DENVER -- The Senate gave initial backing late Thursday to a package of bills to balance next year's budget, including a plan to take money from state-created Pinnacol Assurance to undo $300 million in proposed cuts to higher education.

Lawmakers backed few additional cuts to ease the potential hit to state colleges and universities should the Pinnacol plan fall through.

Lawmakers agreed to cut metal detectors and security officers at public entrances to the state Capitol to save about $850,000. That security was added after an armed man was shot and killed outside the governor's office in 2007. They also backed reducing payments to private prisons that house state inmates by $2.4 million.

Democrats rejected a Republican plan asking all state departments to find ways to cut 2.9 percent on top of a 12 percent cut previously backed by the Joint Budget Committee. They also rejected a GOP proposal to cut lawmaker salaries and eliminate $3 million in vocational training for inmates to help raise more money for higher education.

Also defeated was an amendment that would have reduced employee salaries and save about $46 million through furlough days in all state departments except Corrections, Human services, Judicial and Public safety.

Republicans objected to the plan to take $500 million from Pinnacol Assurance, the state's dominant workers' compensation insurer, which they called a socialist and "banana republic" maneuver.

Democrats argued the funds would help restore higher education.

“This is the only real solution he have in front of us today,” said Senate Majority Leader Brandon Shaffer.

“Pinnacol Assurance is a good state agency, we’ve got to do what we can to balance the budget,” Shaffer told 7NEWS.

Pinnacol Assurance is fighting the legislative move to take money from its surplus to make up for the higher ed cuts. At the same time, company officials have been quietly talking to the governor's staff about a possible way the insurer could voluntarily use some of its $2 billion in assets to help the state out of its budget crunch.

No details have been released. Sen. Chris Romer, D-Denver, said there might be a way for the company to loan the state money. He said the money could be repaid with revenue raised by undoing many of the state's long-standing tax breaks and credits, something being considered by some Democrats.

While approved Thursday night, critics of the plan to transfer the surplus Pinnacol money warned of potential lawsuits.

“Why? Because this money does not belong to the state,” said Sen. Shawn Mitchell, (R) Adams, Broomfield, Weld.

Senate Minority Leader Josh Penry said schools could end up closing by the time the Pinnacol fight is resolved.

"The reality is there are places to make cuts if there's a will to make tough choices," he said.

But Sen. Moe Keller, the budget committee chairwoman, said there really was no "fluff" left to cut in the budget. She said the committee backed closing a prison in Canon City to save $6 million a year, and closing six more wouldn't even eliminate the budget shortfall.

Democratic Senate President Peter Groff said he was still concerned about higher education but thinks there will be other possible solutions to come during the legislative session.

Lawmakers need to cut money out of the state budget for this year and next because tax revenue is expected to drop a combined $900 million because of the recession.

Higher education is a frequent target for cuts during downturns because it's the only large state operation that isn't protected by constitutional spending limits, like public schools, or by federal mandates and funding, like Medicaid.

Other parts of the budget-balancing package rely on taking money from other sources to prop up the budget for the next fiscal year, which starts July 1. That includes taking $15 million from a fund supported by fees on all landline and cell phones that is supposed to be used to subsidize the building of telephone lines in rural areas. The package would also take $20 million from the tobacco tax approved by voters through Amendment 35, which is supposed to pay for smoking prevention and health programs.

The package would also eliminate a $91 million property tax break for senior citizens.

Democratic senators gave the budget committee the backing to consider the politically unpopular move of ending tax breaks on everything from cigarettes to Colorado capital gains. But Sen. Moe Keller, D-Wheat Ridge, said more time is needed to study which ones should stay and which should go. She said that could still possibly happen during a special session of the full Legislature this summer.

She also said a smaller study committee would look at the issue and make recommendations for lawmakers to act on in January, too late to affect the next budget year.

The bill, known as The Long Bill, or SB 240 will come up for final reading in the senate on Monday, before heading to the state House.