LANSING, Mich. - Michigan’s state government partially shut down early this morning as the new fiscal year began with no budget deal in place to plug a $1.75 billion deficit.At about 1 a.m., the Senate voted to raise the state’s income tax from 3.9 percent to 4.35 percent, a key step toward implementing a budget deal, hours after the measure passed the House.Democratic Governor Jennifer Granholm was waiting for the income tax increase bill and a bill placing the state’s 6 percent sales tax on a wide range of services before she would sign a 30-day continuation budget to keep government running.

The House earlier passed the bill expanding the sales tax, but the Senate had not voted on the measure.

The Legislature planned to continue working overnight to try to finish the spending plan. The state has no authority to spend money without the budget in place.

The government partially shut down at 12:01 this morning.

Most state government operations would be expected to cease later this morning, including food safety and gas pump inspections, liquor deliveries, lottery ticket sales, the issuance of driver’s licenses, and road construction.

Some state troopers did not start their overnight shifts. Prison guards kept working, but some other Department of Corrections staff could be reduced today.

Granholm had earlier told about 35,000 of the state’s more than 53,000 workers not to report to work today if the shutdown was not resolved. The remaining workers, mostly related to public health and safety, would stay on the job.

On Friday, a Wayne County judge gave the three Detroit casinos permission to stay open if the state is unable to oversee them during a shutdown. The casinos contribute $1 million a day to public schools and Detroit public safety, a casino spokesman said.

Michigan, which has a fiscal year that begins Oct. 1, is one of only two states that have not agreed yet on a budget for fiscal 2008. Wisconsin is still working on a final spending plan even though its fiscal year began July 1. Under state law, spending, taxing, and services remain at current levels until a new budget is passed.