AUGUSTA – Republicans Tuesday criticized Gov. John Baldacci’s deal-making, saying they were assured the privatization of Maine’s liquor business would not result in the state losing money.

House Minority Leader Joseph Bruno, R-Raymond, said it was a “bad decision” for taxpayers and that he was “deeply disappointed.” He vowed to scrutinize future proposals from Baldacci.

Last week the state announced that Martignetti of Norwood, Mass., was the winning bidder to take over the state’s liquor monopoly for the next 10 years. It will pay the state $125 million plus split future profits, which could mean another $40 million to the state.

However, the state is giving up $26 million annually in profits – $260 million or more over 10 years. Considering an additional $40 million in profit sharing the state could get from Martignetti, the state could end up losing about $100 million in profit over 10 years, Bruno said.

During a caucus with administration officials last year, Republicans were told that while it appears Maine would be losing millions in the deal, “we were told we’d make up the difference, that it would be revenue neutral” by reducing state costs and increasing tax income, Bruno said.

“I know I remember what I was told when this was going through. Unfortunately it’s not the truth,” Bruno said Tuesday during a Republican caucus. “Now we’re stuck with a loss of revenue. Martignetti (the winning bidder) got a good deal on the bid. They’re going to do well. The state isn’t.”

The Baldacci administration has insisted that in the long run taxpayers will benefit in two ways:

First, leasing the state’s liquor business to a private company means getting $125 million up front, helping to solve a budget gap without raising taxes.

Second, Martignetti will pay new taxes to the state, plus boost liquor sales and, therefore, liquor taxes to the state, according to Rebecca Wyke, commissioner of Administrative and Financial Services.

Douglas Rooks, spokesman for House Speaker Patrick Colwell, D-Gardiner, pointed out that Bruno voted for the plan, which was included in last year’s budget, and now is complaining about it.

Nonetheless, Bruno said, “The issue is that the budget was rushed through without proper scrutiny.” He contended the same thing is happening with the current budget proposal. “To bang this budget out by the end of the week is ludicrous,” Bruno said.

Bruno and other Republicans pledged to more thoroughly scrutinize proposals from the administration in the future.

Two members of the Appropriations Committee said Tuesday they knew the state was giving up income in the liquor contract, but that they had few other ways of filling the $1.2 billion budget hole other than by raising taxes. “I didn’t like it, but there was little choice,” said Sen. Peggy Rotundo, D-Lewiston.

Fellow committee member Peter Mills, R-Cornville, agreed. Leasing the alcohol monopoly and giving up the annual income “is a short-term band aid,” he said.

“That $26 million isn’t going to be there to help us in the future,” Mills said, but, “I did not have another place to find $125 million without raising taxes.”

bwashuk@sunjournal.com

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