AUGUSTA, Maine — The Legislature’s Democratic leaders Wednesday said they objected to Gov. Paul LePage’s proposal to renegotiate the state’s wholesale liquor distribution contract and use the proceeds to pay off $186 million the state owes its hospitals.
House Speaker Mark Eves of North Berwick and Senate President Justin Alfond of Portland said the Legislature should consider the various elements of LePage’s plan separately, though they haven’t yet decided on a plan to consider them separately.
The LePage administration is proposing one bill that sets out the criteria for Maine to renew its liquor contract, allows LePage to issue a revenue bond so the state can repay its hospitals and commits the incoming liquor profits to pay off the revenue bond. After the state pays off the revenue bond, the bill, sponsored by Sen. Pat Flood, R-Winthrop, earmarks future liquor earnings to pay for water treatment systems and highways and for state reserves.
“This is really reminiscent of Washington-style politics where you don’t get a good result when you put things together that have nothing to do with one another,” Eves said. “We think it would produce a much better result if these three things were looked at on their own merits and if these decisions were made not entwined together, but separately.”
The Democratic legislative leaders voiced their objections a day after LePage championed his hospital debt repayment plan in his State of the State address as a $700 million injection into the state’s economy. The $186 million payment to the hospitals to pay for past Medicaid services would trigger a $298 million match from the federal government, totaling $484 million.
In addition, LePage has said he’ll release $205 million in bonds if the Legislature passes his hospital debt plan. That sum includes $105 million in bonds voters authorized in 2011, but that LePage has refused to issue until next year, and a $100 million bond LePage is proposing to pay for the construction of a new prison to replace the Maine Correctional Center in Windham.
“We cannot expect to have prosperity when we hold back hundreds of millions of dollars from the people that provide us medical services,” the governor said. “My proposal ensures that Maine hospitals get paid. It will improve Maine’s fiscal health, allowing me to authorize and release bonds, injecting somewhere nearly $700 million into the economy, which is badly needed.”
The state’s $484 million hospital debt dates back to 2009 for services hospitals provided under the state’s Medicaid program, but for which they weren’t fully reimbursed. The debt built up as a result of the state’s prospective interim payment system, under which the state paid hospitals a fixed weekly amount for expected services. That weekly amount, according to the Maine Hospital Association, didn’t keep pace with the state’s growing Medicaid enrollment.
Lawmakers in 2009 required the state to switch to a real-time payment system as part of the two-year state budget, and the state started transitioning to the new payment method in 2010. Between 2005 and 2013, hospitals received more than $300 million in payments from the state budget to pay down the debt, leveraging nearly $716 million in federal funds, according to the Legislature ’s nonpartisan Office of Fiscal and Program Review.
“We’re certainly committed to making sure that we meet that debt obligation,” Eves said. “I think the objection to how [LePage’s debt repayment package] is being rolled out is having things put together that don’t belong together. When we talk about bonds, renewing the liquor contract and hospital settlements, these are things that should be dealt with separately.”
Adrienne Bennett, a LePage spokeswoman, said Wednesday the administration opposes splitting up the separate elements of the governor’s bill.
Republican legislative leaders said Tuesday night they support LePage’s approach.
“Are Maine people opposed to putting $700 million into the Maine economy? That’s really the fundamental question,” House Minority Leader Kenneth Fredette, R-Newport, said. “We have the ability to put $700 million in the Maine economy, put thousands of people to work.”
“I think it’s an incredibly creative way to make sure that our hospitals get paid back, and it maximizes the revenue stream coming in from the liquor sales,” Senate Minority Leader Michael Thibodeau, R-Winterport, said.