AUGUSTA – Gov. Angus S. King’s $35 million budgetary life raft may be about to be deep-sixed by the Legislature.

In his efforts to close a $253 million gap in his $5.5 billion state budget, King is relying in part on a Gov. John McKernan-era mechanism he railed against when running for governor in 1994.

Rather than pay off the state’s debt to the Maine State Retirement System on the 19-year schedule the Legislature agreed to last year, King decided to stretch out the payment plan an additional three years.

While the extra three years to the amortization schedule reduces the state’s payments by $35 million every two years, the extra payments and interest over the 22 years will end up costing taxpayers nearly $800 million more.

Even though King’s proposal returns the state to the same repayment schedule it was on before the 19-year plan was adopted just last year, key lawmakers Wednesday were adamantly against tinkering with the retirement fund as a means of balancing the budget. Some were disappointed the governor did not revise that aspect of his budget package during his Tuesday night State of the State address.

Instead, King chose to use the opportunity to rally public support for his laptop computer plan, which now has about $50 million locked up in a technology endowment fund. Rather than accrue an additional $800 million in interest charges by refinancing the retirement fund, some lawmakers suggest that it would be smarter to take the $35 million out of the state’s $143 million Rainy Day Fund or the technology fund.

During interviews Wednesday with legislative leaders, it was clear both options were being considered.

“Anything makes more sense fiscally than pushing the debt schedule out for the retirement system,” said Maine Senate President Michael Michaud, D-East Millinocket. “We’ve had two upgrades with our bond rating agencies, and one of the issues they keep pointing to is the amount of debt in the retirement system. We’ve made great strides over the last four years to reduce that. I hate to see us going back to a budget that’s fiscally irresponsible.”

Senate President Pro Tem Richard Bennett, R-Norway, doubted that King has the majority votes he needs in the House and Senate to spend money from the technology fund, adding that the governor’s refinancing plan for the Maine State Retirement System wasn’t winning any converts to his side for the computer program.

“Angus King has been saying for the last six years that we need to get our fiscal house in order and that we need to get things on an even keel before we talk about tax cuts,” Bennett said. “Then he comes in at the slightest economic dip – and this isn’t even a dip, we’re just meeting our economic forecast and not exceeding it – and we now have to resort to this gimmick. What are we going to do if we actually have a recession?”

House Majority Leader Patrick Colwell, D-Gardiner, and Maine House Speaker Michael V. Saxl, D-Portland, both expressed dismay at King’s desire to cut programs such as the Healthy Maine Fund and to stretch out the amortization schedule of the Maine State Retirement System while suggesting that the technology fund or the Rainy Day Fund should not be on the table. Saxl said King’s plan was a step backward for the state.

The state has borrowed from the state employees retirement fund in the past or failed to make necessary monthly payments to the fund as a way to overcome budget shortfalls in economic hard times. The amount the state owes the fund is referred to as an unfunded liability.

“A lot of states deal with unfunded liability issues in different ways, but I haven’t seen anyone reamortize to a longer period of time,” Saxl said. “We’ve been trying to reduce the debt to the unfunded liability.”

During his regular press conference Wednesday, King was defensive over his decision to refinance unfunded liability, charging that the full impact of the decision to reduce the payment schedule from 22 to 19 years was not known when it was adopted last year. By summer, he said, it was clear to him that projected revenues would not allow the state to accelerate the payment plan. He bristled at suggestions that his decision amounted to “raiding” the retirement fund.

“We have made so much progress on the pension fund,” King said. “All I’ve said is, ‘Hey, we got ahead of ourselves in our desire to do good here.’ We can’t afford it this year, and after all that’s been done, to say we’re raiding the pension fund, that’s just not so.”

The House speaker wasn’t so sure. Saxl said even though Maine has a constitutional amendment that prevents the governor or the Legislature from “raiding the pension fund,” King was getting a little too close to the line. “While this may not be strictly constitutionally illegal, it certainly may violate the spirit of that law,” Saxl said.

King preferred to compare the refinancing to refinancing a home mortgage in tough times and maintained that last year’s decision to reduce the payment plan from 22 to 19 years was done mostly “at the insistence of Mike Michaud.”

“And it turns out we did it prematurely, we couldn’t afford it,” he said. “I’m not doing anything except to return us to where we were last year. It’s true that if it stays at 22 as opposed to 19 over the course of that period, there will be additional interest charges of around $790 million. That assumes we don’t make any changes in the future. But we moved it down from 30 to 22, and I’d like to continue to move it down. This isn’t something that I did lightly or something that I think is fun.”

If the $35 million doesn’t come from the refinancing plan, then lawmakers will have to find the money elsewhere.