AUBURN — Gov. Paul LePage on Friday reiterated his call for the state to pay off the $186 million it owes hospitals for MaineCare services, and he again detailed his plan for doing so with revenues from the state's wholesale liquor business.
Standing with shelves full of liquor bottles behind him at Roopers Beverage and Redemption on Main Street, LePage said that for him, paying the state's debt was a matter of character.
"At the end of the day, all we have is our character," LePage said. "And a good character is you live by what you say you are going to do and you pay your bills. And I sure believe the state of Maine should not have the reputation of not paying its bills."
A bill offered by LePage before the Legislature would involve the state renegotiating and putting back out to bid a contract that allows a private company to run the state's liquor business. That contract could bring in as much as $45 million per year in new state revenue, according to Gerry Reid, director of the Maine Bureau of Alcoholic Beverages and Lottery Operations.
LePage's plan would use some of that revenue to finance $186 million in revenue bonds that would be used to pay Maine's hospitals and to receive $298 million in federal matching funds, for a total of $484. MaineCare is the state's health insurance program for low-income families and individuals. It is funded with federal and state money.
Maine is one of 17 states that controls the distribution of hard liquor within its borders. The state leased that business to Maine Beverage Co. in 2004 for 10 years in exchange for a $125 million up-front payment and an annual cut of profits. That annual cut was $8.6 million in 2012, Reid has said.
Reid, who joined LePage on Friday as he visited the liquor store and then Central Maine Medical Center in Lewiston, said part of the plan involves making the state's liquor business more competitive with New Hampshire by lowering prices on select brands and volumes of alcohol.
The plan as designed by Reid also would lower costs to state agency liquor store operators, allowing them to make more profit.
"They deserve a little fairer return," Reid said. "By restructuring the financial contract with the wholesale partner, we will have the value to do all those tasks."
Steve Roop, the store's owner, said he supported LePage's plan. Roop said the lower wholesale prices would be passed on to consumers, and higher profits would help him pay and insure his employees.
"We all know that anytime that you go through New Hampshire — 60 percent of the people that I know, stop at the liquor store there," Roop said. He owns five stores in Lewiston and Auburn and four are authorized to sell hard liquor.
After LePage's tour of Central Maine Medical Center, Laird Covey, the hospital's president, said he supported the governor's bill and his plan. Covey said the $51 million the state owes CMMC would be used for a variety of purposes, including allowing the hospital to pay its employees without borrowing to do so.
"Paying off the debt first lets us get out of the fact that we regularly access a line of credit to meet our payroll, along with most of the other hospitals in Maine in the same situation," Covey said. "It takes care of the fact we have major debts we are not able to keep up with. So it's a big factor."
However, Democrats, who are in the majority at the State House, have questioned whether LePage's plan to borrow money to pay debt is constitutional. They say a previous opinion from the Maine Attorney General on the issue didn't bode well for the governor's plan.
But LePage's plan depends on privately backed revenue bonds and not taxpayer-backed general obligation bonds. LePage also disagrees with the assumption that the hospital debt is being defined as an operating cost versus a debt.
On Friday, he sharply rebuked the assertions that his bill, LD 239, has parts that could be ruled unconstitutional.
"It's all a matter of interpreting the state constitution," LePage said. "If you are an opponent of this bill, then you obviously don't believe it's appropriate — it's not constitutional. If you read the constitution and you understand English, it's very constitutional."
State Sen. John Cleveland, D-Auburn, spoke after LePage on Friday. He said his party was still concerned and believed LePage is mistaken. Cleveland said LePage should be negotiating with lawmakers on reaching a solution and not campaigning on the issue.
"Democrats want to pay the bill, and they are prepared to sit down and do that," Cleveland said. "I and all other elected officials, including the governor, swore a solemn oath to follow the constitution of the state of Maine. I'm prepared to take all legal action to pay the debt, but until we resolve this attorney general's opinion, I'm not sure the governor's proposal works."
Cleveland said Democrats and Republicans, including the governor, were in agreement that paying the debt would be good for the economy.
Democratic lawmakers also have urged LePage to release more than $105 million in state general obligation revenue bonds that would trigger more than $296 million in federal matching funds for bridge and road construction, public education facilities and economic development projects across Maine.
LePage said he would not do that until a deal is struck on paying the hospitals.
He said Friday that if Democrats would sign off on his liquor bill, he would release the general obligation bonds at the same time he authorized the revenue bonds for hospitals.
"Hey, the pen's right here," LePage said, reaching into his coat pocket. "I'll sign them both together, immediately. In fact, if I could trust them, I would do it on a promise."
LePage's bill, as well as a competing measure authored by Senate Majority Leader Seth Goodall, D-Richmond, are to go before the Legislature's Veterans and Legal Affairs Committee at 10 a.m. Monday, March 11.