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
Maine Legislature, Session 126, LD 0239
Committee: Veterans and Legal Affairs
Sponsors: FLOOD
Amends: 28-A MRSA §2, 28-A MRSA §83, 28-A MRSA §88, 28-A MRSA §89, 28-A MRSA §90, 28-A MRSA §453, 28-A MRSA §460, 5 MRSA §1523, 22-A MRSA §216

Legislative Document 
No. 239 
S.P. 75 
In Senate, February 5, 2013 
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 
(EMERGENCY) 
Reference to the Committee on Veterans and Legal Affairs suggested and ordered printed. 
DAREK M. GRANT 
Secretary of the Senate 
Presented by Senator FLOOD of Kennebec.  (GOVERNOR'S BILL) 
Emergency preamble. Whereas, acts and resolves of the Legislature do not 
become effective until 90 days after adjournment unless enacted as emergencies; and 
Whereas, this legislation involves the operation of the liquor laws and makes 
changes necessary to maximize revenues for the benefit of the people of Maine; and 
Whereas, the financial health of the State is in jeopardy due to the long-term 
amounts owed to Maine hospitals; and 
Whereas, funds generated by the implementation of this legislation will be used to 
retire the State's overdue financial obligations to Maine hospitals; and 
Whereas, in the judgment of the Legislature, these facts create an emergency within 
the meaning of the Constitution of Maine and require the following legislation as 
immediately necessary for the preservation of the public peace, health and safety; now, 
therefore, 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-1.  28-A MRSA §2, sub-§31-A is enacted to read: 
31-A.  Spirits administration.  "Spirits administration" or "administration" means 
the management of spirits activities involving the distribution and sale of spirits and 
fortified wine by the alcohol bureau or any person awarded a contract under section 90.  
"Spirits administration" includes, but is not limited to, financial and performance 
management; profitable and responsible growth management; management of contracts; 
management of agency liquor store matters and orders; personnel management; 
monitoring and reporting of spirits inventory; management of bailment records and 
billing; management of accounts receivable, accounts payable and tax collection and 
reporting; and sales and profit reporting.  "Spirits administration" does not include 
warehousing and distribution of spirits by the alcohol bureau. 
Sec. A-2.  28-A MRSA §2, sub-§31-B is enacted to read: 
31-B.  Spirits trade marketing.  "Spirits trade marketing" or "trade marketing" 
means oversight and management by the alcohol bureau or any person awarded a contract 
under section 90.  "Spirits trade marketing" includes, but is not limited to, agency liquor 
store category management, analysis and recommendations; agency liquor store shelf 
reset recommendations; agency liquor store displays, advertising, point-of-sale material 
and event marketing recommendations; development, production and distribution of 
sales, marketing and informational publications; consultation and coordination with 
suppliers and brokers on matters affecting their brands; and development, production and 
distribution of any social responsibility initiatives and compliance related to those 
initiatives. 
Sec. A-3.  28-A MRSA §83, sub-§1, as amended by PL 2003, c. 20, Pt. LLL, §1 
and affected by §4, is further amended to read: 
1.  Bureau of Alcoholic Beverages and Lottery Operations; rules.  Until the 
effective date of the privatization of the entire wholesale liquor business authorized by 
Unless one or more contracts is awarded under section 88 90, the alcohol bureau shall 
manage the sale, distribution and merchandising administration and trade marketing of 
spirits and fortified wine through state liquor stores, agency liquor stores and licensees.  
The alcohol bureau may establish rules and procedures for the administration of the state 
liquor laws under its jurisdiction.  The rules adopted under this section are routine 
technical rules pursuant to Title 5, chapter 375, subchapter 2-A.  The day-to-day activities 
of the alcohol bureau are under the supervision of the Commissioner of Administrative 
and Financial Services and the director of the alcohol bureau. 
Sec. A-4.  28-A MRSA §83, sub-§2, as amended by PL 2003, c. 20, Pt. LLL, §1 
and affected by §4, is further amended to read: 
2.  Purchase.  Until the effective date of the privatization of the wholesale liquor 
business authorized by section 88, the The alcohol bureau may buy and have in its 
possession spirits and fortified wine for sale to the public.  The alcohol bureau shall buy 
spirits directly and not through the State Purchasing Agent.  All spirits and fortified wine 
must be free from adulteration and misbranding. 
Sec. A-5.  28-A MRSA §83, sub-§8 is enacted to read: 
8.  Price regulation.  The alcohol bureau shall regulate the wholesale and retail 
prices of spirits and fortified wine sold under this Title. The alcohol bureau shall adopt 
rules for price regulation of the wholesale and retail liquor business at agency liquor 
stores.  A person awarded a contract under section 90 may distribute liquor pursuant to 
this chapter and is immune from antitrust action as long as the person is in compliance 
with the alcohol bureau's rules and all other applicable laws and regulations. 
Sec. A-6.  28-A MRSA §88, as enacted by PL 2003, c. 20, Pt. LLL, §2 and 
affected by §4, is repealed. 
Sec. A-7.  28-A MRSA §89, as enacted by PL 2011, c. 380, Pt. S, §1, is repealed. 
Sec. A-8.  28-A MRSA §90 is enacted to read: 
§90.  Management of spirits activities 
1.  Statement of purpose.  The Legislature finds that it is in the public interest to 
seek efficiencies, cost savings and increased revenues through the management of 
wholesale liquor activities, including the control of all revenues and proceeds from the 
sale of spirits and fortified wine, which may include a private sector person to provide 
administration, trade marketing and distribution and warehousing activities subject to 
price regulation and oversight by the alcohol bureau. 
2.  Authority to award contracts.  The Commissioner of Administrative and 
Financial Services may enter into a competitive bidding or bargaining process to award 
one or more contracts, subject to review under subsection 3, for spirits administration, 
spirits trade marketing and warehousing and distribution activities, to be effective on or 
after July 1, 2014.  A contract awarded under this subsection may require initial payment 
by a person awarded a contract due at the time of the award of the contract.  A contract 
awarded under this subsection may not be for a term of more than 10 years. 
3.  Review by legislative committees.  Prior to awarding a contract under subsection 
2, the Commissioner of Administrative and Financial Services shall provide a contract 
negotiated pursuant to subsection 2 to the joint standing committee of the Legislature 
having jurisdiction over alcoholic beverage matters and the joint standing committee of 
the Legislature having jurisdiction over appropriations and financial affairs so that those 
committees may review that contract prior to its execution. 
4.  Proceeds from liquor operations.  Net proceeds from the sale of spirits and 
fortified wine in this State must be credited to the Liquor Operation Revenue Fund 
established in Title 5, section 174. 
5.  Prohibition.  A person awarded a contract under subsection 2 is prohibited from: 
A.  Holding a retail license to sell liquor for off-premises consumption pursuant to 
chapter 45; and 
B.  Selling spirits and fortified wine directly to establishments licensed by the State to 
sell spirits and fortified wine for on-premises consumption pursuant to chapter 43. 
Sec. A-9.  28-A MRSA §453, sub-§2-C, as enacted by PL 2009, c. 213, Pt. JJJJ, 
§2, is amended to read: 
2-C.  Licenses.  Beginning July 1, 2009, the The bureau shall consider whether the 
applicant can satisfy the following criteria when determining whether to issue an agency 
liquor store license under this section: 
A.  The applicant has held a license in this State to sell malt liquor and or wine for 
off-premises consumption for more than one year immediately preceding application 
without a violation of any provision of this Title or, if the applicant has not held a 
license in this State to sell malt liquor or wine, the applicant has held a license in 
another state for at least one year to sell malt liquor, wine or spirits at retail for 
off-premises consumption without violation of the laws governing the sale of 
alcoholic beverages in that state and can provide the bureau with documentation of 
financial success as determined by the bureau; 
B.  The applicant will be able to stock at least $10,000 worth of spirits purchased 
from the State or the State's wholesale distributor upon issuance of an agency liquor 
store license; and 
C.  The applicant can purchase the initial stock of spirits using a bank check or other 
financial instrument that certifies that funds are available. 
Sec. A-10.  28-A MRSA §460, sub-§2, ¶M, as enacted by PL 2009, c. 459, §1, is 
amended to read: 
M.  The agency liquor store must purchase all distilled spirits served at a taste testing 
from the wholesale liquor provider as defined in section 501 State or a person 
awarded a contract pursuant to section 90. 
Sec. A-11.  28-A MRSA c. 21, as amended, is repealed. 
PART B 
Sec. B-1.  5 MRSA sub-c. 2 is enacted to read: 
SUBCHAPTER 2 
LIQUOR OPERATION REVENUE BONDS 
§171.  Legislative intent 
It is the express legislative intent that revenue financing bonds as authorized in this 
subchapter are tax-exempt or taxable bonds repaid as provided in this subchapter and 
such bonds do not include a legal or equitable claim against tax revenues of the State,  
and therefore do not represent constitutional debt of or the pledge of the full faith and 
credit of the State. 
§172.  Definitions 
As used in this subchapter, unless the context otherwise indicates, the following 
terms have the following meanings. 
1.  Ancillary obligation.  "Ancillary obligation" means the obligation of the 
Treasurer of State in connection with liquor operation revenue bonds issued under this 
subchapter under any of the following entered into by the Treasurer of State: 
A.  A credit enhancement or liquidity agreement, including an obligation in the form 
of bond insurance, letter of credit, standby bond purchase agreement, reimbursement 
agreement, liquidity facility or other similar arrangement; 
B.  A remarketing agreement, auction agent agreement, broker-dealer agreement or 
other agreement relating to the marketing of liquor operation revenue bonds, interest 
rate or other type of swap or hedging contract; or 
C.  An investment agreement, forward purchase agreement or similarly structured 
investment contract. 
2.  Costs of issuance.  "Costs of issuance" means an item of expense directly or 
indirectly payable or reimbursable by the Treasurer of State and related to the 
authorization, sale or issuance of liquor operation revenue bonds, including, but not 
limited to, underwriting fees and fees and expenses of professional consultants and 
fiduciaries. 
3.  Financing costs.  "Financing costs" means all costs of issuance, capitalized 
interest, capitalized operating expenses and debt service reserves, fees and costs of any 
ancillary obligation or other fees, expenses and costs related to issuing, securing and 
marketing liquor operation revenue bonds. 
4.  Fund.  "Fund" means the Liquor Operation Revenue Fund established in section 
174. 
5.  Liquor operation revenue bonds.  "Liquor operation revenue bonds" means a 
bond, note or other evidence of indebtedness issued by the Treasurer of State pursuant to 
this subchapter. 
§173.  Liquor operation revenue bonds authorized 
1.  Revenue bonds.  Notwithstanding any other provision of law and upon approval 
of the Governor, the Treasurer of State may issue liquor operation revenue bonds of up to 
$187,000,000 plus financing costs, and excluding bonds to refund bonds, for the purpose 
of retiring amounts determined by the Commissioner of Health and Human Services to be 
owed by the State to health care providers.  The bonds must be repaid solely from funds 
as provided in this subchapter. 
2.  Amount and terms.  The Treasurer of State may issue liquor operation revenue 
bonds in the amount and upon such terms as the Treasurer of State considers appropriate. 
The terms of the liquor operation revenue bonds, their repayment schedule and other 
provisions to facilitate their creditworthiness must be determined by the Treasurer of 
State. 
3.  Form; interest; taxability.  The Treasurer of State shall determine the following 
regarding liquor operation revenue bonds: 
A.  The form of the liquor operation revenue bond; 
B.  The rate or rates at which the bond bears interest, except that the rate must be 
includable in or excludable from the gross income of the bond owners for federal and 
state income tax purposes, as determined by bond counsel to the Treasurer of State 
and pursuant to the United States Internal Revenue Code of 1986, 26 United States 
Code, et seq., as amended; 
C.  The time of maturity, except that a liquor operation revenue bond must mature 
before July 1, 2029; and 
D.  Other such terms. 
4.  Not a pledge of the full faith or credit; not a debt.  Liquor operation revenue 
bonds are not, and may not be considered to constitute, a debt or liability of the State or 
of any political subdivision of the State, or a pledge of the full faith and credit of the State 
or of any political subdivision of the State but are special obligations payable solely from 
the funds and revenues pledged therefor. 
5.  Bond proceeds.  Proceeds from any sale of liquor operation revenue bonds must 
be deposited into the Health Care Liability Retirement Fund established in Title 22-A, 
section 216, except for any amounts required to be deposited in the Liquor Operation 
Revenue Fund by the terms of the bond. 
6.  Agreements with financial institutions.  For the purposes of this subchapter, the 
Treasurer of State may enter into an ancillary obligation or other agreement or contract 
with a commercial bank, trust company or banking or other financial institution within or 
outside the State that is necessary, desirable or convenient in the opinion of the Treasurer 
of State to provide any other services to the Treasurer of State to assist the Treasurer of 
State in effectuating the purposes of this subchapter.  The Treasurer of State may enter 
into, amend or terminate any ancillary obligation or other agreement as the Treasurer of 
State determines to be necessary or appropriate.  The ancillary obligation or other 
agreement may include without limitation contracts commonly known as interest rate 
swap agreements, forward purchase contracts or guaranteed investment contracts and 
futures or contracts providing for payments based on levels of, or changes in, interest 
rates.  These contracts may be entered into by the Treasurer of State in connection with or 
incidental to entering into or maintaining any agreement that secures liquor operation 
revenue bonds issued under this subchapter or any investment or contract providing for 
investment of reserves or similar facility guaranteeing an investment rate for a period of 
years not to exceed the underlying terms of the bonds.  The determination by the 
Treasurer of State that an ancillary obligation or other agreement or the amendment or 
termination of an ancillary obligation or other agreement is necessary or appropriate as 
provided in this section is conclusive.  An ancillary obligation or other agreement may 
contain provisions regarding payment, security, default, remedy, termination and 
payments and other terms and conditions as determined by the Treasurer of State, after 
giving due consideration to the creditworthiness of the counterparty or other obligated 
party, including any rating by any nationally recognized rating agency, and to any other 
criteria as may be appropriate. 
A liquor operation revenue bond or any ancillary obligation or other agreement made 
pursuant to this subsection may contain a recital that it is issued or executed, respectively, 
pursuant to this subchapter.  The recital is conclusive evidence of the validity of the 
liquor operation revenue bond or ancillary obligation or other agreement and of the 
regularity of the proceedings relating to them. 
7.  Remedies of holders of bonds.  If the Treasurer of State defaults in the payment 
of principal of or interest on any issue of liquor operation revenue bonds after the 
principal and interest become due, whether at maturity or upon call for redemption, and 
that default continues for a period of 30 days, or if the Treasurer of State fails or refuses 
to comply with this subchapter or defaults in an agreement made with the holders of an 
issue of liquor operation revenue bonds, the holders of 25% in aggregate principal 
amount of liquor operation revenue bonds then outstanding, by instrument or instruments 
filed in the office of the clerk of courts of Kennebec County and proved or acknowledged 
in the same manner as a deed to be recorded, may appoint a trustee to represent the 
bondholders.  The trustee, in the trustee's own name, by mandamus or other suit, action or 
proceeding at law or in equity, shall enforce all rights of the bondholders or holders of the 
ancillary obligations or other agreements and require the Treasurer of State to carry out 
any other agreements with the bondholders or holders of such ancillary obligations or 
other agreements and to perform the Treasurer of State's duties required under this 
subchapter, as long as the bonds are limited revenue obligations.  An obligation to make 
debt service payments does not constitute a debt or liability of the State or any political 
subdivision of the State within the meaning of any constitutional or statutory limitation, 
or a loan of the credit of the State, or a pledge of the faith and credit of the State or any 
political subdivision of the State, or a contractual obligation in excess of the amounts 
deposited with the State, and the State has no continuing legal obligation to appropriate 
money for those payments or other obligations.  Payments of the principal of, redemption 
premium for, if any, and interest on the liquor operation revenue bonds must be made 
solely from amounts derived from the Liquor Operation Revenue Fund established 
pursuant to section 174.  Neither the faith and credit nor the taxing power of the State or 
of any political subdivision of the State is pledged to the payment of the principal of, 
redemption premium for, if any, or interest on the liquor operation revenue bonds. 
§174.  Liquor Operation Revenue Fund 
1.  Fund established.  The Liquor Operation Revenue Fund, referred to in this 
section as "the fund," is a nonlapsing fund established within the Office of the Treasurer 
of State to pay amounts owed to holders of liquor operation revenue bonds.  The fund 
must be held separate and apart from all other money, funds and accounts. 
2.  Funding.  There must be deposited directly into the fund any amounts received 
pursuant to Title 28-A, section 90 and Title 22-A, section 216, and any other money or 
funds transferred or made available to the Treasurer of State only for the purposes of the 
fund from any other source including amounts required to be deposited in the fund by the 
terms of any bond secured by the fund. 
3.  Use of fund during bond retirement period.  Money in the fund must be held 
and applied solely to the payment of the interest on and principal of bonds secured by the 
fund as the bonds become due and payable and for the retirement of bonds, including the 
payment of any redemption premium required to be paid when any bonds are redeemed 
or retired before maturity or for the payment of ancillary obligations; except that, to the 
extent there is money in the fund not needed in accordance with terms of the bonds, 
before June 30th of each year, the State Controller shall withdraw an amount to be 
determined by the Treasurer of State but not exceeding $7,000,000 to be distributed as 
follows: 
A.  First, in equal amounts to an account within the Department of Health and Human 
Services and an account within the Department of Environmental Protection, up to 
$3,500,000 per account or the maximum amount allowed for federal matching funds 
purposes, whichever is less, to be used for revolving loan funds for drinking water 
systems and wastewater treatment; and 
B.  The remainder, if any, to an account within the Department of Transportation to 
be used for the construction of highways and bridges. 
Immediately upon retirement of all outstanding bonds secured by the fund, the State 
Controller shall withdraw any excess money in the fund and transfer it to the Maine 
Budget Stabilization Fund established in section 1532. 
4.  Use of fund after bond retirement.  After all bonds secured by the fund have 
been retired, additional proceeds credited to the fund from Title 22-A, section 216 and 
Title 28-A, section 90 must be disbursed on a quarterly basis by the State Controller as 
follows: 
A.  The lesser of 15% and the maximum amount allowed for federal matching funds 
purposes, divided equally between an account within the Department of Health and 
Human Services and an account within the Department of Environmental Protection 
for revolving loan funds for drinking water systems and wastewater treatment; 
B.  Thirty-five percent to an account within the Department of Transportation for 
construction of highways and bridges; and 
C.  The remainder to the Maine Budget Stabilization Fund established in section 
1532. 
Sec. B-2.  5 MRSA §1523 is enacted to read: 
§1523.  Constitutional prohibition on use of bond proceeds 
In accordance with the Constitution of Maine, Article V, Part Third, Section 5, 
proceeds from the sale of bonds authorized by a majority of electors pursuant to Article 
IX, Section 14 may not be used to meet current expenditures of the State.  For purposes 
of this section, "current expenditures" means operational costs due and payable and 
generated in the ordinary course of business during the term of the Legislature that 
authorized the bond issue. 
Sec. B-3.  22-A MRSA §216 is enacted to read: 
§216.  Health Care Liability Retirement Fund 
The Health Care Liability Retirement Fund, referred to in this section as "the fund," is 
established as a nonlapsing fund within the Department of Health and Human Services. 
The fund consists of proceeds from the sale of liquor operation revenue bonds pursuant to 
Title 5, section 173. The money in the fund must be used for the purpose of making 
payments to health care providers for services provided prior to December 1, 2012.  
When, as determined by the commissioner, there exist no outstanding amounts owed to 
health care providers eligible to be paid from the fund, the State Controller must transfer 
all amounts in the fund to the Liquor Operation Revenue Fund established in Title 5, 
section 174. 
Sec. B-4.  Maine Revised Statutes headnote enacted; revision clause.  In the 
Maine Revised Statutes, Title 5, chapter 7, after the chapter headnote, the headnote 
"subchapter 1, duties, generally" is enacted and the Revisor of Statutes shall implement 
this revision when updating, publishing or republishing the statutes. 
Emergency clause.  In view of the emergency cited in the preamble, this 
legislation takes effect when approved. 
SUMMARY 
Part A repeals the law privatizing the State's wholesale liquor business and the law 
requiring the Commissioner of Administrative and Financial Services to seek bids no 
later than June 20, 2013 for the renewal, replacement or continuation of the current 
contract regarding the privatization.  Instead, this bill allows the commissioner to enter 
into an agreement for certain wholesale liquor activities.  Part A also amends the criteria 
for obtaining a license as an agency liquor store to clarify that an applicant that was 
licensed in another state to sell malt liquor, wine or spirits at retail for off-premises 
consumption must have conducted that business without a violation of the laws governing 
the sale of alcoholic beverages in the state in which that applicant was licensed.  Part A 
also repeals the provisions of law regarding wholesale liquor providers. 
Part B authorizes the Treasurer of State, with the approval of the Governor, to issue 
liquor operation revenue bonds in an amount up to $187,000,000.  Part B establishes 2 
funds, the Health Care Liability Retirement Fund and the Liquor Operation Revenue 
Fund.  The Health Care Liability Retirement Fund is funded with the revenue from the 
sale of the bonds and used to pay debts owed by the State for services provided by health 
care providers prior to December 1, 2012; anything in excess of the amount owed is 
transferred to the Liquor Operation Revenue Fund.  The Liquor Operation Revenue Fund 
is funded by revenue from the management of wholesale liquor activities; such revenue 
will be used to pay the principal and interest of the liquor operation revenue bonds as 
those amounts become due.  During the repayment of bonds period, any excess revenue is 
transferred to the Department of Health and Human Services and the Department of 
Environmental Protection for revolving loan funds for drinking water systems and 
wastewater treatment and to the Department of Transportation for construction of 
highways and bridges.  Following the retirement of bonds, excess revenue is also 
transferred to the Maine Budget Stabilization Fund.  Part B also reiterates a provision 
contained in the Constitution of Maine that the proceeds from the sale of bonds 
authorized by the voters may not be used to meet current expenditures of the State.