AUGUSTA – A plan to recognize Sunday hunting and its associated fee increases has failed to survive a key legislative committee vote, leaving lawmakers scrambling for new revenue sources or comparable spending cuts.

Late Sunday evening, members of the Appropriations Committee shelved the controversial Sunday hunting proposal and then refused to extend last year’s $3 hunting license fee increase that would have provided $6 million in revenue to the state Department of Inland Fisheries and Wildlife. The issue was referred back to the Legislature’s Inland Fisheries and Wildlife Committee for further review and possible solutions to replace the money that would have been provided by the increased fees.

The decision to eliminate the fee increase only compounded the problem of balancing Gov. John E. Baldacci’s proposed $5.7 billion budget for Democrats and Republicans on the committee who have yet to agree on about $400 million worth of tax and spending proposals.

On Monday, committee members were in and out of closed-door sessions as they attempted to retool the budget plan for the two-year cycle that begins July 1. Key obstacles blocking bipartisan agreement on the package include:

. The governor’s proposed sell-off of lottery revenues over the next 10 years for a $250 million upfront payment.

. Nearly $140 million in cuts to state Department of Health and Human Services programs opposed by both parties. Republicans want to restore $40 million worth of proposed DHHS cuts and Democrats favor a little more than $50 million in restorations.

The committee took up the hunting license fee plan around 9 p.m. Sunday in a series of votes. Reflecting constituent opposition to the Sunday hunting plan, the 13-member panel rejected the proposal unanimously. Majority Democrats then went on to reject the fee extension, reasoning that hunters received nothing out of the price increase. However, minority Republicans, who had been critical of the governor’s use of fee increases to balance the state budget, voted in favor of the increases.

“Being Republicans, we’re concerned about the department’s being able to continue,” Sen. Richard Nass, a committee member from Acton, said Monday. “There was a bit of confusion over who was doing what and why.”

Sen. John L. Martin, D-Eagle Lake, also a committee member, said there was no way the panel could support the Sunday hunting proposal.

“It became clear that – even in the unorganized territories – people were complaining about Sunday hunting and there was no trade-off for the sportsmen,” Martin said. “The Democrats basically decided that we would not, at this point in time, do fees.”

George Smith, executive director of the Sportsman’s Alliance of Maine, concluded Monday the Appropriations Committee’s decision to strike the fee increases for hunters was only fair and reasonable since the lawmakers were unwilling to expand hunting opportunities in Maine.

“It was essential that the fees come out and now they can figure out how to fund the department properly without gouging sportsmen and giving us nothing in return,” Smith said. “That’s what we’ve been saying and at least the Democrats on the committee were listening.”

Baldacci said Monday that while the fee increases were an aspect of his budget, they were hardly a key component, adding it was now up to all of the players in the budget process to resolve the $6 million deficit.

“What we want is the Inland Fisheries and Wildlife Department to be more independent of the general fund,” the governor said. “It shouldn’t be in a position where the department is competing with mental health, children’s services and other programs. It pits the sportsmen against everybody else.”

Despite differences over some fairly large components of the budget, Republicans and Democrats have found more areas of agreement than disagreement on the overall package, prompting some members to express optimism Monday over the potential for a bipartisan budget. Nass and Martin said the parties are only about $10 million to $12 million apart on an agreement for the DHHS component of the bill.

“If we can come to some realization there, the only remaining issue would be the lottery,” Martin said.

Martin and Nass are part of an appropriations panel subcommittee working to evaluate Baldacci’s lottery plan, a proposal opposed by nearly all Republicans and several key Democrats. Despite discussions on the issue, no breakthrough compromise has surfaced.

“Problems await both Republicans and Democrats on the issue of the lottery securitization,” Martin said. “We are proceeding well in trying to understand it as well as put together some alternatives.”

Legislative leadership has set a March 20 deadline for the budget panel to complete its work.

In case lawmakers can’t negotiate a bill that could win two-thirds support in both the House and Senate so that the measure could become law as soon as the governor signs it, Democrats are preparing a budget proposal for the full Legislature to vote on by April 1. After that date, Democrats would be unable to craft a majority budget to take effect before the fiscal year ends on June 30, since a majority budget could not become law until 90 days after the Legislature adjourns.

Nass predicted much will happen over the next two weeks and held out hope for a budget bill that will be supported by both parties.

“We’ve had some major differences, but not irresolvable differences,” he said.