Did Maine's 2013 AG opinion approve the legality of LD 239, the bill that would have raised state revenue from liquor sales to pay back Maine's debt to its hospitals?
Plain-English summary
In early 2013, Maine had an unpaid backlog of MaineCare reimbursements owed to its hospitals. The state had restructured its liquor distribution business in 2004, contracting with Maine Beverage Company; that contract was due to expire in 2014. LD 239 (introduced as Governor LePage's hospital-payment bill) proposed to use the upcoming renegotiation of the liquor distribution contract as the funding mechanism for paying down the hospital debt. New, more lucrative liquor contract terms would generate revenue that could support a bond issue, with bond proceeds going to the hospitals.
This 2013 AG opinion provided a legal analysis of LD 239 to the Legislature. The AG addressed: whether the State's authority to enter into the new liquor distribution contract structure was clear; whether the bond issue against future liquor revenues was properly structured under Maine constitutional limits on state debt; whether contractual obligations to existing distributors created exposure; and a series of drafting and structural concerns.
The opinion was a working analysis, not a green-light or a red-light. The bill was subsequently amended in response to AG feedback and was enacted (in modified form) as P.L. 2013, c. 269, providing the framework for the state's hospital-debt repayment.
Currency note
This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Background and statutory framework
Maine has a state-controlled liquor distribution system established under Title 28-A. Wholesale distribution of spirits is conducted through state-contracted distributors, with Maine Beverage Company holding the contract from 2004 through 2014. The contract was set to expire in 2014, opening the door to renegotiation on more favorable terms for the State.
The hospital debt at issue arose from MaineCare reimbursement timing: the State had effectively under-funded reimbursements over multiple budget cycles, accumulating a multi-hundred-million-dollar backlog owed to Maine's hospitals.
LD 239 proposed to use the new liquor contract proceeds as security for revenue bonds, with bond proceeds paying down the hospital debt. The legal architecture had to navigate Maine constitutional limits on general-obligation debt (which generally requires legislative supermajority and statewide voter approval) and the interaction with existing distributor contractual rights.
Common questions
Did LD 239 pass?
Yes, in modified form. The Legislature enacted the hospital-payment framework after revisions, including changes responsive to AG concerns.
What was the practical effect at the time?
Maine's hospitals received a substantial backlog payment funded through the liquor-revenue mechanism. The new liquor distribution contract was put out to bid and renegotiated.
Does this opinion still matter today?
The bill has been law for over a decade. The substantive analysis in the opinion is largely of historical interest. The legal frameworks the opinion analyzed (Title 28-A liquor regulation, constitutional debt limits) continue to apply but have been amended over time.
Why did the AG offer a legal analysis instead of a yes/no opinion?
Maine AG opinions on pending legislation typically work through legal issues rather than issuing simple thumbs-up/thumbs-down rulings. Legislators use the analysis to refine the bill before passage.
Citations
- Title 28-A M.R.S. (Maine Liquor Liability and Trade Practices)
- Maine Constitution article IX (state finance and debt limits)
- LD 239, 126th Legislature (2013), enacted as P.L. 2013, c. 269
Source
- Landing page: https://www.maine.gov/ag/about/ag_opinions.html
Original opinion text
MAINE STATE LEGISLATURE
The following document is provided by the
LAW AND LEGISLATIVE DIGITAL LIBRARY
at the Maine State Law and Legislative Reference Library
http://legislature.maine.gov/lawlib
Reproduced from scanned originals with text recognition applied
(searchable text may contain some errors and/or omissions)
-~(;:'! REGIONAL OFFICES
~- ~~ 84 HARLOW ST. 2ND FLOOR
BANGOR, MAINE 04401
TEL: (207) 941-3070
]ANET T. MILLS FAX: (207) 941-3075
ATTORNEY GENERAL
415 CONGRESS ST., STE. 301
PORTLAND, MAINE 04101
TEL: (207) 822-0260
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STATE OF MAINE
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April 9, 2013
Senator Dawn Hill
Representative Margaret R Rotundo
Chairs, Joint Standing Committee on Appropriations and Financial Affairs
Room 228, State House
Maine State Legislature
2 State House Station
Augusta, Maine 04333
Re: LD 239, An Act To Improve the Return to the State on the Sale of Spirits and
To Provide a Source of Payment for Maine's Hospitals
Dear Senator Hill and Representative Rotundo:
I was unaware until this morning that the Committee wished our Office to provide
information regarding the Governor's Liquor Operation Revenue Bonds bill. The
individual who worked most closely on this issue is not available today and I am
required to be in other committees this afternoon. However, let me simply
summarize the view of this Office as follows:
LD 239 as originally drafted raised questions under Art. V, Part Third, Section S of
the Ma,ine Constitution (added in 1976), which prohibits "the use of proceeds from
the sale of bonds to fund current expenditures," as well as under Art. IX, Section 14,
which limits the amount of general obligation debt that may be authorized without
public referendum to $2,000,000.
This Office has worked with the Treasurer and with the Governor's legal counsel,
with input from private bond counsel, to assist in redrafting the bill in its present
form. See draft attached to testimony of Michael Cianchette of March 11, 2013.
Although this legislation raises novel legal issues that, to our knowledge, have not
been litigated previously, I believe the bill in its revised form is defensible against a
constitutional challenge.
'I
For background on the constitutional issues surrounding similar measures, please
see, e.g., Opinion of the Attorney Gerieral of April 23, 2009; Allen v. Quinn, 459 A.2d
1098 (Me.1983); Opinion of the Justices, 146 Me. 183, 79 A.2d 753 (1951); and
Farris v. Goss, 60 A.2d 908 (Me.1948).
This Office takes no position on the wisdom of or the public policy implications of
raising revenue in the manner proposed in this legislation.
Thank you.
¼-
erely,
et T. Mills
Attorney General
Cc: Michael Cianchette, Governor's Office
Senate President Justin L. Alfond
Speaker Mark W. Eves
Senate Majority Leader Seth A. Goodall
Assistant Senate Majority Leader Troy D. Jackson
Senate Republican Leader Michael D. Thibodeau
Assistant Senate Republican Leader Roger J. Katz
House Majority Leader Seth A. Berry
House Majority Whip, Jeff M. McCabe
House Republican Leader Kenneth W. Fredette
Assistant House Republican Leader Alexander R. Willette