AUGUSTA – State departments and agencies are requesting some $655 million in spending above current levels for the next two-year budget, with some requests based on higher energy costs and others for new or expanded services.

“This is the process,” Finance Commissioner Ryan Low said in an interview. “This is what the requests are, not what will be in the proposed state budget.”

He said state agencies will meet with his staff to explain their requests over the next several weeks, and that the governor will make the final decisions on which items he will request from the Legislature in January.

“I have not made any decisions or set any specific targets,” Gov. John Baldacci said in an interview. “I have told the commissioners I want recommendations on where we can consolidate and cut spending, not new spending.”

He said the size of the expected budget gap – the difference between expected revenues and expected expenditures – has not been computed, but could be in the $300 million to $400 million range.

“The reality is that people don’t have any more money,” Baldacci said. “People are losing money to the high cost of energy. I think Wall Street is beginning to recognize what Main Street recognized months ago.”

Senate Majority Leader Libby Mitchell, D-Vassalboro, said the budget requests are important because they underscore the message that services cost money. She said people need to realize that, similar to home budgets, government can’t always do everything some would like it to do in a state budget.

“I do not see any appetite for new revenues, given the difficulty people are facing in heating their homes, putting food on the table and driving their cars,” she said. “But at the same time I do believe we have to focus on raising our per capita incomes by investing in our future.”

Rep. Sawin Millett, R-Waterford, is the GOP lead on the Appropriations Committee and has served as state finance commissioner. He expected agency requests would exceed available resources as they have in the past, and said some that are seeking to replace reduced federal funds may have a strong case to make for additional funding.

“People with any sense of reality have to know that there is not going to be a lot of extra money around and it’s going to be a matter of redistribution only after we have cut substantial costs to meet where current services are in the red,” he said.

The largest request, totaling $239.5 million, is from the Department of Health and Human Services, mostly to pay for expected increases in the costs of providing services under the Medicaid program.

Medicaid receives roughly a third of its funding from the state and two thirds from the federal government.

Hospitals are a big cost driver, according to the budget documents. Payments to settle past-due bills are projected to cost $92 million.

As often happens in budgets, what is not included is likely to raise as much concern as what is included. The DHHS budget proposal provides for no increase in mental health programs or mental retardation programs, nor in several other human services areas.

The second-largest budget requests are from the Department of Education, totaling $203.6 million. Most of it, $173 million, is for the expected increase in the cost of general purpose aid to education. Expected increased costs for teacher retirement are $27.2 million over the budget cycle.

Higher education also is asking for additional funding. The University of Maine System wants a total of $28.7 million for a range of initiatives. The Maine Community College System is seeking $10.6 million, and Maine Maritime Academy wants $3.4 million in additional funds above its baseline budget.

The Department of Public Safety has the largest single request for increased staffing: It want 40 new state troopers over the two-year budget.

The budget also changes the allocation of trooper costs between the state’s General Fund and highway fund. In all, the agency is seeking $20.5 million more over the biennium.

The judicial branch of state government wants $9.7 million over the baseline budget of $135.4 million to operate the courts for two years. Some of the increase is for higher operational costs, but others are initiatives such as an accountant to oversee bail activities.

Baldacci said that when he submits his budget to lawmakers, it will have cuts and restructuring of state agencies. And he said the it would propose to reduce the income taxes Mainers pay.

He said he has a clear message for his commissioners and others seeking additional spending.

“Whatever requests they have, thank you but no thank you,” he said. “Right now I want to see what you can do with less.”