AUGUSTA — Maine’s first government shutdown in more than a quarter-century ended early Tuesday morning after legislative leaders reached a budget deal with Gov. Paul LePage.

After weeks of growing tension and harsh political rhetoric, lawmakers voted 147-2 in the House and 35-0 in the Senate to approve a $7.1 billion budget that eliminates a controversial tax surcharge but allocates an additional $162 million to public education.

House Speaker Sara Gideon, D-Freeport, negotiated the compromise with LePage and Republican House leader Kenneth Fredette late Monday as both sides tried desperately to reopen government offices on Wednesday.

LePage signed the budget bill just after 1 a.m. Tuesday, along with an executive order rescinding a civil emergency that took effect when state government shut down just after midnight on Saturday.

“The shutdown is over, the budget is passed. Go home and get some sleep and enjoy the Fourth of July,” LePage told the weary yet still-enthusiastic crowd of House Republicans who gathered in his Cabinet room.

As part of the final deal, Gideon and her Democratic caucus agreed to eliminate a 1.5 percentage point increase in the lodging tax – something that had become the major sticking point in recent days, even though it accounted for just $21 million in a $7.1 billion budget.

In exchange, LePage and Fredette agreed to earmark an additional $1.15 million for the Head Start preschool program, as well as a two-year moratorium on additional reimbursement rate reductions for a behavioral health MaineCare program.

The budget eliminates the controversial 3 percent tax surcharge on income over $200,000 that voters approved in November to finally achieve 55 percent state funding of public schools. But the $162 million earmarked for education represents one of the largest infusions to public schools in state history.

“I think we made the best of a really poor situation that we were put into,” said Gideon. “At the end of the day we did what’s right for Maine people and we have a budget where everyone gave something.”

Leaders of House Republican caucus, which was closely aligned with LePage throughout the budget process, also cheered the bill, after defeating two previous versions.

“While no bill is perfect, I think this bill is an excellent compromise,” said Rep. Tom Winsor, R-Norway, one of the House Republican budget negotiators.

The agreement came roughly 10 hours after House Democrats failed to win two-thirds support for an earlier deal during an initial vote. For the rest of the day, Democrats and other supporters of the budget compromise tried to wrangle the additional nine votes needed for passage, while LePage and his House Republican allies tried to pressure Democrats to drop the proposal to increase Maine’s hotels and lodging tax from 9 percent to 10.5 percent.

While that tax accounted for less than one-third of 1 percent of the $7.1 billion budget, it had become the major obstacle to ending Maine’s first government shutdown since 1991.

LePage threatened repeatedly to hold any budget containing a tax hike for the 10 days allowed by law, thereby extending a government shutdown that had idled thousands of state workers and threatened to cause more noticeable disruptions to average Mainers starting Wednesday.

But the dynamics began to shift Monday evening.

“If the budget bill before you is amended to remove the increase in the lodging tax, I pledge to sign it immediately,” LePage wrote in a letter to lawmakers.

Union leaders with the Maine State Employees Association, which represents about 12,000 government workers in Maine, were optimistic about the agreement. As part of the tentative budget compromise, all state employees will be paid for any hours lost during the shutdown.

“I think our members played a big role in helping motivate the Legislature and informing them about the issues,” said Rod Hiltz, executive director of the MSEA, whose members maintained a constant, highly visible presence in the State House during the shutdown whenever legislators were working. “Our members want to work. They are very dedicated public servants and care about the work that they are called to do.”

Just before midnight, the tone in the State House was decidedly jovial as Democratic and Republican lawmakers laughed and sang together while others tossed a tennis ball around the hallways.

It was a stark difference from earlier in the day, when a 92-54 vote in the House fell nine votes short of the threshold that would eventually be needed for final passage. All 54 votes against the budget were cast by members of a House Republican caucus closely aligned with LePage that blocked passage of an earlier compromise.

“Honestly, a lot of those conversations are between Republicans and Republicans at this point,” Gideon said Monday afternoon. “There are a number of people who changed their votes from Friday to today, and those people are really dedicated to finding a solution and ending this impasse.”

On Sunday night, members of a budget conference committee voted 5-1 to support a modified version of the budget bill that failed on Friday, triggering Maine’s first state shutdown in 26 years.

That version contained the 1.5 point increase in Maine’s hotels and lodging tax – which LePage opposed despite the inclusion of a 1 percentage point lodging tax increase in his proposed budget – and lacked a statewide teacher contract pilot program sought by the governor and Republicans.

Tensions were high at the State House at that point, with several Republican lawmakers reporting that their vehicles were vandalized. Rep. Sheldon Hanington of Lincoln and Rep. Tim Therriault of China filed police reports.

Meanwhile, LePage further fanned state employees’ anger by reportedly telling two lawmakers that he would leave Maine on vacation during the shutdown if the Legislature does not send him a budget bill that he supports.

A spokeswoman later said the governor was not leaving the state.

LePage had used his executive authority to keep state parks open during the busy, extended July 4 holiday weekend. And law enforcement as well as some social services employees who provide “emergency services” continued to work.State employees were out early Monday for a Capitol Park rally, calling on state legislators to end the budget impasse that idled most of the state’s nearly 15,000 workers.

“The focus of today is to get our message heard,” said Ramona Welton, president of the Maine State Employees Association. “We want to let the Senate and the House know that we want to return to work. We want them to pass a responsible compromise budget and get back to work.”

Union members and supporters, clad in purple shirts, marched past the Blaine House governor’s mansion before gathering in the Hall of Flags at the State House, accompanied by honks and waves of drivers who were stopped in traffic. More than 150 workers and supporters marched.

Attorney General Janet Mills joined the union marchers.

“There’s no hill to die on. This is a state budget,” Mills said before they left Capitol Park. “It’s critical to all of us. Today I am proud not just to be the attorney general and a constitutional officer, but a state employee.”

Kevin Miller can be contacted at 791-6312 or at:

kmiller@mainetoday.com

Twitter: KevinMillerPPH

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