Like states across the country, Maine is facing difficult budget times. Gov. John Baldacci has submitted his approach to addressing a $95 million revenue downturn to the Legislature. But just as the work on those plans has begun in earnest, the state’s economic forecasters are warning of more bad news ahead.

Nationally, the economic slowdown has brought together Democrats and Republicans to propose a stimulus plan intended to pump cash into the hands of people struggling to pay bills.

Now is the appropriate time to consider how Maine uses its resources and what our priorities are. Changes proposed at the federal level that could cost Maine millions of dollars are only adding to the difficulty of the decisions we must make as a state.

The Department of Health and Human Services has been at the center of much debate, as we grapple with providing services to Maine’s most vulnerable and doing so within existing resources available for social services, which continue to dwindle.

The complexities of this challenge are difficult to comprehend. But one way to look forward is to take a step back to understand how this system has evolved and is currently funded.

In the early- to mid-1990s, many states struggled with meeting growing social service needs. Maine was one of several states that made the strategic decision to maximize the number of matching dollars it received from the federally funded Medicaid program. For people who receive a service delivered by MaineCare, every state dollar contributed is matched by two dollars from the federal government.

This influx of federal funding helped Maine close the service gap and did so without an overwhelming increase in state funding. Important services became available and waiting lists diminished.

But just as Maine has made hard decisions in closing its shortfall, the federal government is doing the same, scrutinizing services and considering rule changes to determine what it will support.

We’ve seen significant cuts in our federal block grants. Since 1998, the Social Services Block Grant has been trimmed by $3.2 million and since 2004, the Child Care and Development Block Grant has been slashed $1.1 million.

In the past, the state has used other available resources including General Funds, to keep the contracts intact. Because this is no longer possible, providers are just now feeling the pinch of these cuts.

The lack of federal funds and the current state shortfall are a powerful one-two combination. And we’re only in Round 1 of the match.

Round 2 begins with proposed rule changes by the Centers for Medicare and Medicaid Services that could make the recent deep cuts look like a surface scratch.

Effective March 3, the federal government will no longer pay for Targeted Case Management Services for child welfare, probation and parole, guardianship and some special education case management services. TCM involves establishing and managing a care plan involving multiple service and needs. These include assessment, care planning, referral, linkage, monitoring and follow-up.

Last year, it cost $35 million to provide the services that will no longer be supported by the federal government. If the services continue, the cost will be carried by the state. In addition, other federal rule changes are on the fast track and states have not been allowed enough time to plan accordingly.

We continue to hear the public’s cry for a reduced workforce, but huge staff cuts are not the answer. The elimination of all DHHS staff, for example, would not fully close the deficit caused by CMS’ rule changes. And with more than 2,100 client visits to DHHS each day, there is a certain level of staffing required to meet basic needs.

DHHS has many efforts underway to manage costs even more effectively and to assure that people receive the right service, at the right time, for the right duration and the right cost. Further consolidation of administration is planned and some provider rates have been standardized.

When reflecting on these initiatives to both improve quality and deal with the slumping economy, almost all efforts have been met with criticism, skepticism and protest, often in a public forum. But in this climate, these adjustments are necessary to help us sustain a system of care for those who need help the most.

The abrupt swing of the funding pendulum away from federal support comes at a time where the pressures on the system are at their greatest and more needs are being identified.

These harsh realities must be discussed at the legislative table, the provider’s table and at the family dinner table. We must establish priorities and protect the core services that Mainers should receive, while preparing for a state and national economy that will not change overnight.

In the not-too-distant future, today will be considered the good old days when it comes to funding. And while we keep our eyes squarely on the citizens of Maine who need our support, the realistic view in the short term is that the funding challenge will likely get worse before it gets better.

Brenda M. Harvey is commissioner of the Maine Department of Health and Human Services.