From staff and wire reports

LANSING - The Republican-led Senate early today voted to raise the state's income tax from 3.9 percent to 4.35 percent, another key step toward implementing a budget deal even as state government shut down.

The Senate split 19-19, forcing Lt. Gov. John Cherry to cast the tie-breaking vote in favor of the bill. The measure now heads to Democratic Gov. Jennifer Granholm.

The income tax piece is key to a temporary budget fix that would help fill a $1.75 billion deficit in the fiscal year that began today.

Granholm was waiting to sign a 30-day continuation budget that would keep government running but not until the Legislature sent her the income tax increase and a bill placing the state's 6 percent sales tax on a wide range of services.

That continuation budget contains $29.6 million in funding for the University of Michigan. It also includes the $29.6 million August payment that the state withheld from the University because it was short on cash this summer.

While the House earlier passed the bill expanding the sales tax, the Senate had not voted on the measure as of 1:30 a.m., though it was expected to vote on it early today.

The bills were considered crucial parts of the deal to solve the shortfall in the state's new fiscal year.

In the first public sign of a partial state shutdown, campers were asked to leave some Michigan state parks yesterday night. Some highway rest areas also closed yesterday evening, and overnight road construction projects and lottery sales were scheduled to stop at midnight.

Liz Boyd, spokeswoman for Granholm, said yesterday that the governor would consider signing the budget extension if the House and Senate also passed the revenue bills.

"If the bills are signed and on their way to the governor's desk, that would be sufficient" to avert a shutdown, Boyd said. "There is a path to resolution, and the Legislature needs to get the job done. We need a comprehensive solution of cuts, reforms and revenue before the governor can support a continuation budget."

University students interviewed yesterday were appalled at the prospect of a shutdown. They said it would make them less likely to stay in Michigan after graduation.

LSA sophomore Betsy Callan said she's planning on leaving the state as soon as she graduates. Although Callan grew up in Michigan, she hopes to pursue a career in a city, and with the decline of the automotive industry and Michigan's economy, she thinks there is nothing left here for her.

"I love U of M but as soon as I'm done I'm out of here," she said. "No one wants to stay."

Callan said the inability of the state legislators to agree on a budget proposal is just further proof of Michigan's failings.

"It's sad," she said. "They've got to get their act together."

LSA freshman Eva Olariu said she wants to stay in Michigan despite the dismal economy. But she said the inability of lawmakers to reach a compromise will hurt the state, and could drive her away.

"I think it's their responsibility to handle these issues and if they don't, people are going to relocate," she said. "In the long run they're ruining their work force."

The House passed the income tax measure 57-52. Democrats hold a 58-52 edge in the House, but three Democrats - Martin Griffin and Michael Simpson of the Jackson area and Lisa Wojno of Warren - voted against it. Two Republicans, Chris Ward of Brighton and Ed Gaffney of Grosse Pointe Farms, voted in favor of the proposal.

In the Senate, four Republicans voted for the higher income tax. Two Democrats voted against the tax increase.

No House Republicans voted for the bill placing the sales tax on services - a proposal stiffly opposed by the business community. All Democrats did, except for Reps. Marc Corriveau of Northville and Kate Ebli of Monroe, who voted no.

There were no votes against the two bills implementing the budget extension.

The House and Senate also approved a measure that would change the way some teacher and state worker health benefits are determined.

But the House failed twice to pass a measure tying teachers' health care coverage for retirement to how many years they've worked. It would have affected those entering the teaching ranks after June 30, 2008.

Without a budget deal in place, 35,000 of the state's roughly 53,000 workers were expected to be barred from going to work Today morning and all state services except those needed to protect health and safety were slated to halt.

State workers were told their paychecks would be reduced to reflect any hours missed because of a shutdown. They were given a phone number to call and a Web site to check to see if they should come to work today.