AUGUSTA – The Legislature’s Appropriations Committee postponed a vote Tuesday on a milk-subsidy program designed to help dairy farmers break even when milk prices are low.

Lawmakers are struggling to finish work on the state budget for the rest of 2009 and the next two years. Coping with historically low milk prices has emerged as one of their more difficult tasks. Negotiations on the Dairy Stabilization Tier Program stalled Tuesday for the second straight day.

“It’s all politics now,” Julie Marie Bickford, president of the Maine Dairy Industry Association, said to a group of anxious farmers gathered outside the committee room.

Maine’s tier program, created in 2003, has served as a lifeline to many farmers struggling to stay afloat.

The program ensures that when nationally set milk prices fall below a certain level, dairy farmers get paid the difference. Funds come from a handling fee assessed on milk; the fees are deposited in the state’s General Fund.

When the price of milk dips below the break-even point, the handling fees are generally sufficient to cover what the state pays out to farmers. But for months, historically low milk prices have caused an imbalance in the system, making the program unsustainable.

While many dairy farmers and legislators have agreed on what they think is the best way to distribute the $13.35 million earmarked for the program, Sen. John Nutting, D-Leeds, co-chairman of the Agriculture, Conservation and Forestry Committee, stands firmly opposed.

“To me, their proposal is shortsighted,” said Nutting on Monday. “It’s a huge gamble.”

The plan, which was supported by a 10-3 majority in Nutting’s own committee, would maintain the status quo and create a dairy task force to work at keeping the program viable in the long-term.

Nutting, a dairy farmer, calls that move a gamble because if milk prices remain the same, the funds will run out in about nine months. He agrees a task force should be created, but thinks the monthly payments made to farmers should be slightly reduced, to stretch them out over a longer time.

“It’s a difference in philosophy,” he said. “Some would like it up front and some would like a check every month.”

House Majority Leader John Piotti, D-Unity, who helped create the program, said that endorsing a plan that could potentially bankrupt the program in less than a year may make some people uncomfortable, but the alternative could be worse

Some dairies might not survive without the full subsidy, Piotti said.

The majority of lawmakers and farmers hope the task force will come up with a solution or that milk prices will turn around, Piotti said.

“(The milk price) is going to either go up or it doesn’t matter, because if it stays the way it is, everyone will go out of business,” said Jay Roebuck, a dairy farmer in Turner who milks about 130 cows.

House and Senate leaders have been directly involved in the issue, because support from two-thirds of lawmakers is necessary to pass the budget in time; securing Nutting’s vote in the 35-member Senate may be critical.

Appropriations Committee members said late Tuesday they planned to take up the milk program sometime on Wednesday.