Sunday, April 20, 2014
AUGUSTA — A private business can run Maine's wholesale liquor operation better than the state can, says Senate Majority Leader Seth Goodall, who introduced legislation Thursday to require the state to put its liquor business out for bids.
Liquor on display at Downeast Beverage on Commercial St. in Portland.
Goodall, a Democrat from Richmond, said the state did a poor job running the liquor business before it was contracted out to Maine Beverage Co. in 2004.
"When the state was doing the service, it was subpar and it was a big concern for agency liquor stores," Goodall said. "Let's make sure that we maintain that strong service from the private sector, but put it out to bid and make sure we get the best value for the state of Maine."
Goodall's bill contrasts sharply with a proposal by Republican Gov. Paul LePage for the state to control the proceeds from liquor sales, with "a private sector person to provide administration, trade marketing and distribution and warehousing activities."
LePage's proposed legislation calls for a contractor to monitor inventory, manage accounts, advertise and coordinate with suppliers.
Under Goodall's bill, bidders for the 10-year contract would start by choosing one of two options: making an initial payment of $20 million, or $200 million.
From there, they would have to spell out:
• Their guaranteed annual payments to the state. The amount could change over each year of the contract.
• A revenue sharing formula. The state now gets 50 percent of the revenue over a certain amount.
• The minimum guaranteed profit margin needed by the bidder. The state sets liquor prices, so the figure would reflect the difference between suppliers and state-mandated prices. The figure is now 36.8 percent.
Goodall's bill would require every bidder to put up a nonrefundable $25,000 fee and set guaranteed minimum discounts for agency liquor stores.
If no qualified bid were received, the current contract could be extended for one year for $34 million.
Goodall said his bill would not earmark contract revenue for a particular state program or bill because that discussion should be separate from getting the best terms possible for the state.
LePage has tied his proposal to paying down state debt to Maine's hospitals.
Goodall said the money could be used for hospitals and education, but such decisions should be made by the Legislature's Appropriations Committee, not mandated by a law.
In an email Thursday, LePage's spokeswoman, Adrienne Bennett, said, "We believe the governor's bill presents the best financial return on the state's investment. ...While all the details of Sen. Goodall's bill have not been reviewed yet, it appears the Democrats goal is to continue to let a private company take all the upside from this business. The governor wants to ensure the state receives the best deal and make good on an old debt to our hospitals."
Republican leaders criticized Goodall's proposed legislation, particularly for not specifying how the revenue would be spent.
"History has shown that the Legislature under Democrats can't help itself from using every last drop of revenue to fund government expansion," said House Republican Leader Ken Fredette of Newport in a release. "We must do something responsible with this state asset and use it to pay our debts and put Mainers to work."
The release accused Democrats in the Legislature of stalling on LePage's proposal.
"They have been sitting on it for almost three weeks while Maine hospitals bleed money and lay off workers," Fredette said.
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