Democrats and Republicans in Augusta have found a contentious issue they can agree upon. The governor, however, finds himself on the outs with both the left and the right.

Gov. Baldacci has proposed mortgaging about $400 million worth of lottery proceeds over 10 years in order to get $250 million to help balance the two-year state budget.

The Labor Committee voted unanimously against the proposal Tuesday night, uniting lawmakers who often can’t find common ground, including liberal Sen. Ethan Strimling of Portland and conservative Sen. Lois Snowe-Mello of Poland.

But unity in opposition breaks down quickly when members of the House and Senate start talking about alternatives to Baldacci’s plans.

Generally speaking, Democrats would prefer to raise revenue to balance the budget. There are several options on the table, including broadening the sales tax to include goods and services that are currently exempt and increasing taxes on products like alcohol and tobacco.

Republicans would prefer to cut government spending and, in particular, take a bite out of Baldacci’s Dirigo Health and his plans to expand MaineCare eligibility.

There are differences within the parties, of course. Several Democrats, including Sen. John Nutting, have said they would back some program cuts. And a few Republicans might defect if tax hikes were limited to booze and smokes.

Baldacci is firm on two issues. He says he won’t raise broad-based taxes and doesn’t want to reduce spending on his goal of providing universal health care coverage. At the same time, voters have made it clear they expect property tax relief

That creates a $250 million impasse.

In a perfect world, the governor says he wouldn’t use future lottery proceeds to finance today’s budget problems. At the same time, the problem maintains the pressure on state government to reform, consolidate and contract where possible.

We join with the bipartisan group of lawmakers who have rejected the governor’s plan. Trading a $150 million in future revenues is too steep a price – even assuming the governor’s projections of improving economic circumstances are accurate – for upfront money that will further limit legislative options in the future.

During the last session, Democrats in the House proposed targeted tax increases on cigarettes and alcohol. Increasing the tax on cigarettes from $1 to $1.50 per pack would raise $35.5 million. Hikes on liquor sold in bars, wine sales and rental cars would raise another $10.5 million. That translates to $92 million over the biennium.

If the higher sin taxes were coupled with a deal to postpone temporarily the further expansion of MaineCare and a smaller lottery financing package, enough support might be cobbled together to pass the compromise. Everybody gets a little something: Dirigo isn’t gutted, MaineCare’s growth is slowed, broad-based taxes aren’t raised.

Smokers and drinkers won’t like it, and nobody gets everything they want. It’s an imperfect compromise, with deadly details that could scuttle any deal. We’re certain there are other formulas out there that would work just as well, or even better. It will take political courage to find and shepherd them through the legislative process.

It’s also possible the governor will use his muscle to ram through the budget, lottery plan and all. We’d prefer he make a deal.