May 20, 2018
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Reason, not bluster on hospital debt

Troy R. Bennett | BDN
Troy R. Bennett | BDN
Maine Gov. Paul LePage takes the podium in Augusta Tuesday night Feb. 5, 2013 to deliver his State of the State address.


Gov. Paul LePage undermined his efforts to use liquor revenue to pay back the hospitals when he went too far during a radio appearance on Friday morning and said he would veto all bills, including his own, until he has the payment deal he wants.

This situation, with hundreds of millions of dollars in play, amid many competing priorities, calls for grounded negotiation, not threats. Though LePage later explained he would not sign legislation that doesn’t have “broad, bipartisan support or promote job creation until the hospital debt is paid,” it’s too bad LePage made the issue a power struggle because, to date, he’s mostly offered a reasonable public policy argument about using revenue from a renegotiated liquor contract to pay the debt.

Maine residents already knew LePage’s priorities. He campaigned on paying the debt owed. He’s already held off on issuing $105 million in voter-authorized bonds, saying he will release them only when the Legislature agrees to his plan to repay the hospitals. By going further, and promising to veto bills that come across his desk until the Legislature caves to his proposal to pay down the hospital debt, he may have strengthened his opposition.

So far, the Legislature has two proposals to review. LePage wants to use the proceeds from a renegotiated wholesale liquor contract to pay $186 million in debt the state owes its hospitals, triggering a $298 million federal match. Sen. Seth Goodall, D-Richmond, is sponsoring a bill that is silent about how the money would be used but lays out threshold requirements for companies seeking to operate the state’s wholesale liquor business.

Goodall’s legislation puts forward a smart idea: It would require the state to receive a fixed annual payment from the winning company and a share of annual profits. It would also require the successful company to pay the state either $20 million or $200 million upfront at the start of the 10-year contract. It’s tempting to potentially have a $200 million pot of money that could be used, for example, to restore municipal revenue sharing, which the governor’s budget proposes to eliminate for two years. There are many good ways the money could be used.

But the state cannot forget the debt it owes. Democrats could very well use an upfront payment from the liquor contract to pay off the hospital debt, but so far there is no assurance. They have insisted they want to repay the hospitals, but they have not presented a plan. If they ultimately decide to let the liquor contract revenue flow to the General Fund, for example, with an intention to use it to make a full or partial payment to the hospitals, so far there is nothing to commit them to that objective. No one can bind a future Legislature. If the Democrats want to effectively counter LePage — though LePage may have just done that for them — they should propose a plan of their own to pay back the hospitals.

We aren’t thrilled with LePage’s idea to take out a revenue bond to pay the hospital debt immediately and then use the liquor proceeds to pay off the bond. Paying back debt with debt isn’t ideal. But we recognize that doing so constitutes a plan that can’t be changed by a future Legislature, and using a revenue bond, instead of a general obligation bond, would prevent the state from tying up its remaining borrowing power. Another idea worth considering is for the Legislature to tie together the best aspects of Goodall’s and LePage’s proposals, but will that happen now? Or, would Democrats consider agreeing to the hospital repayment plan if LePage agreed to expand Medicaid under the Affordable Care Act?

The important question for the Legislature is: Who has a strategy to pay the hospitals? The Democrats have good intentions but can’t counter LePage’s proposal without a plan of their own. Unless, that is, their plan was to wait for the governor to have a meltdown.

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