April 8, 2013

Support wanes for upfront payment for Maine liquor contract

The upfront payment of $200 million to repay hospitals has now fallen out of favor with Democrats and Republicans.

By Jessica Hall jhall@pressherald.com
Staff Writer

AUGUSTA — As legislators debate the future of the state's liquor contract, the idea of an upfront payment by a liquor contractor, which could be used to pay money owed Maine hospitals, has fallen out of favor with both Democrats and Republicans.

Opposition to an upfront payment, which had been proposed in a bill sponsored by Sen. Seth Goodall, D-Richmond, was voiced Monday by Rep. Peggy Rotundo, D-Lewiston.

"We're all in agreement that the hospitals need to be paid back. We are interested in getting the best value for the state. In looking at the nonpartisan figures, it became clear that the upfront payment doesn't make sense," Rotundo said in a telephone interview.

An analysis by the nonpartisan Office of Fiscal and Program Review outlined three possible scenarios for a liquor bill. None of the scenarios directly aligned with the two liquor bills on the table that have been proposed by Goodall and Gov. Paul LePage.

The state's 39 hospitals are owed about $484 million in reimbursement for services to patients covered under MaineCare, the state's version of the Medicaid program for low-income residents. The state owes about one-third of the amount but must pay its share before the federal government will release matching funds.

The Veterans and Legal Affairs Committee plans to propose its own bill, which would repay the debt to the hospitals using a revenue bond. The bond would be secured by the revenues from the state liquor business over the next 10 years.

The bill proposed by Goodall had sought an upfront payment of $200 million that would be used to repay the hospitals. Opponents argued that payment to the state of money up front, plus a share of liquor revenues, would provide less money overall than the rival proposal from LePage, which also would use a revenue bond to pay the hospitals.

Ericka Dodge, a spokeswoman for Senate Democrats, said Democrats are now more comfortable with the idea of a revenue bond.

Adrienne Bennett, spokeswoman for LePage, said a move away from the upfront payment in Goodall's bill was essentially support for the governor's proposal.

"The governor has said all along that the upfront payment would cost Mainers more," Bennett said. "Time is of the essence. The state has an opportunity to pay this massive bill and inject hundreds of millions into the economy to get Maine people working this summer. We can't wait until the fall -- hardworking Maine families need this money in the economy as soon as possible."

The Veterans and Legal Affairs Committee's request for a compromise bill will go to the Legislature on Tuesday and should be referred back to the committee. After that, the committee plans to hold a work session on its bill later in the week.

In drafting its own bill, the Veterans and Legal Affairs Committee now will debate whether the state should hire a contractor and pay it a fee to run the liquor business, or whether it should lease the liquor business outright.

Staff Writer Jessica Hall can be contacted at 791-6316 or at:

jhall@pressherald.com

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