Politics

April 5, 2013

Panel proposes compromise on Maine liquor contract

The committee hopes to craft a new bill that would repay the state's hospital debt using liquor revenue while garnering bipartisan support.

By Michael Shepherd mshepherd@mainetoday.com
State House Bureau

AUGUSTA A legislative committee is set to shelve the competing liquor-contract bills of Republican Gov. Paul LePage and Democratic lawmakers and draft its own proposal, using ideas from both measures.

Sen. John Tuttle, D-Sanford, a co-chairman of the Veterans and Legal Affairs Committee won the panel's approval Friday to submit a joint order to the full Legislature that would allow the committee to craft its own bill to pay back the state's share of hospital debt with liquor revenues.

Tuttle said he said he hopes to craft a compromise bill that has unanimous committee support, which would bolster the proposal's chances when it's considered by the full Legislature.

"If we do that, we're doing good," Tuttle said.

Ericka Dodge, a spokeswoman for Senate Democrats, said the request for a compromise bill will go to the Legislature on Tuesday and should be referred back to the committee then. After that, the committee plans to hold a work session on its bill later in the week.

Dodge also said questions remain about how to merge the existing bills, which would map out Maine's plan to renegotiate the state's liquor contract in 2014, then tie it to paying the state's $186 million share of Medicaid debt to hospitals, unlocking $298 million in matching federal funds.

The plans diverge mostly in how the state would receive the liquor money.

The LePage administration asks for an annual fee over the duration of the 10-year contract, which could yield $36 million or more annually, plus another $8 million in revenue sharing to the state. That money would be used to amortize a bond for the state's share of the hospital debt.

On Friday, LePage spokeswoman Adrienne Bennett said the governor would only support a plan that returns payment to the hospitals fully and quickly.

The Democratic plan, sponsored by Sen. Seth Goodall, D-Richmond, would ask for $200 million up front, alongside revenue sharing. Goodall has said there's more risk in receiving money over the long term, and his plan would pay the hospital debt without borrowing.

For many, that's reminiscent of the 2004 negotiation of the state's current liquor contract, which asked for a $125 million up-front payment. The current contract also generates annual revenue for the state but has been criticized as a sweetheart deal for the private vendor, which could have generated more money for the state if structured differently.

Rep. Louis Luchini, D-Ellsworth, the Veterans and Legal Affairs Committee co-chair, and Sen. Garrett Mason, R-Lisbon Falls, said at a recent hearing that they were reluctant to support a large up-front payment. They said that could generate borrowing costs for the winning bidder on the contract, which could be passed along to the state and consumers. 

"There is a cost to borrowing money," Mason said. "That cost is going to be factored into an up-front payment."

The hospital debt has been a major political issue in the legislative session.

LePage has been badgering lawmakers to approve his plan for months, saying the state has a financial and moral obligation to pay the hospital debt. 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.

He has cast the debt payment as an economic development issue, saying the money would be used to fund expansions, renovations or other capital investments that would provide jobs.

In an effort to exert pressure on lawmakers, LePage has threatened to veto any bill that doesn't promote economic development until a hospital payment plan is agreed to.

Democrats have countered that it's imprudent to move too quickly on the new liquor contract because of the amount of money at stake, and that the hospital payments should be part of a more comprehensive look at state revenue needs.

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