Democrats question constitutionality of LePage plan to pay hospital debt

AUGUSTA — Some Democratic lawmakers are voicing concerns that a plan being offered by Gov. Paul LePage to pay down the state's $484 million debt to hospitals for services provided to MaineCare patients may be unconstitutional under Maine law.

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Christopher Cousins/Bangor Daily News

Gov. Paul LePage comments Wednesday at the Blaine House in Augusta on the Legislature's delay in approving his plan to pay Maine hospitals millions of dollars owed by the state. LePage repeated his pledge to veto non-hospital legislation

MaineCare is a state and federally funded health care program for low-income families and individuals, and is paid for, in part, with federal Medicaid funds.

Democrats said last week and reiterated the point Wednesday that LePage's plan to pay hospitals the $186 million the state owes for its share of the debt with a revenue bond could be illegal. LePage is proposing using revenue from the state's wholesale liquor business to finance the bonds.

The state's share once paid would be matched with $298 million in federal funds.

"There are constitutional questions around the governor's proposal," state Sen. Seth Goodall, D-Richmond, said Wednesday. Goodall, the majority leader in the Senate, said former Republican Senate President Kevin Raye asked for an opinion on a similar issue in 2009.

Goodall said that while Raye was asking about general revenue bonds, which are approved by voters and paid with tax revenue, an opinion issued by state Attorney General Janet Mills at the time noted it would not be legal under the state constitution, which prohibits the use of proceeds from the sale of bonds for the purpose of paying current state expenditures.

"Hospital payments are an ongoing current expenditure under the law, and current expenditures cannot be bonded to pay back," Goodall said. "The way that the governor's proposal is drafted ... most likely it's unconstitutional and it would have to be addressed."

LePage's legal adviser, Mike Cianchette, said Wednesday that Democrats are essentially comparing apples and oranges, because revenue bonds and general obligation bonds are different. Cianchette said the administration also disagrees that hospital debt is a current expenditure.

"This is all old debt. Our proposal makes that very clear," Cianchette said. "When we came into office we moved to a pay-as-you-go system, so the amount we owe is a discreet amount. We caught up to 2009, but we know what the back amount is, so it's long-term debt; it's not current."

Cianchette said general obligation bonds are backed  by the "full taxing power of the state."

 "Our proposal is very different. It secures a revenue stream. It's not a tax stream; it's an operating (revenue), essentially a business," Cianchette said. "...If all of the sudden the federal government brings back Prohibition and the liquor business ends, then the risk is with the bondholders."

Cianchette said the administration was very confident LePage's proposal would withstand any constitutional challenges.

"It's not unconstitutional to pay your bills," he said.

Tim Feeley, spokesman for the Attorney General's Office, said Wednesday the office believes there's a distinction between general obligation bonds and revenue bonds, and has concerns about the way the governor's bill is drafted. He said the office believes there are some constitutional issues, but is working with the governor's office to resolve them.

State Rep. Mike Carey, D-Lewiston, a member of the Legislature's Appropriations Committee, said Wednesday he has had concerns about the LePage plan since it was announced in December 2012. 

"The constitution is very clear, and wishing it were different doesn't make it so," Carey said. "It's a legalistic argument. If it looks like an apple and it tastes like an apple, but if it turns out not to be an apple, great. But we have to go down and ask the questions and get the answers and deliberate before jumping to a conclusion."

Both the governor's bill and a bill sponsored by Goodall that addresses the state's liquor business will go before the Legislature's Legal and Veterans Affairs Committee on Monday for public hearings.

Carey said he also has concerns with Goodall's bill, saying it too closely resembles a plan advanced in 2003 by Democrats under Gov. John Baldacci.

"The 2003 contract has the state paying leg-breaker rates, and I certainly don't want to do that again and won't be part of that," Carey said.

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Amedeo Lauria's picture

Does this mean I don't have to pay my bills as well?

Maybe I should get a good Democrat lawyer to take a look at my bills and make a decision as to their validity; I might save a few bucks.

I never knew you could walk away from just debts with some legal maneuvering and leave my creditors scratching their heads about how to cover the cost of their losses.

I'm glad we have a Governor who knows how important it is not to welch on your debts.

My goodness!


We all know all doctors are

We all know all doctors are rich. Hospitals are just ripping us off. They don't need the money and don't deserve to be paid, NOT. Maybe the Dems should ask the great Mr. Baldacci how to pay off his old debts. Mr. Baldacci is out there making noice about a comeback.

Tony Capola's picture

Pay your bills

If any of us had a large debt that we are required to pay and we didn't we'd have been arrested by this time.
This should NOT be made a partisan issue... It is irresponsible for our legislators to try and make it one.
It is highly negligent for any official to totally disregard this legal responsibility.
It's an obligation that, because it was left unpaid, lead to several hospital employees losing their jobs and more are threatened. These vital institutions cannot afford to simply absorb this loss.
Our previous governor was all too willing to look the other way and ignore this huge valid bill. After all, to acknowledge it exists would be to confirm the fact that MaineCare is a farce.
No matter what happens WE will all pay one way or another.

PAUL ST JEAN's picture

Leave it to the dems to

Leave it to the dems to convince themselves that paying a valid bill is unconstitutional. I'll bet they've never considered the unconstitutional aspects of NOT paying the hospital bills. Thirty years of democratic "leadership" have proven that democrats can always be counted on for solid mismanagement of other peoples' money. That's why the state is in such a financial sinkhole.

Robert McQueeney's picture

Pay the bill

I read a lot of crying that this is not the way to pay our bill from opponents. I didn't read one of them suggesting the "proper" way to pay our bill. So their solution to the problem is...... nothing, I'm guessing?

Let's not forget that if we pay this within a certain time frame, the federal government pitches in a sizable chunk of money to help us pay our bill.

To all the opponents of any plan to pay our bill, please, find a viable way to pay our bill, or approve this bill, in time for the federal government to pitch in also. We'll get help paying the bill if we do so within the timeframe. Make it happen.


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