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OLYMPIA, Wash. -- The Washington state Legislature has approved a supplemental budget, setting them up for a final adjournment of an overtime legislative session.

The Senate passed the measure on a 44-2 bipartisan vote and it now goes to the governor for her signature. The House earlier passed the negotiated agreement on a 64-34 vote. Lawmakers worked through the early morning hours passing several bills before taking up the budget.

The House will need to take up the capital budget, which has already passed the Senate.

Gov. Chris Gregoire called lawmakers immediately back into a second special session at midnight after they failed to complete their work by the end of the first 30-day special session.

We have broad agreement on a deal, said Cory Curtis, a spokesman for Gregoire. Some issues remain to be worked out.

The flurry of activity Tuesday started the previous day and was the culmination of months of negotiations over how to close a roughly half-billion dollar shortfall for the two-year budget cycle ending June 2013.

On Tuesday, lawmakers reached agreement on a bill addressing early retirement benefits for future state employees. That measure had been a key sticking point between Democrats and Republicans.

A Republican-led coalition in the Senate had insisted on several reform-related bills, including the pension one, before taking up the budget.

Senators approved the measure Tuesday evening by a margin of 27-22, clearing a major hurdle in the quest by lawmakers to complete their work.

State workers who retire before the age of 62 already have scaled back pension benefits. Under the new bill, workers retiring at the age of 55 would be reduced by as much as 50 percent. The changes only apply to workers hired starting in May 2013. The plan would save the state an estimated $1.3 billion over 25 years

Senate Majority Leader Lisa Brown, D-Spokane, said that if lawmakers weren't able to get all of the bills moved by midnight, they still planned to work until everything was done. If the governor needs to call another special session, Brown said the plan is for lawmakers to work through the night to finish everything within hours.

I don't think anyone wants to come back tomorrow, she said.

Sen. Joe Zarelli, Senate Republicans' lead on budget issues, sounded an equally optimistic note after an afternoon meeting with the governor and key Democrats.

We're all on the same sheet of music, but some of the notes need to be clarified, Zarelli said. Time isn't our friend right now. We'll work the clock. If we have everything worked out and we're in agreement and the clock expires, there's always another day.

Democrats hold power in the House and have been unwilling to embrace GOP bills that passed the Senate on Saturday, one that would require the state's two-year budget to be in line with anticipated revenue over a four-year period and another to alter health insurance benefits for K-12 employees.

Sen. Rodney Tom, a Medina Democrat who voted with Republicans on a budget proposal last month, had been out of town this week in California and not expected to return until Wednesday, after the special session ended. However, he was seen in the Senate wings Tuesday, having returned a day earlier than expected.

Tom said he was concerned about how the proposed changes to the pension system were coming together in negotiations. And he also worried that Senate Democrats might push through a budget in his absence.

Tom has been siding with Republicans in the latest talks, helping provide the GOP coalition with a 25-24 majority in the Senate.

Earlier in the day, key lawmakers announced that they reached a deal on the capital budget.

House Capital Budget Committee Chairman Hans Dunshee, a Snohomish Democrat, said the agreed-upon $1.1 billion supplemental capital budget includes hundreds of millions of dollars in new spending.

However, the capital budget, which is for building and construction projects, would not be passed until after the operating budget.

Sen. Linda Evans Parlette, R-Wenatchee, said both parties agreed to spend more on projects now, while the economy is struggling and costs are low. She said she expects next year's capital budget to be more modest.

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