Majority Republicans were divided as the Arizona Senate approved a temporary tax increase on employers to repay borrowing for unemployment benefits.
The so-called “special assessment” supported by business groups would be levied for two years.
Arizona is among many states that have borrowed money from the federal government because state unemployment trust funds have been emptied by the recession.
Supporters say approving a phased-in temporary tax increase designed by the state avoids having federal officials impose a larger one that could shock employers.
The legislation was originally proposed in January, but then was put on hold for two months because of political sensitivities associated with tax increases.
Eight of the Senate’s 21 Republicans voted no Tuesday. It now goes to the House where similar legislation is pending.