Alaska House and Senate leaders took a major step Wednesday toward averting a July 1 government shutdown by agreeing to an $8 million cut to the state university system — a move members said brings them close to a budget deal.

"We still don't have a deal. But I think a deal is imminent," said Bethel Sen. Lyman Hoffman, co-chairman of the Senate Finance Committee and the sole Democratic member of his chamber's Republican-led majority.

One of Hoffman's House counterparts offered a similar assessment.

"I think that both the Senate and the House are working in good faith and working toward compromises in a nonpartisan manner," said Homer Rep. Paul Seaton, co-chairman of the House Finance Committee and one of three Republicans in his chamber's largely Democratic majority.

Seaton added, however: "You never know what little glitches will come up."

The Legislature has been working continuously since January to assemble a package to close the state's multibillion-dollar deficit, and to approve a budget for the next fiscal year, which starts July 1. That's the same day all but the most essential state government services would shut down if lawmakers haven't approved a budget by then.

Both the House and Senate majorities have offered their own deficit-reduction plans to restructure the $60 billion Permanent Fund and use some of its investment earnings to pay for government services — a move that would cut dividends roughly in half.

The House majority also wants an income tax and higher oil taxes. But the two chambers haven't agreed on the right combination of bills, and at Gov. Bill Walker's direction last week, they narrowed their focus to a one-year spending plan alone — though the budget is still expected to rely on Permanent Fund earnings and pay a smaller dividend.

After weeks of minimal progress, legislative leaders on the House-Senate conference committee charged with resolving the two chambers' competing budget proposals have held promising meetings Tuesday and Wednesday — suggesting they could be on pace to finish a budget by the weekend.

At Tuesday's meeting, the committee advanced the Department of Transportation's budget, while on Wednesday it took up the Department of Health and Social Services' spending plan in addition to the state university system's.

Along with agreeing to the $8 million cut to the university system, the committee formalized a previously stated pledge to reverse a proposed Senate cut to the state-run Pioneer Homes for senior citizens. It also rejected a House proposal to sharply reduce the amount of money budgeted for lawmakers' per diem, which is meant to cover their Juneau expenses.

The action Tuesday and Wednesday closed nearly all the big-ticket items still pending before the conference committee. Two major unresolved issues, however, are whether to adopt a nearly 6 percent Senate cut to public schools and whether to pay the $1,000 dividend proposed by the Senate — or the $1,150 proposed by the House.

The committee is scheduled to meet again Thursday morning. Any final budget proposal adopted by the committee would still have to be approved by both the House and Senate before going to Walker for his signature.

In phone interviews Wednesday, lawmakers and legislative observers said they're encouraged by this week's developments.

"It's clear to me they're heading towards a budget deal, and I hope we'll see it on the floor early next week, if not sooner," said Jim Duncan, executive director of the Alaska State Employees Association, the largest union of state workers.

Hoffman pointed to the summer solstice in arguing that it's time for lawmakers to finish up in Juneau.

"Tomorrow, we're losing daylight, and the Legislature needs some time for debriefing and enjoying Alaska and the Alaskan way of life," he said.

Lawmakers will likely have more work to do before the end of 2017, however. They still haven't passed a capital budget, which typically includes money for infrastructure and other projects, and Walker has also signaled his desire for a bigger deficit-reduction package that includes a broad-based tax.

Credit-rating agency S&P Global Ratings on Tuesday warned that it would likely downgrade Alaska's AA+ general obligation bond rating unless lawmakers adopt "structural fiscal reform."