U.S. Markets closed

Lawmakers OK with rejection of Maine liquor offer

AUGUSTA, Maine (AP) -- Top legislators signaled Thursday they support Gov. Paul LePage's rejection of an offer from Maine's wholesale liquor distributor to guarantee the state $320 million over 10 years if the state extends its contract without opening the bidding to other offers.

One of the lawmakers, Democratic Sen. Emily Ann Cain of Orono, said she was glad Maine Beverage Co. made the offer to the state, saying it provides the Legislature with a lot of valuable information about the potential of the state's liquor business.

Maine Beverage President and CEO Dean Williams told the state he could guarantee annual state liquor revenues of $32 million, with the potential for an additional $4 to $6 million annually. Maine Beverage has held the wholesale liquor contract for the past decade but the deal is set to expire next year.

In declining the offer Wednesday, LePage said he believes there's more value for the state in the wholesale liquor operation than Maine Beverage's proposal offered but invited the company to participate in a competitive bidding process.

Cain, a member of the Appropriations Committee, said the whole liquor contract matter faces a long and thorough review.

With the state looking for immediate revenues in 2004, Maine Beverage was awarded a 10-year contract for warehousing and distribution. In exchange, the state received $125 million up front, plus profit sharing.

Some Republican lawmakers say the state could have gotten a better deal.

"In 2004, we had a fire sale on our wholesale liquor contract that didn't result in the best deal for our state," said Senate GOP Leader Michael Thibodeau of Winterport. "Maine cannot afford to repeat this mistake. We need to make sure we maximize the revenue stream created by the next liquor contract."

House Republican Leader Rep. Ken Fredette of Newport agreed, saying it's important to maximize the value of the liquor contract.

"Maine Beverage Company has proven that the contract's value is substantially higher than what they paid for it in 2004. We must ensure that our return on this state asset is put to good use in our overall budget strategy," Fredette said.

Maine Beverage held out its offer as a possible alternative to LePage's plan to raise $186 million the state owes to hospitals for Medicaid services dating to 2009, which would trigger $298 million in federal funding to complete the repayment.

LePage has suggested the state take over liquor sales and issue bonds to pay the Medicaid debt, paying the bonds with future liquor sales. Maine Beverage said the revenue from the new contract could pay the debt without a bond issue.