detailed survey of state budget offices, detailed analysis of federal budget documents and case studies of local budgets.

    Last Updated

    November 2023