WASHINGTON -- The federal government is stepping into the labor mural controversy in Maine, demanding that the state either put the artwork back up at the Department of Labor or repay the cost of the mural.

In a letter first obtained by the Associated Press, Gay Gilbert, a senior U.S. Labor Department official, writes that the federal government appropriated the funds to Maine for the mural.

"We understand, however, that the mural is no longer on display in your headquarters," writes Gilbert. "Thus, it is no longer being used for an administrative purpose permitted by the Reed Act. Accordingly [...] the state must [...] return to its UTF [Unemployment Trust Fund] account the amount of the Reed Act funds represented by the mural."

An alternative, Gilbert adds, would be to simply put the mural back up at the Department of Labor or another state employment security building.

A U.S. Department of Labor spokesman explained to The Huffington Post that the federal money was given to the state of Maine for its unemployment insurance fund. But now that the funds are not being spent on their designated use, the state must put back 63.39 percent of the painting's value into its own jobless fund. The fair market value of the painting was $60,000 when the funds were first allocated, but that may have changed.

“We have reviewed the letter and are assessing what it may mean for the agency moving forward,” said Main Department of Labor spokesman Adam Fisher.

Gov. Paul LePage (R) stirred up controversy recently when he ordered the mural, which depicts scenes from the state's workers history, taken down from the lobby of Maine’s Department of Labor building.

The letter comes as 350 people demonstrated at the State House on Monday in opposition to LePage's actions, chanting "Put it back" and "Recall Paul."

LePage has since said that he regretted stirring up the issue in the middle of the legislative session.

In an op-ed on Monday, eight GOP state senators publicly rebuked the governor.

"[W]e find ourselves continually diverted, responding to yet another example of our chief executive picking a personal fight not worth fighting," they wrote. "'Government by disrespect' should have no place in Augusta, and when it happens, we should all reject it."

Rep. Chellie Pingree (D-Maine) said in a statement Monday afternoon that the "best solution at this point" would be for Maine to simply put the mural back up. "Public art belongs to all of us and I don't think the governor should have acted so hastily in taking it down,” she said. “It wasn't a decision for one person."

Six individuals have filed a lawsuit in federal court asking that the mural be put back up. Judy Taylor, the painter of the mural, is not among them. But another artist demanded that his artwork be taken down from the Maine State House.

The mural was erected in 2008 after the Maine Arts Commission chose Taylor through a jury selection.

Taylor told The Huffington Post that the reactions she has received to her art have always been "very, very positive" -- from both business leaders and workers alike. She said a businessman once told her he was particularly moved by the painting because it reminded him of his grandmother's stories about working at a textile mill.

Story was updated with reaction from the Maine Department of Labor.