AUGUSTA – Republicans are proposing state budget cuts that would eliminate MaineCare for more than 21,000 people, end prescription drug benefits for about 1,500 elderly Mainers and reduce state funding for Head Start and other programs.

Republican and Democratic legislators parted ways Thursday on a budget that highlights the stark philosophical differences between the parties and is raising tension in an election year.

Democrats say Republicans are underestimating the extent of the proposed cuts, based on estimates they have from advocates. Republicans say agencies that receive state funds can cut administrative costs, rather than hurting children and elderly Mainers who benefit from the programs.

Republican leaders set the stage for the party-line vote by the Appropriations Committee by saying at a news conference Thursday morning that cuts to MaineCare are needed to bring Maine more in line with what other states spend.

“We are here because previous legislatures and governors have presided over an explosive, irresponsible and unaffordable expansion of MaineCare to tens of thousands of people who would not qualify for Medicaid coverage in other states,” said Senate President Kevin Raye, R-Perry.

The cuts are part of an attempt to close an $83 million funding shortfall in the Department of Health and Human Services through June 30, 2013. Lawmakers learned last week that state revenues are up about $50 million over previous projections, leading Democrats to ask why Republicans are still pushing for significant cuts.

“Where’s the crisis?” asked Sen. Dawn Hill, D-York. “Why aren’t we looking at helping these people who need help?”

In response, Sen. Roger Katz, R-Augusta, said the state cannot continue to fund a MaineCare program that has been expanded throughout the years beyond what the state can afford.

“We can’t be all things to all people,” he said. “Increasingly, the MaineCare budget is taking up more and more of our General Fund revenue. It is preventing us from making investments that we need to make.”

Thursday’s 8-4 vote marked the first time that the Appropriations Committee, which has been meeting for 17 months, has broken along party lines on a budget.

Republicans in the House and Senate are expected to pass the budget with little or no Democratic support when the Legislature reconvenes Tuesday.

Gov. Paul LePage is happy with most of the budget, including a promise to repay more money that the state owes to hospitals, said his spokeswoman, Adrienne Bennett.

“We’re in a positive place right now,” she said. “We’re encouraged by what we’re seeing. The Republicans have stepped up and made the types of structural changes the governor wants to see.”

The budget proposal also includes tax cuts that legislators set aside earlier this year. It proposes to:

Increase the amount of pension income that would be tax-exempt, from $6,000 to $10,000 a year.

Give an income tax exemption to active-duty military personnel for work outside the state.

Provide a sales tax exemption for commercial wood harvesting, and commercial greenhouse and nursery products.

All of the tax cuts would start in fiscal year 2013-14.

Democrats asked what costs will be passed on to future legislators if the tax cuts are approved. Republicans said they are counting on a projected revenue increase in future years to more than cover the cost of the tax cuts.

For example, revenues are projected to increase by nearly $27 million in fiscal year 2014-15, and the cost of the pension tax cut that year would be about $21 million, said Rep. Kathleen Chase, R-Wells.

Groups that represent the poor and women decried the proposed spending cuts as unnecessary.

The budget would cut more than $400,000 from family planning, although those services would still be supported by fees and nearly $5 million in other state and federal funds.

“The programs that were slashed today are effective, proven strategies that improve public health, reduce unwanted pregnancies, prepare young children to learn, allow low-income parents to earn a living, and support our most fragile elderly,” said Eliza Townsend, executive director of the Maine Women’s Lobby. “Cutting spending in these areas is shortsighted and fiscally irresponsible.”

Tension grew in the committee room as both sides took turns giving speeches about why they support or oppose certain cuts.

“This committee should be proud of the work it’s done in entitlement reform,” said Rep. Ken Fredette, R-Newport.

That prompted Rep. David Webster, D-Freeport, to say he’s not proud that there are waiting lists for services. “I’m not proud about the fact that people are lined up in the ER with mental health issues,” he said.

Rep. John Martin, D-Eagle Lake, said he will be glad to campaign in the fall against Republicans because of tax cuts that have been passed but not funded.

“I look forward to the campaign, running on the structural gap of the Republican Legislature,” he said. “It will be very enlightening to see candidates run for cover.”

At Thursday morning’s news conference, House Speaker Robert Nutting, R-Oakland, said Republicans will be glad to explain to voters the choices they have made as the majority party.

“We’re going to campaign on this budget,” Nutting said. “It’s the first time in a long time we’ve dealt with structural problems that pestered the Department of Health and Human Services to the point we have to revisit it year after year after year.”

The budget would largely preserve the General Assistance program, which is administered by cities and towns.

LePage issued a line-item veto of the General Assistance portions of the supplemental state budget that the Legislature passed last month, saying it did not cut the program enough. Lawmakers said Thursday that they are holding their ground on the issue.

The budget proposes to give large cities and towns an 85 percent state reimbursement for the cost of General Assistance, not the 50 percent that LePage wants. That translates into an additional $4.3 million for the program, which largely provides money for temporary housing.

Appropriations Committee Senate Chairman Richard Rosen, R-Bucksport, said Republicans and Democrats on the committee agreed they would not renegotiate General Assistance.

Bennett said the governor is disappointed, but can accept leaving General Assistance as it is for now. She said he will be back in January seeking additional cuts.

State House Writer Susan Cover can be contacted at 620-7015 or at:

scover@mainetoday.com