A D.C. Council committee defeated Mayor Vincent C. Gray’s proposal to extend bar hours by one hour and instead recommended that the city increase its alcohol tax.

D.C. Mayor Vincent C. Gray. (Jim Cole/AP)

Though the vote dealt a serious setback to Gray’s proposal for raising $3.2 million in revenue, it could still resurface during the final days of budget negotiations later this month.

Council member Jim Graham (D-Ward 1), the chairman of the committee, has been a staunch opponent of extending alcohol sales.

Pedro Ribeiro, a Gray spokesman, said the mayor continues to support his proposal to extend bar hours, casting it as a choice between his plan and higher taxes.

The mayor fully supports his approach,” Ribeiro said. “No new taxes. No new fees. A lot can still happen. . .We think it’s the right approach.”

Many neighborhood groups also opposed the plan, citing the potential for late-night noise and violence. But tourist and business groups supported the move, saying the city needed to evolve into more of a 24-hour city.

Council members Tommy Wells (D-Ward 6) and Michael Brown (I-At large) joined Graham in opposing the measure.

Council members Marion Barry (D-Ward 8) and Yvette Alexander (D-Ward 7) supported the proposal.

The council now faces a $3.2 million hole in the fiscal year 2013 budget. To make up the gap, Graham, Wells, Brown and Barry are recommending a 6-cent per drink increase in the city’s alcohol excise tax.

The committee did approve two segments of Gray’s alcohol proposals.

By a unanimous vote, the committee agreed that bars should be able to stay open until 4 a.m. during the presidential inauguration every four years.

The committee also agreed to allow class A and class B liquor stores to open at 7 a.m. instead of 9 a.m., except on Sundays