Maine’s sales of hundreds of millions of dollars of bonds have been delayed while the Republican governor and Democrat-controlled legislature  debate how  to  raise $484 million owed to the state’s hospitals.

In January Maine Gov. Paul LePage introduced a plan to pay the $484 million in Medicaid bills, financing the payments in part with bonds backed by liquor revenue.

A 10-year private contract for the wholesale sale of liquor in state is expiring in summer of 2014. The state would take over the wholesale sales operation while still leaving the distribution to a private contractor.

Based on this anticipated revenue flow, the governor’s plan calls for the state to sell a $186 million revenue bond. Maine would pay this amount to hospitals for Medicaid payments owed back to 2009, which would trigger federal government matching payments of $298 million to the hospitals.

If the plan was enacted, LePage would be willing to release $105 million in voter-approved bonds that he has declined to sell, LePage spokeswoman Adrienne Bennett said Monday. The bonds were approved as long ago as November 2010. In addition, LePage has said that he would propose the sale of a $100 million bond to build a new prison and a $100 million bond to improve transportation facilities, if the debt to the hospitals is paid off.

In March Democrats, who control both houses of the state legislature, came up with an alternate plan to pay off the hospital debt. In their plan the right to supply the state with liquor would have been put up to bid.

In April the state’s budget office came out with a report that said the governor’s bonding approach would save the state about $30 million, said David Sorensen, spokesman for the Maine House Republicans.

Though the Democrats largely came around to supporting the governor’s approach, in the last few weeks they have introduced a new demand that the expansion of Medicaid coverage be added to any bill that would pay off Maine’s Medicaid obligations to the hospitals. The Democrats have “thrown a wrench into the works” with their new demand, Sorensen said.

“Maine expanded welfare 10 years ago, and we still haven’t paid that debt,” LePage said. “Mainers know that hospitals provide good jobs and are vital to the local economy. They know that paying our bills is the right thing to do. So why are Democrats still refusing to pay the hospitals?”

The Democrats see things differently. “Maine is losing out each day that the governor holds these bonds hostage,” said Maine assistant House majority leader Jeff McCabe. “Construction season is here. These bonds need to be boosting our economy, getting Mainers to work and putting money in the pockets of our middle class.”

The Maine Hospital Association has made statements in favor of divorcing the bond sale from the expansion of Medicaid.

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