After months of holding firm on a "no new taxes" pledge, some Republican lawmakers said Wednesday that they are willing to consider a tax hike as part of a wider-ranging deal to close the state's budget gap.

Republican legislators' internal budget discussions were part of a private, two-day policy conference at Sacramento's Hyatt Hotel.

The GOP caucus realizes a tax hike will be part of any budget pact but could support it only if agreement were reached on permanent program cuts, a hard spending cap and other issues, lawmakers said.

"The reforms have to be there," said Assemblyman Anthony Adams, R-Hesperia.

"(We must be able) to tell constituents, 'Look, we had to raise taxes, we had to go forward, but we've fundamentally altered the way in which Sacramento is going to be budgeted – and we will not have these problems again because of it,'" Adams said.

No deal seems imminent to bridge the state's projected $40 billion budget shortfall.

But Assemblyman Roger Niello, a Fair Oaks Republican who serves as vice chairman of the Assembly Budget Committee, said he senses a change in the tone of negotiations.

"I think both sides are beginning to at least discuss the priorities of the other side," he said.

Gov. Arnold Schwarzenegger and legislative leaders are expected to meet today in an attempt to hammer out an agreement.

Democrats need three GOP votes in both the Senate and Assembly to garner the two-thirds supermajority needed to pass a budget.

Democrats consistently have resisted GOP demands to roll back environmental and labor regulations to aid businesses, and to permanently cap state spending through a formula tied to inflation and population growth.

Assembly Speaker Karen Bass, in a media conference call, did not rule out the possibility Wednesday of reaching agreement on a spending cap.

"I think that we can say it's important that we negotiate all aspects of this, putting everything on the table," Bass said.

Later, Shannon Murphy, Bass' spokeswoman, said that "we're not going to get into specifics, but negotiations are serious and all options are being discussed."

Assemblyman Michael Duvall, R-Yorba Linda, said that "I think we all know it's crisis time" and that discussion is targeting "what the pushes and shoves are going to be."

Republicans know there "has to be some kind of revenue to balance this whole situation" but must obtain systemic change to "make sure we're not right back in this mess next year."

"There will be things that are fee-generated and probably some kind of tax (increase)," Duvall said of prospects for a deal. "But until we actually get the whole package, we're not jumping on board."

Several GOP lawmakers said no consensus has been reached in the caucus on whether a temporary sales tax hike is preferable to a vehicle license fee increase or some other revenue option.

Niello carefully avoided using the word "tax increase," saying only that he could support additional revenues as part of a deal.

"I'm going to express enough flexibility so that the other side will know that, as for me, if they express flexibility on those things that I think are important, I'm going to express flexibility on those things that they think are important," he said.

Niello said he always has been willing to discuss revenue increases in return for systemic changes in state government.

"The problem has been, all along, that every notion of reform that we've put forth has been literally ignored," Niello said. "It gets frustrating."

Sen. Tony Strickland, R-Moorpark, declined to speculate on a tax deal.

"The bottom line is, we want spending reforms and we want to control the growth of government," he said.

Asked about prospects for a tax hike, Senate Republican leader Dave Cogdill, R-Modesto, said only that "we're looking at a lot of different things."

The GOP is insistent upon strong, long-lasting changes to state budgeting and "right now, we're not seeing it," he said.

Adams said he doesn't expect a budget deal to be struck this week because Democrats have balked at GOP demands in the past.

"While it shouldn't have to come to this, it may be true that until we get the real pressure of insolvency there, you're not going to see a break," he said.

Call Jim Sanders, Bee Capitol Bureau, (916) 326-5538.