In a debate that lasted past 11:30 p.m., the state House of Representatives on Thursday voted 37-31 to pass a budget bill that would slice $257 million from state agencies and public schools and colleges, all in an effort to eliminate the $650 million-and-growing deficit in this year's budget.

The vote on House Bill 17 capped a day in which legislators and others at the Capitol were weary and frustrated after six days of a special session. Some in the Senate grew testy as the debates — and the long periods of waiting for debate — dragged on. And early in the day it became clear that predictions of the session ending Thursday had been overly optimistic.

But little by little, legislators passed measures to close the budget gap.

The House passed HB 17 with most Democrats voting in favor and most Republicans voting against. The bill goes on to the Senate, which though controlled by Democrats is more conservative than the House.

The cuts in the bill range from 2 percent to 7.6 percent. However, the measure would soften the blow to public schools by using other revenue, including federal stimulus funds, to replace state money.

Rep. Brian Egolf, D-Santa Fe, said the budget bill contains a provision that would allow school districts to get reimbursed for their property insurance premiums from a school building fund. Egolf said the premium for Santa Fe Public Schools is about $2.4 million. This, he said, would more than offset the $2 million budget cut in the bill. This provision is similar to SB 24, which passed the Senate on Thursday.

Egolf said the provision is designed to keep the schools afloat during the current school year. He said it will be necessary for the Legislature to come up with new revenue sources — such as tax increases — in the regular session that begins in January.

The budget bill contained a slap to Gov. Bill Richardson. It would require the governor to cut salaries and benefits of 80 so-called exempt employees. The bill calls for reductions of 7.6 percent for agencies under Richardson's control.

Early Thursday evening, as a House committee was finishing up work on its main budget measure, the Senate recessed for the night. Senate President Pro-Tem Tim Jennings told a reporter he expected the session to end todayafter passing a budget bill that will cut the state education budget by 2 or 2.5 percent and all other agencies by about 5 percent.

The feed bill, which pays for the special session that began Saturday, appropriated $370,000 for the session. That's enough money to pay legislators and staffers until today. Jennings said he didn't foresee legislators voting for another feed bill to extend the session. "I think everyone's ready to go home," he said.

Shortly before the Senate recessed, that chamber voted to approve Senate Bill 29, which frees up about $136 million for the general fund that has been tied up in more than 240 capital outlay projects.

This came after the Senate narrowly voted down another bill that would have used short-term "sponge bonds" to free up an estimated $140 million currently budgeted for capital outlay bonds.

Senate Republican Whip Bill Payne, R-Albuquerque, voted for SB 29 but against the sponge bonds bill, which he called a "gimmick." Payne said that bill would "have a significant smell attached and questionable legality." He later told a reporter he was more comfortable with SB 29 because it had fewer "legal red flags" and because the capital outlay projects involved were identified, unlike the sponge-bond bill.

Early in the day the House gave final approval to HB 3, which was approved late Wednesday by the Senate. That bill would free up $117 million by sweeping up cash balances of various state agencies including $68 million from a college scholarship fund.

Also on Thursday, the House voted 45-24 to transfer $225 million from the state's reserves to balance the books for the 2009 fiscal year, which ended in June.

The Legislature sent Richardson a bill that would trim the spending of the Legislature's year-round operations by 5.3 percent, or about $839,000. That includes the permanent finance and education committees and the chief clerks' offices in the House and Senate.

Other measures still in play include those that would:

• Cut capital projects across the state that have been approved in previous years but not yet started.

• Allow school districts to transfer to their operating accounts unexpended revenue from taxes levied for school improvements. The authorization would be good through next year and the money would have to be repaid.

• Give school districts more flexibility in areas such as class sizes and teacher work loads, so they can better absorb cuts.

Material from The Associated Press was used in this report.

Contact Steve Terrell at 986-3037 or sterrell@sfnewmexican.com. Read his political blog at roundhouseroundup.com