The budget proposal that was voted out of the state Appropriations Committee after a marathon session late last week is built upon borrowing.

There’s no other way to honestly describe it.

Maine voters mandated an increase in spending on education with a November referendum vote. Gov. Baldacci and most Republicans in the Legislature have rejected increases in broad-based taxes out of hand. Most Democrats and some Republicans rejected the notion of draconian cuts in Medicaid and social services.

That leaves borrowing.

In the governor’s original proposal, he would have borrowed the money by selling off future lottery revenues. Appropriations Democrats, working with Republicans on the committee, replaced that with about $450 million in revenue bonds.

Republicans can claim several victories from their negotiations. The budget would use the bonds to pay down the unfunded liability owed to the state’s teacher pension plan, contribute about $66 million to the reserve fund and reduce by about $16 million – more in future years – the structural budget gap the state faces. Also, the budget would bring state and federal tax law into conformity on student loan interest and the child care credit.

Democrats were able to protect Dirigo and the expansion of Medicaid from determined Republican efforts to stymie both, while balancing the demand to increase education funding without a sales tax increase.

But in the end, without enough revenue and without the political will to cut more – the Appropriations Committee did slash about $90 million in health care spending that will have real consequences on people’s lives – borrowing was the only option left on the table.

We opposed the governor’s plan for the lottery. And while we support the idea of lowering the amount the state owes in unfunded liability, borrowing to balance the state budget is troubling. It’s easy to oppose the plan purely on principle. But it seems a reasonable alternative when no good choices were left on the table.

The politicking has already begun. The Maine Republican Party says Democrats had no interest in bipartisanship, that they rammed an irresponsible budget through. But, frankly, Republicans offered no sound alternative and had no reason – besides good governance – to provide cover for a budget over which they had small, but irreconcilable, differences and little to gain politically.

Democrats and Republicans differ over the role of government in providing health care. When the budget hinges, at least in part, on that, compromise – and a two-thirds budget – are out of reach. Democrats have a majority in both the House and Senate, and if they are successful at holding members in line, they will pass a majority budget before April 1. If not, it’s a whole new ballgame.

Given the political reality that the 2006-07 budget likely will include significant borrowing, we wonder whether voters will have a taste for general revenue bonds, which are next on the to-do list for the Appropriations Committee. The governor has proposed a $197 million package, and several alternatives are working their way around the State House. According to Finance Commissioner Becky Wyke, the revenue bonds shouldn’t affect the state’s general revenue bond ratings and because the money pays down other liabilities and adds to the state’s reserve funds, the borrowing in the budget would likely be viewed favorably by Wall Street.

The Democrats are trying to ride out a revenue storm by using one-time revenue to balance the books, hoping that growth will fill the holes in the budget down the road. The plan, also in the 2005-06 budget, has worked in the past. The state is growing and has recovered many of the jobs, if not the salaries, lost during the recession. But cuts in federal Medicaid funding and a mandate to increase education spending has created new problems.

In the end, we do not support an increase in broad-based taxes for fear it would damage the state’s still-fragile economy, although we would support increases in targeted taxes on things like alcohol and tobacco. We also can’t sign off on $250 million in cuts to social services and, particularly, to health care and mental health services.

That leaves a particularly distasteful choice. Like the members of the Legislature who eventually vote in favor of this budget, we’re left with borrowing.