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LePage Pushes for More Liquor Sales Revenue to Pay off Hospital Debt
01/18/2013   Reported By: A.J. Higgins

The price of a bottle of liquor could be going down under a proposal from Gov. Paul LePage, who wants to increase state tax revenue from alcohol sales in Maine. The governor's liquor tax plan would wipe out nearly a half-billion dollars owed to Maine's hospitals. In his weekend radio address, the governor says the new revenue will be generated by sales currently being racked up by Mainers in New Hampshire. But health care advocates worry that alcohol abuse will rise as well. A.J. Higgins has this report.

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LePage Pushes for More Liquor Sales Revenue to Pay
Originally Aired: 1/18/2013 5:30 PM
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 Duration:
4:13

Gov. Paul LePage announced earlier this week that he wants quick legislative action on his plan to float a bond to repay state Medicaid debt owed to Maine's hospitals. The state's $186 million share would receive an additional federal match, to give Maine's 39 hospitals a long-overdue payday of $484 million in outstanding Medicaid payments.

LePage would also release $105 million in voter approved bonds in return for the Legislature's support. But the linchpin for the whole deal could pivot on the return Maine is currently getting from its sales of Allen's Coffee-flavored brandy, Absolut vodka and other liquors.

"The fact is with this plan, the state will see a much greater return on investment," LePage said.

LePage says the enhanced liquor revenues will be generated by the negotiation of a new retail liquor distribution contract when the current agreement expires in mid-2014. The governor envisions an arrangement that gives Maine a larger percentage of the profits and more control over pricing to make Maine more competitive with New Hampshire - a state he says many Mainers travel to when they want to buy liquor.

"The current contract has cost Maine hundreds of millions of dollars, and my plan will return this money to the state," LePage said. "We will contract out many services, among those logistics and warehousing. I believe under state management we can actually grow the business by lowering prices on spirits so Maine can better compete with New Hampshire. It will also give a better value to the customer."

The increased tax revenue LePage says his plan generates would come not from wide scale increased consumption in the state, but from the Maine sales that are currently lost to New Hampshire. If there are problem drinkers among those New Hampshire buyers, state Rep. Lance Harvell, a Farmington Republican, says LePage's plan certainly won't make their situation worse.

'Right now, if an alcoholic hypothetically is buying his alcohol in New Hampshire, Maine is still having to cover the costs," Harvell says. "That might be a bad way of putting it, but anyone buying alcohol there that could potentially be from Maine, Maine is having to cover the social costs of that."

"It concerns me greatly to think that we would be lowering the price of alcohol," says Dalene Dutton, the executive director of Five Town Communities That Care in Rockport that focuses on a number of problem adolescent behaviors - including substance abuse. She says it's clear to her that Mainers who are currently buying their liquor in New Hampshire won't be the only ones contributing to the state's new tax revenue collections.

"Studies have shown that the higher the price of alcohol, the fewer kids drink and the fewer kids get into trouble as a result of drinking, so we have car accidents and other accidental injuries and things like that, sexual behavior, all of these things," Dutton says. "Lowering the price of alcohol logically to me is going to increase the incidence of substance abuse - alcohol use - which is not a good thing for the state of Maine."

Democratic lawmakers who hold a majority on the Legislature's Appropriations Committee say they will want to see some level of acceptance by the LePage administration that lower alcohol prices will mean increased social costs. The governor's budget provides about $170,000 more in the next budget cycle for the Office of Substance Abuse than it does this year.

Committee member Sen. Emily Cain, an Orono Democrat, says that the OSA needs to receive an allocation that reflects the potential costs associated with the proposal.

"There is no way to just look at the business side without looking at the potential impact on substance abuse and the need for additional substance abuse, prevention and treatment in our community," Cain says.

In a prepared statement, Rich Cebra, chairman of the Maine Republican Party, urged Democrats in the Legislature to support the governor's plans for a new liquor contract revenue bond and put politics aside. 

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