With state finances on the sunny side, cities and towns hope to convince lawmakers to relieve some of the budget pressures on local governments.

And it appears legislators are listening.

Arizona’s hospitals will renew their campaign for a bed-tax proposal to draw down federal money, which they say would salvage coverage for thousands of residents who are frozen out of the state’s Medicaid program.

The tentative budget agreement legislative leaders and Gov. Jan Brewer reached late Wednesday night slashes $1.14 billion from the budget and more forcefully reflects the ascent of fiscally conservative Republicans at the Capitol.

Legislative leaders said they are making strides in their talks with the governor over a budget proposal that would solve more than $540 million in deficit this year and another $1.2 billion in the next fiscal year.

A bed tax proposed by the Arizona Hospital and Healthcare Association is a distant Plan C in the Legislature as lawmakers look to overhaul AHCCCS, but the trade group is hoping it might win by default if lawsuits block the state from cutting its Medicaid program.

Despite all the raw emotions it stirred and all the opposition it encountered, the Senate’s budget-slashing and gimmicks-busting proposal isn’t going to be state’s final spending plan.

Its most contentious aspects, more likely than not, will be softened and its most ragged edges smoothed out before it wins support in the House of Representatives and with Gov. Jan Brewer.

In a move that potentially sets the stage for a showdown with Gov. Jan Brewer, the Senate late Wednesday passed a budget proposal that cuts more than what the governor called for in January and rejects many of her accounting maneuvers to erase the fiscal deficit.

The Arizona Senate is advancing a budget plan with spending cuts that majority Republicans say are overdue to fit state spending to state revenue.

Sen. Andy Biggs, an eloquent speaker and conservative legislator from Gilbert, emerged as the new majority leader following a closed-door meeting this afternoon.

According to data released by Smith Travel Research, an independent firm serving the hospitality industry, hotels all across Arizona lost significant business while news coverage and commentary about SB1070 roared across the country.

Now industry insiders fear the latest slate of immigration bills will trigger another jolt of negative nationwide publicity, and lead to a second big decline in business.