AUGUSTA – Gov. John Baldacci is leaning toward proposing a trade of future lottery proceeds for upfront money as a big step toward financing a new two-year state budget.

Maintaining a no-new-tax stance, the governor also is expected to propose stretching out a state timetable for reducing Maine’s unfunded pension liability as a way to achieve substantial short-term savings.

Additionally, Baldacci may seek approval for changing some benefit standards in the state Medicaid program, which is known as MaineCare.

Aides shying away from details emphasized that the forthcoming budget package, due to be forwarded to the Legislature by Friday, was subject to change. But planning for a Friday release was already under way.

The value of securitizing lottery revenue has been pegged at $250 million for the biennium, while a reamortization of the unfunded retirement liability – moving from a schedule of 14 years to 23 years – could be worth more than $135 million through fiscal 2007.

The Baldacci administration, which in the last legislative session successfully used the privatization of the state’s retail liquor business to raise revenue, is facing a potential budget gap of about $740 million.

The idea of securitizing a stream of anticipated revenue has been raised in the past in the context of uses for Maine’s share of money from a national tobacco settlement.

Administration officials, who conducted at least a couple of briefings Wednesday afternoon for the presiding officers of the House and Senate and a leader of the Maine State Employees Association, are looking to realize savings of at least $65 million within the Department of Health and Human Services.

Personnel effects were not immediately clear as an outline of the budget package drawn from interviews with ranking administration officials, departmental managers, lawmakers and lobbyists began to emerge.

“We think there will be some impact on personnel and obviously our goal will be to minimize the impact on human beings,” MSEA Executive Director Carl Leinonen said after his session in the governor’s office.

Leinonen credited the Baldacci administration with a “good faith effort last time” to ease the effects of budget cuts in the face of a $1 billion structural gap.

This time around, Democratic Sen. Margaret Rotundo of Lewiston, who is the new Senate chairwoman of the Legislature’s Appropriations Committee, said the administration’s message has been that the budget picture is not as dark.

As part of his budget planning, Baldacci has pledged to make an additional $250 million available for public schools as the first half of a four-year phase-in to raise the state share of local education costs to 55 percent.

The governor is being aided by the availability of $94 million in higher than anticipated state revenue that was projected for the upcoming budget cycle by the Maine Revenue Forecasting Committee in its Dec. 1 report.

“The governor’s budget will further control spending, make critical investments and grow Maine’s economy,” gubernatorial spokesman Lee Umphrey said. Umphrey called the spending blueprint “part of a two-year process of regaining Maine’s financial position.”