The proposed sales tax expansion on services was passed Oct. 1 along with an income tax increase more than four hours into a government shutdown. If not repealed, the service tax could generate $613.8 million in the 2008 fiscal year.

Under current law, the tax wouldn’t be enacted until Dec. 1. However, the Senate passed legislation last week delaying the start date of the tax until Dec. 20. The legislation is now awaiting discussion in the House.

Senate Democrats opposed repealing the tax until a viable substitution could be agreed upon.

There was an attempt to tie the repeal to legislation in the House that could replace the revenue lost from repealing the service tax, said Tom Lenard, communications director for the Senate Democratic Caucus and spokesman for Sen. Mark Schauer, D-Battle Creek.

“We won’t have uncertainty, so let’s make sure the money is there,” Lenard said. “And (the Republicans) voted against it. For the most part the majority of Republicans are not willing to have a solution, they would rather blow a $600 million hole in the budget.”

A repeal without a substitution would mean revenue proposed to areas like higher education and public education in last week’s budget deals might not see funding.

“We disagreed with Senate Democrats’ solution because it was nothing more than a shell bill tied to legislation that muddied the waters,” Marsden said. “We sent legislation over to the House that would give the House an opportunity to present an alternative solution. It’s our hope they will come up with a way to fill the hole.”

House members have been meeting with members of the business community in order to determine what a revenue-generating substitution should look like.

“What we’re doing is continuing our discussions with legislative leadership in the business community to make sure whatever action is taken is a bipartisan consensus, and the revenue is fully replaced to ensure there are no cuts to higher education, public education or health care,” said Greg Bird, spokesman for House Speaker Andy Dillon, D-Redford.

Legislators, however, may be working on a tight time frame. Lawmakers have a two-week vacation coming up for the holidays where they may not be able to hold sessions.

“Obviously we have to be mindful of the time frame we have, but at the same time we want to make sure there is a consensus,” Bird said.

“We need to ensure we can fully replace this because if not, we’ll have to make further cuts.”