LePage announces timeline for selling liquor revenue bond to pay Maine’s remaining Medicaid debt to hospitals by September

Posted Aug. 22, 2013, at 11:52 a.m.
Last modified Aug. 23, 2013, at 2:49 p.m.

AUGUSTA, Maine — The state is about one week away from selling a liquor revenue bond that will fund payment of $183.5 million in Medicaid debt to Maine’s hospitals, Gov. Paul LePage’s office announced this week.

The announcement comes on the heels of healthy, stable bond ratings from Standard & Poor’s and Moody’s Investors Service, according to the governor’s news release Thursday.

With the ratings in hand, Maine Municipal Bond Bank is set to sell the liquor revenue bond next week, according to the release. Hospitals throughout the state will receive payments for the Medicaid debt by Sept. 30, according to David Heidrich, spokesman for Maine’s Department of Administrative and Financial Services. The state’s payment will trigger an additional $305 million in federal payments to the same hospitals.

“As a result of these new bond ratings, our administration is one step closer to repaying Maine’s hospitals the $484 million in welfare debt that is owed to them,” LePage said in the news release. “Maine hospitals provide good jobs and are vital to the local economy. Repaying our hospitals is the right thing to do, and I am proud to deliver on my promise to finally pay off this burdensome debt.”

LePage made repayment to Maine’s hospitals his top legislative priority in the first session of the Democrat-controlled 126th Legislature this spring. Until the outstanding debt was repaid, he said, it was irresponsible to take on new debt. As a result, LePage held up $105 million in bonds approved by voters in 2010 and 2012 until the plan to repay the hospitals was approved by the Legislature in June.

The bond used to make final payment on Medicaid debt to Maine’s hospitals will be paid off by revenue from a new contract for the state’s wholesale liquor business, which will take effect when the state’s contract with Maine Beverage Co. expires next summer.

Under the terms of the previous wholesale liquor deal, Maine Beverage paid the state a lump sum at the outset of the contract term in 2004. In exchange, the state guaranteed a set profit margin for Maine Beverage. LePage administration officials have criticized that deal, arguing that it resulted in higher prices for liquor in Maine than in neighboring New Hampshire and less revenue for state coffers through the sale of spirits.

The new proposal will be more favorable to the state, guaranteeing revenue enough to pay back the liquor revenue bond, Heidrich said.

Follow Mario Moretto on Twitter at @riocarmine.

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