Thousands of Connecticut residents, including many low-income individuals, won’t get the mental health services they need if a $25 million funding reduction remains in the proposed state budget, service providers say.

Mental health advocates and outpatient clinic operators warn that if the state budget passes in its current form, a deep cut into the Department of Mental Health and Addiction Services will have devastating effects on those struggling with mental illness.

That $25 million is parceled out in grants to outpatient clinics known as local mental health authorities, or LMHAs, which treat clients directly. The clinics depend on the grants to cover the cost of services, officials say, particularly for those who are uninsured or on Medicaid.

“We will have to cut services — medication and treatment — for 1,700 clients” if the reduction stays in the budget, said Emily Granelli, director of communications and legislative affairs for BHcare.

The North Haven-based organization provides mental health services and other services to people throughout the shoreline and Naugatuck Valley areas from its Branford and Ansonia locations.

“We serve people with the most serious mental illness,” she said, including those suffering from schizophrenia, bipolar disorder, and major depression. If funding for clinics plummets, many of those people will go without treatment, she added.

BHcare provides individual and group therapy as well as medication management to mental health clients, she said. These are vital services, particularly because those people tend to take medications that can have serious side effects that must be managed, she said.

If the proposed funding cut comes to fruition, the organization also expects to have to eliminate 40 full-time positions related to its clinic — about half of its overall staff — Granelli said.

The proposed cut to the DMHAS grants come as lawmakers grapple with declining state revenue.

“While this is no doubt a difficult budget filled with tough choices, it’s one that will put our state on a path for success in the short- and long-term,” Devon Puglia, spokesman for Gov. Dannel P. Malloy, said. “… Ultimately, DMHAS will continue to provide high-quality care as we make the tough but smart choices today to put Connecticut on a strong path for tomorrow.”

The grant funding also was cut from the budget two years ago but state lawmakers enacted a one-time fix, taking $10 million from the state Tobacco and Health Trust Fund, to offset some of the loss, Granelli said.

Even with that help two years ago, BHcare had to cut services for 300 clients and eliminate four staff positions, she said.

At this point, there are no similar fixes being proposed.

“We are extremely concerned,” said Susan Walkama, president and CEO of Plainville-based Wheeler Clinic, which provides mental health and substance abuse treatment services and has two dozen sites statewide.

“I’m worried that the funding will not be restored,” Walkama said. “If there are not new revenues that come into the state, it’s going to be very difficult for all these cuts to be restored in the budget.”

While some lawmakers may assume that clients’ insurance coverage will kick in once the cut goes into effect, that doesn’t help the many who are uninsured, she said.

Wheeler Clinic provides services to uninsured individuals in great need, she said, but if the cut remains “we can no longer subsidize the uninsured” and Wheeler’s clinics will have to stop enrolling them.

In addition, the clinics will have an extremely difficult time accepting Medicaid patients, she said.

Medicaid reimbursement rates do not cover the clinics’ expenses for providing outpatient services, meaning clinics take a financial loss when they provide those services, Walkama said. Against that backdrop, Wheeler has seen demand from Medicaid patients jump 40 percent over the past two years, she said.

A steep funding cut on top of that would force the clinics to make some tough decisions, she said.

“We’d have to make strategic staffing reductions,” she said, adding the goal would be to achieve them through attrition.

Walkama and Granelli both said that funding the DMHAS grants is the most economical way for the state to help those with mental illness.

Without access to clinics, the mentally ill will turn to hospital emergency rooms and those battling substance abuse may end up in the justice system, both of which are more costly alternatives, Walkama said.