AUGUSTA – Dividing along party lines, minority Republicans and majority Democrats agreed to part company Monday night over a $109 million supplemental budget request that will include a controversial new tax on Maine hospitals.

The 8-5 vote in favor of the Democrats’ majority budget was taken by the Legislature’s Appropriations Committee shortly after 9 p.m. The budget bill is expected to move to the House floor Wednesday afternoon. After dealing with the usual flurry of proposed amendments submitted by lawmakers, a final vote on the tax-and-spending plan could be taken late Thursday or early Friday morning.

With fewer than six months left in the current fiscal year, Gov. John E. Baldacci is determined to obtain legislative approval for his supplemental budget by Friday. Although most of the budget’s controversial cuts to Medicaid and health care providers are being implemented administratively without legislative approval, the administration’s new hospital tax will require a majority vote by lawmakers in the House and Senate.

As late as Saturday, the administration had proposed an $8.5 million reduction in reimbursement to hospitals. The plan was roundly criticized by hospital lobbyists who said the decrease actually amounted to a $25 million cut because of a federal 2-to-1 match in funding.

Under the tax-and-match policy, which must be approved by federal officials, the state would levy a gross receipts tax of a little less than .05 percent on the hospitals to obtain $16.6 million. The state would then use that money to get more matching federal funds and reimburse the hospitals all but $2.6 million of what they were taxed by the state.

Baldacci and his top staffers met with hospital representatives and House and Senate Republicans throughout the day Monday in an attempt to gain broader support for the administration’s budget package. Mary Mayhew, chief lobbyist for the Maine Hospital Association, conceded that the tax-and-match plan was better than Baldacci’s first proposal because it would only impose a $2.6 million reduction instead of the $25 million cut in hospital revenues over the next five months.

But Mayhew fears there could be hidden consequences for hospitals that suffered 10 years ago under a similar plan. In the mid-1990s, the federal government decided to bail out of the tax-and-match scheme, essentially leaving hospitals with a tax and no match.

In presenting their competing proposals Monday night, Democrats and Republicans signed off on concepts rather than actual written budget proposals, since final drafts were still being prepared by both sides.

“We found this to be a very painful budget to deal with – much worse than the four that we did last year when we cut over $1.2 billion,” said Appropriations Committee Senate Chairwoman Mary Cathcart, D-Orono. “You get to a point where you cut and you cut and you cut, and you just don’t feel like cutting anymore.”

As a result, the Democrats restored as much of the funding as they could for many of the programs affected by the Baldacci budget. The University of Maine System, which had been targeted for $5.8 million reduction, is likely to see that figure cut nearly in half by the Democrats. Other areas of reduction proposed by the governor but rejected by the Democrats included the Baxter School for the Deaf, the Division of the Blind and Visually Impaired within the Department of Labor and a plan to increase co-pays under the Drugs for the Elderly Program.

Democrats identified about $7.5 million in new revenue to reach their goals, a large portion of which will come from the hospital tax-and-match program.

“What we have done is much better for our hospitals and will provide us with the vital services that we care about,” Cathcart said.

Speaking for Republicans on the committee, Sen. Karl Turner of Cumberland said the GOP legislators had made many of the same choices as Democrats, but had chosen to fund them by delaying the scheduled expansion of Medicaid eligibility until Feb. 1, 2006. The Republicans also proposed withdrawing $20 million of the “Bush-Collins tax money” from the $53 million Baldacci has dedicated to his Dirigo Health insurance program.

“That leaves $33 million to go toward the concept for Dirigo, which I think we all agree is very important,” Turner said.