With time running out before appropriations season must begin in earnest, Senate Majority Leader Bill Frist (R-Tenn.) appears headed for another potentially crippling setback this week in his quest for Senate passage of a bicameral budget resolution.

The glimmer of hope provided by last Thursday’s meeting with four holdout GOP moderates appeared quashed by Friday as Republican conservatives, including Senate Republican Policy Committee Chairman Jon Kyl (R-Ariz.) and Senate Steering Committee Chairman Jeff Sessions (R-Ala.), began rejecting the nascent agreement to change Senate rules to establish strict spending restraints, known as pay-as-you-go or PAYGO, for three years.

“Kyl and Sessions already nixed it,” said one Senate GOP aide. “As far as I’m concerned, conservatives killed the budget, not the moderates. … They didn’t even consider this proposal. It was just, ‘No.’”

Without the support of conservatives in the Senate GOP Conference, Frist is unlikely to even bring up the rules change on the Senate floor, because it might take up more than a week of floor time and even then might not pass, said one Senate GOP leadership aide.

The GOP leadership aide said the tight schedule the Senate faces this summer and for the rest of the 108th Congress means Frist can consider the rules change only if he gets unanimous consent, something conservatives would be unlikely to support.

“Either we get it by consent or we go back to the drawing board,” the leadership aide said.

Though Kyl and Sessions are unlikely to agree to a unanimous consent request, the GOP leadership aide noted Frist would continue to press for adoption of the budget resolution, even if that means having to come up with other proposals.

“We’re never going to say never,” the leadership aide said.

In an effort to get the two votes he needs for passage of the budget, Frist agreed Thursday to press for the rules change to win the votes of Sens. Olympia Snowe (R-Maine) and Susan Collins (R-Maine).

PAYGO rules — which narrowly passed the Senate in March with the support of the four GOP moderates and nearly all Democrats — would require a supermajority, or 60 votes, in the Senate to pass mandatory spending increases or tax cuts that add to the deficit.

After securing the votes of Snowe and Collins, Frist then began to turn his attention to lobbying conservatives opposed to having tax cuts fall under PAYGO.

Though Kyl could not be reached for comment as of press time, a Senate Republican Policy Committee paper, titled “Options for Budget Reform,” gave clues to his viewpoint.

The paper, dated March 2, argues that, “PAYGO was more effective in preventing tax cuts than Congressional spending” when it was last in effect during the 1990s. The paper went on to say, “traditional PAYGO could pose a roadblock to making [expiring] tax cuts permanent, which consequently could lead to a tax increase for many tax payers.”

Position papers put out by Kyl’s policy committee staff are intended to sway GOP Senators on issues of the day.

A Sessions spokesman did not return a call Friday requesting comment.

But Senate Republican moderates, including Sen. John McCain (Ariz.), signaled on Friday that they believe the rules change proposal is the last best hope for Frist and Senate Budget Chairman Don Nickles (R-Okla.) to get a 2005 budget resolution passed through the chamber.

Though McCain has warmed to Collins’ idea to institute PAYGO for three years in exchange for votes on the budget, he remains skeptical of Frist’s ability to convince conservatives to go along, said a McCain aide.

Without an agreement on the rules change, Frist and Nickles will have to scramble this week to come up with other proposals attractive to moderates if they hope to head off Senate Appropriations Chairman Ted Stevens (R-Alaska), who said last week he would begin marking up 2005 spending bills by June 15 whether a budget deal was in place or not.

No Senate Appropriations markups had been scheduled as of last Thursday, according to a committee spokeswoman.

Still, Stevens has pushed for a budget deal, even going so far as to publicly offer to fund projects near and dear to the holdout moderates.

Stevens considers having a budget beneficial, because it would set a $821 billion discretionary spending limit, rather than the $814 billion limit he would be beholden to without passage of this year’s budget.

Without a budget, Stevens will likely have to use procedural tools to declare about $7 billion in spending “emergency” funds not covered by the discretionary spending cap.

Given that there are only two weeks left before the July Fourth recess and only three working weeks in July before the Congress leaves for the six-week August recess, Stevens has precious little time in which to move all 13 annual spending bills through committee and the floor before the government’s fiscal year ends on Oct. 1.

The House has already begun marking up spending bills, and measures to fund the Homeland Security and Interior departments could be on the House floor next week.

The House passed the bicameral budget agreement on May 19. In anticipation of the Senate’s troubles, House leaders used a procedural maneuver to limit appropriators to $821 billion in discretionary spending. Traditionally, passage by both chambers is needed to force appropriators to work within the budget resolution.