AUGUSTA – Surrounded by the bill’s supporters, Gov. John Baldacci on Thursday signed into law a bill to raise Maine’s minimum wage to $7 an hour by October 2007, declaring that it will keep the state on a pace with the rest of New England.

The Democratic governor said the two-step increase will make Maine’s minimum wage into a “living wage” for those who struggle with one or more jobs to make ends meet. More than a dozen supporters applauded as the governor signed the legislation in the State House Hall of Flags.

The Legislature earlier this week gave its final approval to the bill, which nudges the minimum up from the current $6.50 an hour to $6.75 in October, and then by another quarter to $7 a year later. The federal minimum wage is $5.15 an hour, the same as it is in neighboring New Hampshire.

All of the rest of New England’s states have higher minimums than the federal standard. Connecticut’s is $7.40, while Vermont’s is $7.25, Rhode Island’s $7.10 and Massachusetts’ $6.75, according to the U.S. Labor Department’s Web site.

Maine’s minimum in 2007 “won’t be the best in New England,” Baldacci said, “but we will be on a pace with the rest of New England.”

The wage bill was debated passionately and lobbied intensely. Supporters said Maine’s lowest-paid workers need a boost to keep up with rising costs of fuel, food and other everyday needs.

“It’s all about giving something to those who have less,” said Rep. William Smith, D-Van Buren, House chairman of the Labor Committee.

Opponents said the wage hike would hurt small businesses and by extension hurt workers by discouraging job creation.

House Speaker John Richardson, D-Brunswick, cited federal labor figures which he said underscore the need for passing a minimum wage increase. Richardson said the federal minimum was $1 an hour in 1956. If adjusted for inflation, that minimum would now be $7.31 an hour, he said. Maine’s minimum-wage earners received their most recent increase last fall under a bill signed into law two years ago.

Rep. John Tuttle, D-Sanford, sponsor of the latest bill, said this is the 10th time he’s been involved in minimum wage fights and each time it has been enacted by only a few votes.

“It’s a good day for the state of Maine,” said Tuttle, also a Labor Committee member.