LePage says paying debts a matter of character for Maine

Posted March 08, 2013, at 12:57 p.m.
Last modified March 08, 2013, at 10:55 p.m.
Gov. Paul LePage addresses members of the media and the public at Roopers Beverage and Redemption on Main Street in Auburn on Friday about his plan to use the revenue from the state's liquor business to pay back $484 million the state owes to 39 Maine hospitals.
Amber Waterman | Sun Journal
Gov. Paul LePage addresses members of the media and the public at Roopers Beverage and Redemption on Main Street in Auburn on Friday about his plan to use the revenue from the state's liquor business to pay back $484 million the state owes to 39 Maine hospitals.
Sen. John Cleveland, D-Auburn, responds to Gov. Paul LePage's press conference at Roopers Beverage and Redemption on Main Street in Auburn Friday morning.
Amber Waterman | Sun Journal
Sen. John Cleveland, D-Auburn, responds to Gov. Paul LePage's press conference at Roopers Beverage and Redemption on Main Street in Auburn Friday morning.

AUBURN, Maine — Gov. Paul LePage on Friday reiterated his call for the state to pay off the $484 million it owes its hospitals for MaineCare services and again detailed his plan for doing so with revenues from the state’s wholesale liquor business.

Standing with shelves full of bottles of liquor behind him at Roopers Beverage and Redemption on Main Street, LePage said that for him, paying the state’s debt was a matter of character.

“At the end of the day, all we have is our character,” LePage said. “And a good character is you live by what you say you are going to do and you pay your bills. And I sure believe the state of Maine should not have the reputation of not paying its bills.”

A bill offered by LePage before the Legislature would involve the state renegotiating and putting back out for bid a contract that allows a private company to run the state’s liquor business. That contract could bring in as much as $45 million a year in new state revenue, according to Gerry Reid, the director of the Maine Bureau of Alcoholic Beverages and Lottery Operations.

LePage’s plan would use some of that revenue to finance $186 million in revenue bonds that would be used to pay Maine’s hospitals and receive $298 million in federal matching funds. MaineCare is the state’s health insurance program for low-income families and individuals — it is funded with federal and state funds.

Meanwhile, Maine is one of 17 states that controls the distribution of hard liquor within its borders. The state leased that business to Maine Beverage Co. in 2004 for 10 years in exchange for a $125 million upfront payment and an annual cut of profits. That annual cut was $8.6 million in 2012, Reid has said.

Reid, who joined LePage on Friday as he visited the liquor store and then Central Maine Medical Center in Lewiston, said part of the plan involves making the state’s liquor business more competitive with New Hampshire by lowering prices on select brands and sizes of alcohol.

The plan as designed by Reid also would lower costs to state agency liquor store operators, allowing them to make more profit.

“They deserve a little fairer return,” Reid said. “By restructuring the financial contract with the wholesale partner we will have the value to do all those tasks.”

Steve Roop, the store’s owner, said he supports LePage’s plan. He also said the lower wholesale prices would be passed on to consumers, and higher profits would help him pay and insure employees.

“We all know that anytime that you go through New Hampshire — 60 percent of the people that I know, stop at the liquor store there,” Roop said. He owns five stores in Lewiston and Auburn and four of them are authorized to sell hard alcohol.

After LePage’s tour of CMMC, Laird Covey, the hospital’s president, said they supported the governor’s bill and his plan. Covey said the $51 million the state owes CMMC would be used for a variety of purposes, including allowing the hospital to pay its employees without borrowing to do so.

“Paying off the debt, first, lets us get out of the fact that we regularly access a line of credit to meet our payroll, along with most of the other hospitals in Maine in the same situation,” Covey said. “It takes care of the fact we have major debts we are not able to keep up with. So it’s a big factor.”

Covey said the debt repayment, in and of itself, may not be enough to allow the hospital to grow jobs but it was important to the hospital’s long-term financial stability.

However Democrats, in the majority, at the State House have questioned whether LePage’s plan to borrow money to pay debt is constitutional. They say a previous opinion from the state’s attorney general on the exact same issue doesn’t bode well for the governor’s plan.

But LePage’s plan depends on privately backed revenue bonds and not taxpayer-backed general obligation bonds. LePage also disagrees with the assumption the hospital debt is being defined as an operating cost versus a debt.

On Friday, he sharply rebuked the assertions that his bill, LD 239, has parts that could be ruled unconstitutional.

“It’s all a matter of interpreting the state constitution. If you are an opponent of this bill, then you obviously don’t believe it’s appropriate — it’s not constitutional,” LePage said. “If you read the constitution and you understand English, it’s very constitutional.”

State Sen. John Cleveland, D-Auburn, spoke after LePage on Friday. He said his party was still concerned and believed LePage is mistaken. Cleveland also said that LePage should be negotiating with lawmakers on reaching a solution and not campaigning on the issue.

“Democrats want to pay the bill, and they are prepared to sit down and do that,” Cleveland said. “I and all other elected officials, including the governor, swore a solemn oath to follow the constitution of the state of Maine. I’m prepared to take all legal action to pay the debt but until we resolve this attorney general’s opinion, I’m not sure the governor’s proposal works.”

Cleveland said Democrats and Republicans, including the governor, were all in agreement that paying the debt would be good for the economy.

Democratic lawmakers also have been urging LePage to release more than $105 million in state general obligation revenue bonds that would trigger more than $296 million in federal matching funds for bridge and road construction, public education facilities and economic development projects around Maine.

LePage said he will not do that until a deal is struck on paying the hospitals.

But Friday, he said if Democrats would sign off on his liquor bill, he would release the general obligation bonds at the same time he authorized the revenue bonds for hospitals.

“Hey, the pen’s right here,” LePage said, reaching into his suit-coat pocket. “I’ll sign them both together, immediately. In fact, if I could trust them, I would do it on a promise.”

LePage’s bill as well as a competing measure written by Senate Majority Leader Sen. Seth Goodall, D-Richmond, go before the Legislature’s Veterans and Legal Affairs Committee at 10 a.m. Monday, March 11.

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