Gov.-elect Robert L. Ehrlich Jr., facing Maryland's worst fiscal crisis in at least a decade, is considering a plan to streamline state government that includes consolidating two Cabinet-level agencies that manage the environment.

Under the proposal, presented Friday to Ehrlich (R) by leaders of his transition team, the Department of the Environment and the Department of Natural Resources would be merged.

The plan contains more than a dozen other ideas for saving money without cutting services, including shifting some tasks among agencies and consolidating state police forces, Republican sources said.

Transition team leaders estimate that the proposal would save more than $30 million -- a relatively small amount when the state must close a gap of nearly $600 million in the current budget and faces a projected shortfall of nearly $1.2 billion in the fiscal year that begins in July.

But Ehrlich's running mate, Lt. Gov.-elect Michael S. Steele, said more than money is at stake.

"This is something we feel very strongly about. We see the upside potential and synergies there for the state," Steele said yesterday in Annapolis, where he and Ehrlich addressed a jubilant convention of Maryland Republicans. It was the party's first meeting since Nov. 5, when Ehrlich became the first Republican in 36 years to win a gubernatorial election in the state.

Steele said merging the two environmental agencies would end duplication and improve efficiency without cutting jobs or services. "The final recommendation may be 'No,' but right now we feel very comfortable with it," Steele said.

Environmental activists were alarmed by the proposal, however. They said it was likely to leave the state with fewer workers to perform critical environmental functions, such as ensuring the safety of the state's drinking water.

"Given Ehrlich's record in Congress on the environment, there's been a great concern about how he might manage our resources in Maryland now that he's governor," said Dru Schmidt-Perkins, executive director of 1000 Friends of Maryland. "He pledged during the campaign to save the bay, continue 'smart growth,' all these good things. But if his first action is to merge key agencies, that would make a number of people extremely nervous."

Together, the two departments receive about $330 million in state funds, about 1.5 percent of the state's $21.6 billion budget. The Department of Natural Resources oversees land conservation programs; hunting, fishing and boating regulations; and protection of the state's wildlife.

The Department of the Environment, meanwhile, regulates waste-producing industries and municipal systems under guidelines set out in the federal Clean Water and Clean Air acts.

The proposed merger is just one of many budget-cutting ideas under consideration by the Ehrlich camp, which will take control of state government Jan. 15. A few days later, Ehrlich is required by law to submit his first budget proposal. He is expected to decide within the next few weeks whether the merger will be part of his budget plan.

While it may not save much money, merging the Environment and Natural Resources departments would send a strong signal to Ehrlich supporters that he is determined to make his mark on state government even in the midst of a budget crisis. The agencies have come under fire from conservatives who say they have promoted the liberal policies of Gov. Parris N. Glendening (D) at the expense of economic development and the interests of the state's outdoor enthusiasts.

At the same time, a merger could prove politically costly to Ehrlich, who campaigned as a moderate and is working hard to allay the fears of skeptics who perceive him to be a hard-right conservative. Those skeptics include many of the state's leading environmental activists, most of whom endorsed Ehrlich's Democratic opponent, Lt. Gov. Kathleen Kennedy Townsend.

Yesterday, Ehrlich's chief of staff, Steven L. Kreseski, said Ehrlich would pursue a merger only if it could be accomplished without compromising environmental programs.

"If it impacts programs, Bob would not be inclined to do it. Bob wants to keep environmental programs intact," Kreseski said. "The core mission of preserving the bay, improving municipal waste treatment -- all those remain intact. He's completely committed."

Until the early 1970s, the Department of Natural Resources alone was responsible for all environmental programs and regulations. In 1986, Gov. William Donald Schaefer (D) created the Maryland Department of the Environment to handle clean water regulations.

In the early 1990s, Glendening consolidated other regulatory tasks within the Department of the Environment, leaving the Department of Natural Resources responsible only for conservation programs.

That division of tasks has since led to what Republicans describe as unnecessary duplication. For example, while DNR assesses water quality, the Department of the Environment is responsible for approving cleanup plans.

At yesterday's convention, Maryland Republicans gave Ehrlich a standing ovations that lasted nearly a minute and a half as they celebrated the first Republican governorship in more than three decades.

A year ago, Ehrlich warned Republicans that they would have to pull together and ignore minor differences among them to win the governor's race in heavily Democratic Maryland. Yesterday, he thanked them for following his advice and asked them to maintain party unity and discipline to help him govern effectively.

"Holding power, sharing power, is not going to be easy. We're not used to it," Ehrlich said. "But as we get used to it, we'll grow."

Staff writer Anita Huslin contributed to this report.

Robert L. Ehrlich Jr. addresses the state convention of Maryland Republicans in Annapolis. With him are Michelle Duffy-Orr and Louis M. Pope.Lt. Gov.-elect Michael S. Steele listens as Ehrlich speaks to the Republican Party faithful.