Gov. Jan Brewer and legislative leaders were working late Tuesday to put a plan back together to adopt a new budget before the fiscal year ended at midnight.
The package negotiated between the governor and top Republicans fell apart Tuesday when several Republicans balked at the idea of putting a measure on the November ballot to hike the state sales tax. Foes said they believe higher taxes are bad for the economy, to the point of being unwilling to even give voters the option to decide that for themselves.
But Brewer insisted she does not want - and will not accept - the $8.4 billion Republican spending plan without including some provision for additional revenues. The governor said Arizona needs the $1 billion a year a 1 percent increase in the state's 5.6 percent sales tax would raise, at least for the next three years.
That raised the specter of a government shutdown if there is no deal.
Gubernatorial press aide Paul Senseman said plans are in place to maintain "essential" services if there is no budget - and no authority to spend money beginning Wednesday morning. He would not provide additional details.
But several state agencies already are moving in that direction.
Ellen Bilbrey, who works for the Arizona Parks Department, said her agency is presuming everything will be closed. That even includes Kartchner Caverns near Benson even though the entry fees from that park more than cover the operating costs.
Bilbrey acknowledged that people have made reservations months in advance for the underground tour. She said staffers will be making calls and telling people not to come.
The Motor Vehicle Division, which processes driver license applications and vehicle registrations, will also be closed. But agency officials said motorists still will be able to renew their registrations online and get a printed confirmation, even if there is no one in MVD offices to actually mail out the renewal tab.
But public schools will not be affected - at least not immediately. State Superintendent of Public Instruction Tom Horne said his agency will be distributing $600 million in funds due to schools Wednesday.
The possibility of shutting down state services does not worry several legislators who are balking at approving the tax hike.
"A lot of times people down here act as if everything in the world hinges on government, that every move in the world hinges on what the government's going to do," said Sen. Ron Gould, R-Lake Havasu City. But he said the experience of what happened in the mid-1990s when Congress didn't approve a new budget showed "it wasn't catastrophic."
"Nobody passed away because of that," he said. "And it showed you how little government actually has to do with your life other than to drag you down."
Brewer spent several hours behind closed doors Tuesday afternoon, bringing in Democratic lawmakers one by one in hopes of getting their votes to replace the Republicans who will not support the plan. But not a single Democrat who spoke with reporters afterward seemed inclined to go along.
The Democrats don't like the size of the spending cuts. And they also don't like a sales tax hike, which they consider "regressive" because the poor spend a proportionately larger share of their income on the levy than the rich.
House Minority Leader David Lujan, D-Phoenix, suggested the sales tax might be more palatable if the plan included a rebate for those below a certain income level.
Despite the failure to line up the votes, Brewer said Arizonans should not be worried about a shutdown.
"I'm very hopeful that when they wake up Wednesday morning that we have a budget and that everything is good," she said.
Rep. John Kavanagh, R-Fountain Hills, said there is an option if no deal can be reached: Send the governor an interim budget.
He said that would be based on the June 4 spending plan GOP lawmakers enacted - one Brewer does not like - but with all the spending numbers simply chopped to one-twelfth of their original figure. That would buy lawmakers more time for a deal.
But Senate President Bob Burns, R-Peoria, seemed cool to that plan. Burns said he would prefer to send Brewer that whole June 4 budget and tell her that's as good as it gets.