BANGOR — Standing next to a bag that contained all of her worldly goods, Arlene Holt spoke of a personal nightmare that many fear will happen to more mentally ill people should Bangor Mental Health Institute be forced to close.

“They say I’ve fallen through the cracks. I haven’t fallen. The system has fallen down around me,” said Holt. With her personal story of mental illness, homelessness and despair, the 31-year-old captured the concerns of a packed audience attending a two-hour forum on the state mental health system Monday evening at City Hall.

Homeless for 10 weeks, Holt sleeps at the Hope House, a local shelter and rehabilitation center. She walks the streets during the day waiting for the shelter to open at 5 p.m. Walking is difficult for the short-haired, expressive woman because she has cerebral palsy which forces her to wear leg braces. She also suffers from manic depression and epilepsy and has bounced in and out of the state mental health system for half her life, Holt said.

Her eloquent testimony epitomized politically charged discussions under way locally and in Augusta about the future of the system which serves about 20,000 people.

An estimated 125 people crowded the third-floor City Council chambers and spilled out into the hall Monday to hear one state commissioner, five legislators and the superintendent of Bangor Mental Health Institute review the status of the area’s mentally ill population, and the institutions that serve them.

Many in the vocal crowd sported “We Need BMHI” buttons. They voiced concern about a lack of high-quality community services to take care of people discharged from BMHI. They stressed the need to keep BMHI open, perhaps in altered form, to take care of the state’s most vulnerable population.

“You’re being cruel to people with mental illness,” charged Kay Lebowitz, a former city councilor and former legislator who urged the panel of legislators and Melodie Peet, commissioner of the Department of Mental Health and Mental Retardation, to keep BMHI open. She was one of the few speakers to draw applause from a crowd not easily placated with bureaucratic assurances that the local mental health institute would not close in the immediate future.

Peet has recommended a total revamping of the Department of Mental Health and Mental Retardation. One of her ideas — to rechannel $4.5 million in savings achieved by reorganization back into the department — has gained approval from the State Productivity Realization Task Force. Gov. Angus King is expected to sign the measure this week.

She recommended to Gov. King two months ago that he close the Augusta Mental Health Institute, Peet said. She has made no recommendation to close BMHI. The governor deferred action on her re- commendation, effectively “taking off the table” the question of closing any mental health institute, Peet said.

In turn, King has formed a stakeholder’s advisory group for comment on the state’s mental health system. The group in March will begin studying the state’s mental health system with an eye toward improved delivery of services. Efforts will be made to steer the group away from the question of whether to close one or both mental health institutes, Peet said.

A direct woman, Peet’s quiet demeanor was no-nonsense. She told the crowd at the start of the forum — one of five held so far around the state on mental health issues — that the state’s system for treating mentally ill people is outdated and needs revamping.

She quelled some fears of BMHI employees by expressing support for funneling trained state employees into the community-service system to continue their work with former mental health institute patients.

Also presiding at the forum were Rep. Jane Saxl, D-Bangor; Rep.Hugh Morrison, D-Bangor; Sen. Sean Faircloth, D-Bangor; Rep. Richard Campbell, R-Holden; Rep. Ralph Carr, D-Hermon; and Larry Ventura, BMHI superinten- dent.

It’s a fact that the nation is moving away from the trend to house all mentally ill people in state institutions, Peet said. Vermont this year closed its last mental institution in favor of placing clients in strong, community-based programs. Connecticut, the state where Peet last worked, recently closed several mental health institutes.

Peet said recent discussions have revealed Maine should aim for a 100-bed institution to take care of patients with severe mental illness who present a danger to themselves or others if placed in community programs. That program could be placed at BMHI to serve the northern part of the state which often loses funding battles for mental health services and other programs.

The state now spends 62 percent of its mental health budget on 5 percent of its mental health clients who are institutionalized.

“The number of people in institutions has dropped dramatically in recent years. Most of our patients are in the communities of Maine,” Peet said.

Sen. Faircloth issued a direct challenge to Peet, asking her to speak for herself and for the governor and to give definitive assurance that BMHI would not be closed.

Peet stopped short of giving the firm assurance Faircloth sought.

“I wouldn’t presume to speak for Governor King,” Peet said. “Ultimately the question of whether or not a hospital is closed is not data-driven. It’s always a political call.”