WALDOBORO, Maine (NEWS CENTER) — Restaurant workers on Wednesday are expected to jam the State House for a showdown, of sorts, over tips.

The minimum wage referendum that passed last year also eliminates the special, reduced wage for tipped workers called the "tip credit." Instead, the new law increased the tipped wage to $5 per hour, and then steadily raises it to the full $12 minimum wage.

Restaurant owners say it's creating a big increase in costs already, and many servers say they’re worried it will eventually result in smaller tips.

At Moody’s Diner in Waldoboro, a landmark business in the Midcoast, they’re taking the issue so seriously that the restaurant will close Wednesday so the staff can go to Augusta to testify at the public hearing.

General manager Dan Beck told NEWS CENTER their payroll costs have increased between $500 and $600 per week so far, and they haven't reached the busy season yet. Beck said costs will keep going up each year for seven years, as the wage for servers gradually reached the $12 minimum. He said they’ve already increased prices and may have to do more next year as a result of the higher costs.

Waitresses Jill Nutter and Alyssa Stred, who said they earn a good salary through tips, also said they’re worried higher prices will result in smaller tips.

"A family of six comes in and their bill has gone from $80 to over $100 so they might not be able to tip," Stred said. "Going to be a ton of things like that."

Beck, whose grandfather started the restaurant, said businesses like his could be forced to make big changes as costs increase.

"We’re celebrating 90 years this year," Beck said. "I want to make it to 100. And if we don’t get the tip credit reinstated it seriously jeopardizes this."

The tip credit issue is likely to face a tough partisan fight in Augusta. Republicans generally want to bring the credit back, while many Democrats support the new minimum wage law.

Senate Democratic leader Troy Jackson is sponsoring a bill to study the tip credit issue for a year. Meanwhile, the restaurant industry is supporting a bill by GOP Sen. Roger Katz that would restore the tip credit.