In this day of economic challenges, there is a bit of optimism on the horizon. In the coming weeks, the Legislature will decide what to do with the state’s $400 million liquor business. The liquor contract is up for renegotiation and now is the time to get it right. We must get the best value for the state. To do anything less would shortchange taxpayers.

The Legislature will consider two options. The governor has put forth one plan and so have I.

Last week, the Sun Journal suggested that Gov. Paul LePage has a better plan for the liquor contract, but it appears the newspaper did not consider all the facts or at least question his proposal. In order to determine which plan may be best for the state, it is important to first look back at our history.

Prior to 2003, the state operated the liquor business and by all accounts it was under-performing. The complaints about service, delivery, and product selection were endless. When the contract went out to bid, the value of the business was not well known. It was negotiated under pressure to fill a budgetary hole and, arguably, we should have gotten a better deal. Since then, the business has significantly increased in value, the number of agency stores has nearly doubled and complaints are nearly non-existent.

To be clear, I believe strongly that there are many things that state government does better than the private sector, but in this instance history proves otherwise.

The governor says he wants the state to take back the liquor business. I say keep it entirely in the private sector because doing so eliminates the state’s risk and gets the best value possible for the people of Maine.

Here’s why:

The governor’s proposal is a confusing plan that pulls the state’s liquor business into a deal that requires Maine to borrow from Wall Street in order to pay a debt to the hospitals. We must pay our hospitals but tying the two together in one plan is politically dangerous, financially risky and may jeopardize getting the best deal for the state’s liquor business. The first step should be getting the liquor contract right.

To date, the governor’s proposal is one that lacks a detailed business plan and is, instead, based on sound bites. The legislation plainly states that the state will manage the state liquor business with the option to contract out for service. However, it sets no qualifications for bidders for potential contracts, it sets no implementation timeline and fails to restore the inequity with our retail agency liquor stores.

Additionally, the administration claims it can easily get back lost sales from New Hampshire. The solution: spend $16 million on lowering prices and marketing in order to get back a return of $5.5 million. The math doesn’t add up.

The governor and I agree: this liquor contract must be better than the last. The difference between us is the approach.

My proposal clearly maintains the privatization of the liquor business by putting it out to competitive bid for qualified bidders who demonstrate they have the experience, knowledge and financial capacity to run this $400 million business. It also strengthens our relationships with agency liquor stores so they get the service they need and the revenue they deserve. As our partners in business, they should be fairly considered.

To get the best value for Maine, my plan offers two options: The state would either get an upfront lump sum payment of $200 million or $20 million. In either case, the state would receive fixed annual payments that would increase over the length of the contract, plus revenue sharing. Doing this eliminates all the risk and guarantees the state a substantial influx of money plus shared profits. When the business grows, so will the money coming to the state.

My proposal also provides a stopgap measure. One that protects the state’s revenue from liquor sales. In fact, it guarantees $34 million for one year, if the state lapses in its current liquor contract. The Sun Journal called it scary. I believe this mechanism is an appropriate safeguard to protect the state’s interest and the business.

On March 11, the Legislature will begin its deliberations on both proposals.

We must get it right. The liquor business is complex and requires significant deliberation. It is not often that we deal with $400 million coming in to the state’s coffers. Once we get it right, we can move on to the next step: how to use the revenue to pay our bills, including the hospitals, as well as making investments in education, roads and bridges, and water and sewer.

The governor and the Legislature would be wise to not put the cart before the horse.

State Sen. Seth Goodall, D-Richmond, is Senate Majority Leader.

Editor’s note: The Sun Journal editorial board held a lengthy meeting with Michael Cianchette, chief counsel to Gov. Paul LePage, and Gerry Reid, director of Maine’s Bureau of Alcoholic Beverages and Lottery Operations, on Feb. 1 to discuss details of the governor’s proposal — including financials — before taking a position in support of that plan.

The Committee on Veterans and Legal Affairs will hold a public hearing on two competing liquor contract proposals starting at 10 a.m. on Monday, March 11, State House, Room 437.

Gov. Paul LePage proposal, LD 239: An Act To Improve the Return to the State on the Sale of Spirits and To Provide a Source of Payment for Maine’s Hospitals

Sen.

proposal, LD 644: An Act To Strengthen the State’s Wholesale Liquor Business