Though Republicans portray climate change legislation as an energy tax that would cost families thousands of dollars a year, the worsening budget woes in dozens of states are increasing chances the Senate will enact a bill this year.

The White House is hoping billions of dollars worth of emissions allowances that would be issued as part of a cap-and-trade system will provide an economic lure for undecided senators to support the bill.

The climate change bill (HR 2454) the House passed on June 26 would distribute allowances from 2012 to 2025 to each state to protect consumers from energy price hikes, help utilities and other industries transition to clean energy and to spur conservation efforts and new technologies.

The states would establish State Energy and Environmental Development, or SEED, accounts — essentially repositories to manage emission allowances. Analysts say if the funding mechanism is incorporated into a House-Senate compromise, it could deliver between $120 billion and $330 billion worth of assistance to the states, which would have substantial leeway to distribute the money as they see fit.

The largesse could prove a potent lure at a time when national unemployment stands at 9.5 percent and many states are experiencing even higher jobless rates.

Kevin Book, managing director of research at the investment firm ClearView Energy Partners, said tough times have transformed climate change from an environmental cause into an economic opportunity.

The fate of any bill rests on senators from seven cash-strapped, mostly agricultural states, Book said.

Farmers in these states could profit from actions such as planting trees that offset carbon emissions and this could ease budget problems the states face. The states are Arkansas, Idaho, Kansas, Missouri, Nebraska, South Dakota and Virginia.

“All other things being equal, we would suggest that senators from states with gaping budget holes may be willing to consider [a climate change bill] if it appears likely to shore up fiscal shortfalls back home,” Book writes in a new report.

Support from the Midwest and farm-staters could offset defections from Democrats such as Michigan’s Carl Levin and Debbie Stabenow and Ohio’s Sherrod Brown , who fear that a cap on fossil fuel emissions could hurt their home state manufacturing industries.

The debate is shaping up against a grim economic backdrop. Forty-two states have already had to make mid-year budget cuts worth a combined $31.6 billion due to lower-than-anticipated tax collections, according to the National Governors’ Association (NGA).

The NGA says states are facing $183.3 billion in remaining budget gaps for fiscal 2009 to 2011. (Every state except Vermont has a balanced budget amendment requiring it to bring spending in line with projected revenues.)

States that run out of money wind up tapping their cash reserves to meet their obligations. When those stabilization funds dry up, officials must raise taxes, float bonds, cut social programs or turn to the federal government for help.