Legislators in Augusta are nervously facing the prospect of a state government shutdown on July 1, because they continue to be unable to reach a compromise on a new, two year state budget.

The special conference committee, created to develop a compromise budget, has not done that. The committee has only met a few times, while the actual budget negotiations have reportedly been handled by the four top party leaders.

Those talks appear to have not progressed since last week, as Democrats, House Republicans and Senate Republicans are still voicing similar proposals to those outlined last Thursday. On the key issue of increased school funding, Democrats continue to propose a $200 million increase, while Senate republicans are offering more than $150 million in new school spending, and House Republicans are proposing a $125 million increase.

Senate and House republicans continue to insist on eliminating the 3% income tax surtax on high incomes, which was passed by Maine voters in November. House Republicans also are insisting on education reforms wanted by Governor Paul LePage, including a proposal for a statewide teacher contract which has already been rejected by the legislature.

The House Democrats and Republicans are blaming the other for not compromising on a budget.

The stalemate threatens to put thousands of state employees out of work, starting July 1, if state government is forced to shut down by the lack of a new budget. Those workers were joined by teachers for a demonstration in the State House Thursday, which included raucous chanting as House Republicans left a party caucus meeting. Those legislators had to walk a gauntlet of union protestors, chanting to “pass a fair budget”.

Party leaders continued negotiating Tuesday night, and more talks are expected Wednesday. Can they break the stalemate? House GOP leader Rep. Ken Fredette said his party could possibly make some changes.

“I don’t think this negotiation is a take it or leave it negotiation,” said Fredette. “Tthere is ongoing negotiation every day and we include the Governor in that.”

But Senate Democratic leader Sen. Troy Jackson said all sides will need to give something up to get a budget deal.

“At this point we obviously have to act quick,” Jackson told NEWS CENTER. “We need a budget by Friday night, I’m still relatively optimistic. I’m frustrated by the whole thing, not any one person, but it seems we could have done this a lot sooner.”