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Gov LePage Proposes to Link Hospital Payments to Liquor Sales Change
01/15/2013   Reported By: Susan Sharon

Gov. Paul LePage today unveiled a plan to grow Maine's economy by paying off the $186 million it owes to hospitals for MaineCare services, and releasing bonds recently approved by voters for transportation improvements, conservation and construction at post-secondary education institutions. The entire plan hinges on passage of emergency legislation to allow the state to take over operatonal control of liquor sales beginning next year. Susan Sharon has more.

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Gov LePage Proposes to Link Hospital Payments to L
Originally Aired: 1/15/2013 5:30 PM

Gov. LePage campaigned on the theme of having the state pay its bills. He's already taken steps to reform the state's hospital reimbursement system, ensuring that hospitals are paid as they provide MaineCare services. But he says it hasn't gone far enough. A $484-million debt remains.

Under the governor's new plan, the state would pay $186 million to the hospitals, which would trigger a nearly $300 million federal match.

"We are putting a proposal forward, to use the future liquor revenues to fund a bond issue so we can pay our hospitals once and for all," LePage said today.

What that means is, beginning next year, when the current 10-year private contract for liquor sales expires, the state will get back into management of the liquor business that it gave up in 2004.

Gov. LePage says he estimates liquor sales are worth about $30 million a year. Those future sales would be uses as collateral for a revenue bond that would be used to pay back the hospitals. This is different than a general bond which is backed by the credit of the State.

LePage says that's why he has refused to release voter authorized bonds. This strategy, he says, gives him more comfort and should give the credit rating agencies more comfort too. "The number one issue that the rating agencies have is that we don't pay our bills," he said. "Once we pay our bills and we get this long-term liability off the books, then we can sell the bonds with a lot more comfort that we won't be losing our credit rating."

With the Legislature's approval, the governor says he would issue voter-authorized bonds, including a $51.5-million bond for transportation improvements, and $53.5 million for conservation, clean water upgrades and construction at post-secondary education institutions.

In addition, the governor has proposed a $100-million bond for construction of new correctional facilities.

"I think what we're really seeing now is the beginning of the process," says House Republican Leader Ken Fredette, of Newport. Fredette was on hand for the governor's news conference at the University of New England, where construction of a new dental school is underway. UNE would be the beneficiary of $3.5 million when the bonds are sold.

"It's a very serious proposal," Fredette says. "It's something that's in the best interest of the people of the state of Maine for jobs and for quality health care, and I think it's something that's going to get a lot of traction and should be passed soon."

Lawmakers are still digesting the plan, which was only released Tuesday afternoon. But Democratic Senate President Justin Alfond of Portland says his early read is that it's thin on details.

"The liquor contract numbers don't add up," Alfond says. "And I think it's our responsibility as elected leaders to look at everything very carefully to get the best deal for the state of Maine."

Alfond says no one is suggesting that the state should not pay back the hospital debt. He says the questions are:  How can that best be done, and how can lawmakers ensure that new revenues are used wisely?

Alfond refused to reject the plan outright, but he says there are big risks to borrowing against Wall Street. Dozens of representatives from Maine hospitals and members of Maine's business community attended the governor's announcement. Mark Curtis is general manager for Gorham Sand and Gravel, a local construction company. He says it's a great time for Maine to make this kind of investment.

"It really does two things:  It puts that money into the economy and into the hands of the construction companies and into the hands of the people that work for the construction companies," Curtis says. "Because that's the important part, and the return on investment is huge."

The governor is hoping that with enactment of his emergency legislation, hospitals could receive their payments and general bonds could be sold within a matter of months.




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