By Bonnie Washuk,Staff Writer

AUGUSTA – Freshman Rep. Barbara Merrill, D-Appleton, plans to vote against the state budget when it reaches the House floor, expected late tonight.

“The real deal-breaker for me is the degree of deficit spending,” Merrill said Monday. “I didn’t give up my job to serve people from my towns to enact a budget unprecedented in the history of Maine,” she said. “This isn’t Washington.”

Merrill dislikes the education funding formula in the budget, saying it will hurt rural towns like hers. But she really dislikes paying bills by borrowing $447 million. Other House Democrats are also unhappy, Merrill said, predicting tonight’s vote will “be close. They don’t have the numbers today.”

With House Democrats outnumbering Republicans only 76-73, it would take a only few defectors for the budget to be rejected.

If no state budget is passed by Thursday or Friday, that means the budget would have to be passed by a supermajority, two-thirds vote. That means Republicans will be in play.

And that will mean more cuts would happen, with Republicans wanting $215 million in more reductions to avoid future deficits.

Merrill said she welcomes Republican involvement. Voters don’t want one party controlling spending. “I’m not so partisan to believe our colleagues on the Republican side don’t want to do the right thing,” Merrill said. “It’s an enormous number we’re borrowing.”

Republican Appropriation Committee members agreed, saying in a written statement that the processing costs of the $447 million loan total $37 million, leaving the state with a net of $410 million. The state is not only borrowing to pay bills, it’s borrowing the closing costs, which is like taking out a home equity loan to pay the mortgage, said Appropriations Committee member Rep. Darlene Curley, R-Scarborough.

Sen. Peggy Rotundo, D-Lewiston, Senate co-chairwoman of the Appropriations Committee, which crafted the loan in the budget, said Monday she understands that borrowing isn’t popular, but said some good will come from it.

Borrowing $447 million would allow $120 million to pay down the unfunded liability – or future retirement costs – of the pension plan for teachers and state workers, said Administrative and Financial Commissioner Becky Wyke. Another $250 million would be spent on bills, and $66 million will go into the state savings account.

Because the state is using $120 million to speed up payments in future retirement debts owed to not-yet-retired state workers and teachers, paying that extra $120 million will over 23 years save $340 million, Wyke said.

Rotundo agreed.

“It’s like making additional payments on your house every month. Over the long term you save.” The budget does have borrowing, “but we tried to do it in the most responsible way possible. We would really see something positive for this money.”

The alternative was bleak, Rotundo said.

Legislators had to come up with $250 million for the referendum passed in June in which voters said they wanted more money for schools and property tax relief. At the same time, Gov. John Baldacci and Republicans insisted on no new taxes, Rotundo said.

When Republicans demanded $210 million in more cuts after some $400 million had been made, Democrats said “we just can’t go there,” Rotundo said.

To Democrats thinking about voting against the budget, Rotundo warned that more cuts will hurt “children with disabilities, families, our neighbors, and 75 percent of people in nursing homes. These numbers have faces on them.”

Rep. Sawin Millett, R-Waterford, said Republicans would cut “without removing people from programs and services they’re receiving.” Republicans would shrink government, slow growth and eliminate vacant positions, he said.