Democrats question constitutionality of LePage’s plan to pay hospital debt

Gov. Paul LePage
Gov. Paul LePage
Posted March 06, 2013, at 3:48 p.m.
Last modified March 06, 2013, at 6:48 p.m.

AUGUSTA, Maine — A group of Democratic lawmakers is voicing concerns that a plan being offered by Gov. Paul LePage that aims to pay down the state’s $484 million debt to its hospitals for providing services to MaineCare patients may violate Maine’s constitution.

MaineCare is a state and federally funded health care program for low-income families and individuals and is paid for, in part, with federal Medicaid funds.

Democrats said last week and reiterated the point Wednesday that LePage’s plan to pay hospitals the $186 million the state owes for its share of the debt with a revenue bond could be illegal. LePage is proposing using revenue from the state’s wholesale liquor business to finance the bonds.

The state’s share, once paid, would be matched with $298 million in federal funds.

“There are constitutional questions around the governor’s proposal,” state Sen. Seth Goodall, D-Richmond, said Wednesday.

Goodall, the majority leader in the Senate, said former Republican Senate President Kevin Raye asked for an opinion on a similar issue in 2009.

Goodall said that while Raye was asking about general revenue bonds, which are approved by voters and paid off with tax revenue, an opinion issued by state Attorney General Janet Mills at the time noted it would not be legal under the state constitution, which prohibits the use of proceeds from the sale of bonds for the purpose of paying current state expenditures.

“Hospital payments are an ongoing current expenditure under the law and current expenditures cannot be bonded to pay back,” Goodall said. “The way that the governor’s proposal is drafted … most likely it’s unconstitutional and it would have to be addressed.”

LePage legal adviser Mike Cianchette said Wednesday that Democrats essentially are comparing apples and oranges because revenue bonds and general obligation bonds are different things. Cianchette said the administration also disagrees that hospital debt is a current expenditure.

“This is all old debt. Our proposal makes that very clear,” Cianchette said. “When we came into office we moved to a pay-as-you-go system, so the amount we owe is a discrete amount. We caught up to 2009, but we know what the back amount is, so it’s long-term debt, it’s not current.”

Cianchette said general obligation bonds are backed by the “full taxing power of the state.”

“Our proposal is very different. It secures a revenue stream. It’s not a tax stream, it’s an operating [revenue], essentially a business,” Cianchette said.

Cianchette said the administration was confident LePage’s proposal would withstand any constitutional challenges.

“It’s not unconstitutional to pay your bills,” he said.

Tim Feeley, spokesman for the attorney general’s office, said Wednesday the office believes there’s a distinction between federal obligation bonds and revenue bonds and has concerns about the way the governor’s bill is drafted. He said the office believes there are some constitutional issues but is working with the governor’s office to resolve them.

State Rep. Mike Carey, D-Lewiston, a member of the Legislature’s Appropriations Committee, said Wednesday he has had concerns about the LePage plan since it was announced in December 2012.

“The constitution is very clear, and wishing it were different doesn’t make it so,” Carey said. “It’s a legalistic argument. If it looks like an apple and it tastes like an apple, but if it turns out not to be an apple, great. But we have to go down and ask the questions and get the answers and deliberate before jumping to a conclusion.”

Both the governor’s bill and a bill sponsored by Goodall that addresses the state’s liquor business will go before the Legislature’s Legal and Veterans Affairs Committee on Monday for public hearings.

Carey said he also has concerns with Goodall’s bill, saying it too closely resembles a plan advanced in 2003 by Democrats under Gov. John Baldacci.

“The 2003 contract has the state paying leg-breaker rates and I certainly don’t want to do that again and won’t be part of that,” Carey said.

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