AUGUSTA – Rep. Matt Dunlap, D-Old Town, was reclining at his desk in the Fish and Wildlife Committee room. George Smith, executive director of the Sportsman’s Alliance of Maine, was leaning against a filing cabinet. They were debating whether hunting license fees should be increased, something Maine outdoors folks haven’t seen happen since 1996, and something Dunlap thinks could end the Department of Inland Fisheries and Wildlife’s financial woes for the long term.

“We should put away money for a rainy year. A hard winter would eliminate the moose hunt. We could have a 1971, when the deer season was canceled,” Dunlap said.

Smith says, “It’s too easy.” Money should come from state taxes.

The committee Dunlap co-chairs has been considering ways to solve the Department of Inland Fisheries and Wildlife’s impending budget shortfall – a possible $200 million hole in two years. It may attempt to do so with an unprecedented request to the Appropriations Committee on Tuesday.

Right now, the DIF&W’s only option is to clean out its surplus account – $3.4 million. To save it from having to do so, the Joint Standing Committee on Inland Fisheries and Wildlife likely will ask the Appropriations Committee for an extra $750,000 to help pay for department salaries.

The state employee contract raise of 4 percent, which begins July 1, will cost a total of $1.1 million. State lawmakers already have agreed to pick up roughly half of that.

Every other state agency’s employee contract is funded wholly from the General Fund. DIF&W is unique in this regard. It is allowed to keep its license fees, but it is forced to fund programs and staff, getting only part of its money from federal grants and dedicated funds and the state’s General Fund.

Without a bailout, DIF&W plans to use the surplus account to fund the pay increase for its 315 employees for the next two years, which would mean using all but a small portion of the $3.4 million in the account.

“It does balance the budget,” Dunlap said. “My concern is what is left behind. It puts off the problem to the future. It seems to make sense to have the General Fund pick up the overhead. It’s a matter of trying to secure the future.”

The DIF&W has been given money from the General Fund before, particularly for its search and rescue duties, which benefit the entire public. But with license sales having stagnated and the cost of inflation, the possibility of the department functioning independently has become increasingly remote without raising license fees every year.

“We want to reduce the need to dip into the carrying account,” said Deputy Commissioner Fred Hurley, a 30-year veteran of the department who listened to legislators wearily Monday. “As inflation goes up, license fees have not. Every four years we are back in this position.”

Finding new ways to take care of the DIF&W budget in the next two years is the Fish and Wildlife Committee’s present goal, and it has done this before.

In 1998, the problem of a shortfall was avoided when the committee helped the department raise $1.2 million through the introduction of the multiple moose lottery, an expanded bowhunting season and increased boat registration fees. That money helped DIF&W put $2 million into the carrying account.

Now, the committee is considering raising fees on at least three of its 117 licenses – turkey, bear and ATV permits.

Dunlap also has proposed coming up with license packages.

“I got the idea from the phone company,” Dunlap said. “They sell individual packages, with call waiting, and call forwarding. You buy them individually they’re expensive. As a package, you get a big discount.”

But Dunlap also wants to look further down the road – beyond the budget shortfall in two years.

His plan involves a possible one-time fee increase on hunting licenses.

The last license hike was in 1996, ending a three-year period when fees were gradually raised $4, to bring the cost to $20.

Dunlap said funds from a fee increase could be used to top off the carrying account and put additional money into the year-old fund created from lifetime license fees which now contains $215,000 and cannot be touched until 2010.

“I want to think ahead of the revolving carrying balance and how to utilize it,” he said. “You not only need a management plan, you need a more comprehensive plan.”

Rep. David Trahan, R-Waldoboro, took SAM’s stance on the issue Monday.

“At fish and game clubs around the state they’re opposed to fee increases – quite vehemently, actually,” Trahan said.

A week earlier, SAM’s George Smith said he didn’t have a problem with a license fee hike on its face, but he wanted a little quid pro quo.

“We need expansion of opportunities along with that,” Smith said. “There should be more fishing opportunities if you increase fees.”

What worries Dunlap is the idea of offering increased bag limits. Then, he said, you lose a season, you lose money.

On the other hand, the threat of losing license holders because of fee increases also looms, said Rick Record, DIF&W budget director. It’s a problem many other agencies have grappled with before.

“Fish and game agencies in other states have the same problem. If there was a good idea out there, someone would be doing it,” Record said. “I just got an e-mail from my counterpart in New Hampshire. They’re looking at a $10 fee increase. I can’t see that going over here.”