No deal yet but progress is being made. That's the mantra around the State Capitol as lawmakers scramble to replace the 6% service tax set to take affect Saturday.

"Our backs are against the wall," said House Democrats Spokesman Greg Bird.

The most likely replacement is the new surcharge that would be added to the Michigan Business Tax. Both Democrats and Republicans are still trying to find a compromise to their plans.

The House passed a bill last month with a 33% surcharge, the Senate at 14%. The House wants to cap the tax at $2 million per business per year, the Senate at more than $7 million. And there's one other difference...

"Their surcharge stopped in the number of years down the way," said Bird. "Our's was permanent and i think a permanent source of revenue is very important at this stage."

Some lawmakers are calling for the tax to be repealed altogether.

"This is something both sides now see as something we've got to get rid of this right away," said Republican Representative Rick Jones of Grand Ledge. "I would much prefer to look at the budget and cut this amount of money out of the budget."

The Governor, however, is still hoping for a viable replacement.

"I'm encouraged by the fact that there is a great desire to replace the services tax with a new version of the Michigan Business Tax. The business community is on board."

The Michigan Chamber of Commerce says they prefer the new surcharge edition of the tax as it would be more suited for business owners.

"We view this as, if they can find some middle ground, as the lesser of two evils," said Tricia Kinley.

"If the tax is repealed with no replacement, the state is set to lose more than $600 million which could lead to cuts in education and medicaid.