The deal on subcommittee allocations adheres to the defense and nondefense caps agreed to as part of a two-year budget deal announced in July. Under that agreement, overall defense spending was $738 billion for fiscal 2020, while nondefense spending was $632 billion.

The agreement between Shelby and Lowey does not resolve a looming fight over the border wall; the House included no money for new border barriers in its Department of Homeland Security (DHS) bill, while the Senate included $5 billion for the border in DHS as well as an additional $3.6 billion that could be reprogrammed from military projects to the border.

Under the agreement between Shelby and Lowey, it's now up to the subcommittees to try to work out myriad policy differences, including the wall.

"Individual funding items are being left to the subcommittees in keeping with long-standing committee practice," a second source said.

In addition to money for the border wall, other policy fights — including policies related to abortion and the number of Immigration and Customs Enforcement beds — are expected to be major roadblocks for negotiators as they draft the fiscal 2020 bills.