Gov. Rick Perry and House leaders have reached an agreement to use $3.2 billion from the state's reserve fund to close a deficit in the current budget.
The announcement Tuesday clears the way for an end to a stalemate, in which Rep. Jim Pitts, the chief House budget writer, urged Perry to agree publicly to tap the fund.
Pitts had been fighting a wave of conservative opposition from Republicans in the House, spearheaded by Perry.
The agreement also would make $800 million in agency cuts in the current budget.
The agreement would give lawmakers wiggle room to deal with a revenue shortfall that could reach almost $27 billion when counting for population growth.