A Vermont state senator pleaded not guilty Friday to charges he tried to extract sexual favors in exchange for rent, used sex as a punishment and told a woman they could both earn extra money if she had sex with farm workers.

Prosecutors say the charges against Norman McAllister, 63, involve three victims.

McAllister, a successful Franklin County dairy farmer and one of nine Republicans in the 30-member Senate, is in his second two-year Senate term. He was arrested Thursday outside the statehouse.

He said nothing after the brief court appearance Friday morning but his lawyer, Brooks McArthur, urged people not to rush to judgment.

"We have a much different version of events," McArthur said. McAllister was released on $20,000 bail.

Court records released after Friday's arraignment contain a transcript of a recorded call in which McAllister and a woman who rents property from him talk about the extra money she could earn if she went to other farms to have sex with farm workers. In the call, McAllister responds "yes" when the woman says he would take half of what she earned from the sex to help pay her rent.

McAllister says: "That's totally up to you. I mean, we were trying to figure out a way to get you money."

The woman told investigators that when a worker was injured while teaching her how to drive a tractor, McAllister said her punishment for causing the injury would be allowing him to perform a sexual act on her. She estimated she had sex with McAllister once or twice a month and said she felt she had to do it to keep her housing, according to the affidavit.

Another woman who worked for McAllister on his farm said the sexual acts were "definitely not" consensual. "I was screaming no at him and he still ... went for it," she told investigators.

McAllister is charged with three counts each of sexual assault and prohibited acts. Police had initially recommended a human trafficking charge but prosecutors said the accusations didn't match the spirit of that law.

The arrest sent ripples through the statehouse.

"I am shocked and saddened and if the allegations are true, these are very serious and disturbing," said House Speaker Shap Smith, a Morristown Democrat. "Norm and I came in together in 2003. We've always had a good working relationship, and I'm just very saddened by the whole thing."

Gov. Peter Shumlin wouldn't say whether McAllister should resign.

"I'm not going to speculate on that," he said. "I leave that decision to Sen. McAllister."

"Obviously the allegations are extremely troubling, and we'll have to see how it goes forward," Shumlin said. "But I'm both concerned and troubled by it, as I'm sure most Vermonters are."

Sen. Joe Benning, the Republican minority leader from Caledonia, said: "The initial allegations have everybody in the building sad. But I think everybody's willing to withhold judgment until we have a more accurate picture."

Benning, who is a criminal defense lawyer, said he was asked to join McAllister as he met with the police officers who arrested him at the statehouse.

"At that point, I was treating it as acting in the capacity of a defense attorney, and for that reason I can't talk about any of the conversation that we had," he said.