INDIANAPOLIS — Leaders of the Democrat-controlled House and Republican-ruled Senate said Monday night that they were very close to agreeing on a new two-year state budget, and votes on the plan were expected Tuesday.

Lawmakers must pass a new budget or a stopgap funding measure by midnight Tuesday, when the current spending plan expires, or Republican Gov. Mitch Daniels has said much of state government would shut down.

“The prospect of not finishing on June 30 was distasteful to everyone,” said Senate President Pro Tem David Long, R-Fort Wayne. “I think the public expects you to get it done.”

Long said Daniels was on board with the plan.

Senate Appropriations Chairman Luke Kenley, R-Noblesville, said the bill would spend an estimated $27.8 billion over two years, and provide spending increases for public schools of about 1 percent the first year and 0.3 percent the second year. Higher education funding would essentially remain flat, although there was bonding authority for numerous university building projects.

Long predicted the plan would pass the Senate, where Republicans have a commanding 33-17 majority. Democrats control the House 52-48, and Speaker Patrick Bauer, D-South Bend, said it would take Republican support to pass it in that chamber.

“This is a very Republican-flavored bill,” Bauer said shortly before the House adjourned for the evening. “They’ve made some adjustments, but if you’re at the flavor of the other party, they’ve got to help pay for the drink.”

Bauer said he would put the plan up for a vote Tuesday, but “whether it succeeds or not is another story.”

The General Assembly did not pass a new budget by the regular session deadline of April 29, forcing a special session that began June 11.

Bauer said earlier Monday that the parties remained at odds over how billions of dollars would be distributed to the state’s nearly 300 public school districts.

A one-year, $14.5 billion budget bill passed earlier by House Democrats would give schools statewide an average increase of 2 percent next year and guarantee no district receives less than this year.

A two-year, $28.5 billion plan passed earlier by the Senate would increase state spending for schools by about 0.5 percent in each of the next two years. Many urban and rural districts losing enrollment would see cuts, while some growing suburban districts would see big increases.

“We thought the governor and the budget sent over (from the Senate) cut thousands of teachers,” Bauer said. “We put more money into the school formula.”

Kenley said the compromise plan probably favored Republicans’ wishes more than Democrats’, but he gave Bauer credit for agreeing to put the bill up for a vote Tuesday. He said the economic downturn made it an extremely difficult budget to draft, and indicated its passage in the House was no certainty.

“People are going to negotiate until the last hat drops,” he said. “We think we’ve gone as far as we can go to meet them (House Democrats).”

Bauer said the plan to be voted on did not have a limit on charter schools, which House Democrats had sought earlier. He also said there was some money to provide tax credits for people who donate to scholarship organizations that allow students to attend private schools — something else Democrats did not favor.

The Republican-controlled state Board of Finance was prepared to meet in an emergency session Wednesday to potentially transfer hundreds of millions of dollars to keep essential services such as prisons and state police running if a new budget or temporary funding measure was not enacted on time.

The Daniels’ administration also has said unemployment benefits, child support payments and welfare assistance would continue to be rendered for those already eligible.

But Daniels has said state parks would close, as would Bureau of Motor Vehicles branches and most state offices; most of the state’s 30,900 full-time employees would be furloughed.

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Associated Press Writer Deanna Martin contributed to this report from Indianapolis.