AUGUSTA — More than two dozen firefighters testified at the State House Monday against a proposed cut in the state’s contribution to the retiree health plan that covers municipal first responders.

As part of a supplemental budget to close a $65 million shortfall for the current fiscal year, Gov. Paul LePage proposes cutting $777,738 — the entire state contribution to the health plan for the current fiscal year. State Controller Terry Brann told the Legislature’s Appropriations Committee that program payouts have been lower than anticipated, so the plan can afford the funding reduction.

“We’re feeling good about what we put into the trust and we have all the money to make the benefit payments,” he said.

But firefighters who oppose the cut say it’s the same kind of decision as those made years ago that helped create a $4.3 billion deficit in the state retirement system program.

“While the current administration barnstorms the state and points to what it terms bad policy decisions made by past administrations and the dire need for Draconian reform because of these misguided policies, they also seem all too ready to repeat these mistakes by not fully funding the state portion of this program,” said Rick Cailler, president of the Lewiston Firefighters Association.

The Department of Health and Human Services accounts for nearly $62 million of the shortfall in the fiscal year ending June 30. About half is owed to the federal government to repay what the state overbilled for MaineCare in 2002 and 2003.

About $10.4 million would cover increased enrollment in the state’s Medicaid program – more than 11,000 people have enrolled since last May, said DHHS Commissioner Mary Mayhew.

Brann said there weren’t many places to come up with funding to make up the shortfall.

The $777,738 would come from the Retiree Healthcare Plan for County and Municipal Law Enforcement Officers & Municipal Firefighters, which was created by the Legislature in 2007. The state contributes 45 percent of the contributions. There are 912 active plan participants and 69 retirees.

The total fund balance was $4.4 million as of June 30 of last year and there is an unfunded liability of $20 million, Brann said.

This raised questions from committee members who wondered why the first responder plan — funded at only about 25 percent – could afford a funding reduction when the state pension system – funded at 66 percent — is viewed as such a problem.

“You’re going to have trouble convincing me that (the pension system) plan is in trouble, but this one has 25 percent funding and (it’s) in good shape,” said Rep. John Martin, D-Eagle Lake.

And Rep. Ken Fredette, R-Newport, said he’s concerned that lawmakers will need to act quickly on such a significant proposal.

“What I’m uncomfortable about is it seems to me we’re looking at an issue that not ought to be part of an emergency package,” he said.

Decreasing funding for the first responder health plan, along with a proposal to take $4.3 million out of the state employee health insurance fund, will be the two sticking points in the supplemental budget. The bill must be passed by April 20 to meet payment deadlines at DHHS, said Senate Chairman Richard Rosen, R-Bucksport.

Bruce Hodsdon of the Maine State Employees Association told the committee the union opposes the $4.3 million transfer because it seems “to punish” state employees for finding ways to save money within the program.

“This proposal raids the plan’s fund of savings achieved through continued cost reductions in the plan,” he said. “Things like increasing co-pays, increasing deductibles and reducing the number of claims filed.”

Susan Cover — 620-7015

scover@mainetoday.com