PORTLAND — An upgrade of 30 miles of railroad tracks between Portland and Brunswick will receive a $35 million boost from the federal government.

Proponents say the overhaul will pave the way for the extension of Amtrak Downeaster passenger service to Freeport and Brunswick – perhaps by the end of 2012.

The announcement by U.S. Rep. Chellie Pingree, D-Maine, came shortly after President Obama’s State of the Union Speech on Wednesday.

The project is one of several nationwide that qualified for $8 billion Obama made available for rail improvements in the American Recovery and Reinvestment Act.

“This is a significant economic boost to Maine,” Pingree in a press release. “It will put over 200 people to work improving the rail line and bring economic development to downtown train stations in communities like Freeport and Brunswick.”

Pingree and representatives from the state’s Congressional delegation made a formal announcement Thursday morning at Brunswick’s Maine Street Station, a multi-use project that has a significant rail component and train station.

Passenger service could also stop in Freeport near the town’s recently constructed Village Station mall.

Pingree said work would begin immediately on the upgrade.

Proponents of the extension say passenger service to Freeport and Brunswick will create more economic opportunities.

“This will fulfill the dream for an awful lot of Maine people to be able to get on the train in Mid-Coast Maine and ride all the way to Boston,” Wayne Davis, chairman of Trainriders Northeast, said. “Nearly 5 million people go from the Boston area to Freeport to go shopping. That’s a big market that the Downeaster can tap in to.”

Pingree said the extension is a “natural tourism generator.”

In a joint statement, U.S. Sen. Olympia Snowe, R-Maine, and U.S. Sen. Susan Collins, R-Maine, said the project would reduce road congestion and increase commuting options while providing economic development opportunities for businesses and communities.

“This is an exciting time for passenger rail in America,” said Patricia Quinn, executive director of the Downeaster’s administrative arm, the Northern New England Passenger Rail Authority. “We are honored to be included in the first round of this investment package.”

The funding settles one of three issues facing the Downeaster.

The service also applied for federal money made available in Obama’s effort to create a high-speed rail system, in order to increase speeds on the existing Portland-Boston line and make it more competitive with vehicles. However, recent statements from federal Transportation Secretary Ray LaHood appear to indicate that funding may be headed elsewhere.

Also unresolved is the Downeaster’s $8 million operating subsidy, the majority of which is funded by the federal government through an exception in Congestion Mitigation and Air Quality Program. Maine is one of just two states permitted to use CMAQ money for operations, and some fear that the exception will be harder to justify as other states face shortfalls in their transportation budgets.

Pingree said Thursday that she was concerned about the CMAQ funding, but hoped that the Portland-Brunswick upgrade would help the cause.

“It would be difficult for them to help us expand and then cut the operations funding,” Pingree said. “This certainly gives us some leverage in the debate.”

Also, in the past, the state has chipped in an estimated $2 million toward the services operations. However, Baldacci last year removed the subsidy from his biennial budget amid the state’s fiscal crisis.

The governor has since vowed to find solutions to replace the funding.

Steve Mistler can be reached at 373-9060 ext. 123 or smistler@theforecaster.net

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At Maine Street Station in Brunswick on Thursday to discuss the $35 million stimulus package that will extend Amtrak Downeaster rail service from Portland to Freeport and Brunswick, U.S. Rep. Chellie Pingree, D-Maine, displays an old Boston & Maine Railroad poster she purchased on eBay.