JACKSON (AP) — Democratic Sen. Hob Bryan says House and Senate negotiators have signed an agreement in principle for a hospital tax, which is key to reaching a deal on the state budget.

Bryan of Amory said Sunday the agreement calls for a $60 million hospital tax that could increase to $90 million once the state stops receiving federal stimulus money in 2010. In return, the hospitals could save nearly $100 million through the reversal of previous budget cuts and the prohibition of future cuts.

Lawmakers say the tax is needed to help cover the cost of Medicaid, a government funded health program.

Bryan and House Medicaid Chairman Dirk Dedeaux signed the agreement. Bryan said draft legislation will be given to other lawmakers so they can add their input or suggest modifications.