Prospects for North Carolina repealing its divisive “bathroom bill” in the near future are fading rapidly as the year draws to a close, amid a fresh outbreak of anger and recrimination reflecting anything but a seasonal spirit of peace and reconciliation in the state.

An attempt to repeal the hot-button law, which restricts bathroom options for transgender people in a way opponents have called “inhuman”, ended in tatters after a special session of the legislature on Wednesday.

Fresh efforts to get rid of the law, known as HB2, are now expected to be made as soon as the state assembly reconvenes in January, but neither Democrats nor Republicans who support repeal expect success for those attempts in the short term.

However, Republican state senator Jeff Tarte, who belongs to the state GOP minority that supports repeal, told the Guardian on Thursday that he was optimistic that the law could be gone by the summer.

“It was bad legislation. It was a mistake and when you make a mistake you need to own it and you need to correct it,” he said.

Tarte insisted that any discrimination against transgender people in North Carolina was “an unintended consequence” of the law.

He added that the failure to repeal it during the special session of the state general assembly on Wednesday in Raleigh was “excruciatingly frustrating”.

Democratic state senator Jeff Jackson called Wednesday’s legislative session “a debacle”.

Tarte lamented that the failure to repeal the bill would continue to have economic repercussions for the state.

The legislation has already cost the state at least $630m in lost business since it was passed last March, according to estimates by Forbes.

“It will have a further impact on jobs,” Tarte said.

House Bill 2 (HB2) was passed last March and dictates that transgender people in North Carolina must use the public bathroom that matches the gender stated on their birth certificate – not the gender they identify as. That includes all public sector bathrooms, such as in government buildings, public universities, public schools and libraries across the state.

“At least 70% of people in North Carolina now believe that HB2 hurts the state and they don’t agree with it,” Tarte said on Thursday, citing recent opinion polls.

The legislation was introduced in response to the city of Charlotte passing a local anti-discrimination law designed to protect gay and transgender people from bias, including allowing everyone to use the public bathrooms that matched their gender identity. HB2 overrode the Charlotte law, and prohibited such LGBT anti-discrimination laws statewide. The legislation also blocked local areas from raising the minimum wage above the state level.

The new statewide law, also known as the “bathroom bill”, brought recriminations, lost business, and resulted in music boycotts and protest tours.

Republican state senator Norman Sanderson holds his head during a failed attempt to repeal HB2 in Raleigh, North Carolina Wednesday. Photograph: Jonathan Drake/Reuters

Dennis Edwards, chief executive of the greater Raleigh convention and visitors bureau told the Guardian on Thursday: “The result in the legislature on Wednesday was very disappointing. Every day that the law is in place it’s tarnishing the reputation of the entire state. This is not who we are. We have always been a welcoming and inclusive community and this is giving out the wrong message.”

The compromise deal this week involved the city of Charlotte, state Democrats and Republicans and both the outgoing and incoming state governors. It was expected to lead to the repealing of HB2 in the legislature on Wednesday night.

But after much deliberation behind closed doors, the attempt failed, with Democrats and Republicans accusing each other of breaking their side of the bargain.

Some who support repeal confidently forecast on Thursday that the legislature will have another go at getting rid of the controversial law in the next assembly session in January.

But they predicted it will not be quick to succeed.

Jackson has already sponsored a bill to repeal HB2 and is prepared to sponsor another one to put before the legislature in January, but admits that Republicans won’t consider a bill devised by Democrats; the one that failed on Wednesday came from the GOP.

Democrats are already reeling from another special session of the state assembly last week during which the dominant GOP passed a law stripping incoming Democratic state governor Roy Cooper of key powers. Cooper narrowly beat Republican incumbent governor Pat McCrory after the race took a month longer election night to decide.

“We have to vote fully to repeal HB2, there are enough Democrats and moderate Republicans to do that,” said Jackson. “HB2 loosed a witch hunt and has emboldened those who see transgender people as inferior. That’s just wrong.”

Jackson said there had never been a single reported incident in the US of a problem with, for example, male sexual predators posing as transgender people as an excuse to enter female public restrooms and harass women and girls, as some supporters of HB2 argued was a legitimate risk the law was designed to guard against.

“It has never happened,” Jackson said.

Tarte said that people were using HB2 to discriminate against gays, lesbians, bisexual and transgender (LGBT) people and “that’s a mistake”.

He predicted that the chances of repealing HB2 quickly in another special session of the assembly early in 2017 were unlikely, but if properly examined and debated through the full legislative process could result in a repeal by the summer.

“If not, North Carolina is going to continue to suffer unnecessarily. But I think in the end reasonable minds will prevail,” he said.

James Esseks, national director of the American Civil Liberties Union LGBT and HIV project, described the impact of HB2 on the queer and trans community of North Carolina as “inhuman and devastating”.

But he added: “I’m fundamentally optimistic that all the debate over this is going to lead to less division in the longer term and greater progress for transgender people in our society.”