Wait just a minute.
Did I hear correctly?
Right in the middle of a long, dark Maine winter, is there a ray of light? A reason for optimism that could launch us gleefully toward spring?
Some officials in Augusta say it could happen — the price of a gallon of Allen’s Coffee Brandy could be going down.
Maine’s spirit of choice — cheaper!
Admittedly that’s just a small benefit of what could come from the state’s renegotiation of its liquor contract, which has cost Maine millions and millions of dollars in revenue over the past 10 years that instead went to a private company.
But I dare say the coffee brandy benefit alone could snag Gov. Paul LePage, the force behind the renegotiation, more than a few new supporters.
On the other end of the spectrum Maine hospitals could be repaid the $186 million owed to them by the state and subsequently the federal government; retailers could see a rise in their profit margins from liquor and the state could see a huge increase in its annual share of profits from liquor sales — possibly from its current $8 million a year to $32 million.
It was 10 years ago that then Gov. John Baldacci, committed to not raising taxes but facing a $1 billion budget gap, opted to privatize the sale and distribution of liquor in the state at least in part on the advice of his longtime supporter and lobbyist Severin Beliveau. The state was paid $125 million for the lease and received an annual share of the profits.
Beliveau happened to represent an out-of-state client that eventually would become part owner of Maine Beverage Co., which has held the extraordinarily lucrative contract for the past 10 years.
That the contract is now up for renegotiation at all and could go a long way toward digging the state out of its long-term debt to hospitals is due in no small part to the stand taken by former Republican State Sen. Peter Mills.
Mills disagreed vehemently with Baldacci’s decision to sell off the liquor business and originally the plan called for just that, a complete and one-time monopolistic sale.
Mills fought and succeeded at attaching an amendment that would convert the sale to a 10-year lease.
And here we are today.
In case you still aren’t sure just how lucrative the liquor business is these days, here is what Maine Beverage Co. CEO Dean Williams said while trying to convince LePage that his company should be allowed to continue its control of the contract:
“We’d step up to the plate, pay a lot more than we have in the past and try to continue this great relationship,” he said.
He offered to pay the state $186 million up front so it could pay off the hospitals without having to worry about all those pesky revenue bonds and such.
That way, Williams assured LePage, “If the wholesale liquor business fails to perform it’s our risk, not yours.”
Some estimates have placed the value of the liquor contract between $380 million and $450 million.
Liquor sales seem to be profitable and stable despite the economy and there is probably little risk of that business failing.
I don’t mean to belittle Mr. Williams. By all accounts, Maine Beverage Co. has done a credible job running Maine’s liquor business. But the profits have been enormous and Maine has missed out on millions and millions of dollars over the years because its leaders at the time acted out of desperation and with not enough thought about the long-term implications of their decision.
LePage is absolutely right to make the most of this opportunity by opening up the bidding process to all in order to get the best deal for the state. The Legislature should help assure it happens.
Really. It’s worthy of celebrating. Cheap Allen’s Coffee Brandy all ’round.