Florida's Republican-controlled Legislature reached a budget deal on Friday that should allow the 2016 session to end on time.
Leaders announced an agreement on big-dollar items, including how much money would go to education and health care.
But the agreement comes with a heavy cost for Gov. Rick Scott. Lawmakers refused to set aside the $250 million that Scott wanted to use to lure new companies to the state. They also balked at his push to cut taxes by $1 billion, and instead said they were willing to offer up $400 million in tax cuts.
It was a stunning setback for the Republican governor who had insisted just a few days ago there was enough money for legislators to enact his budget proposals.
Legislative leaders, some of whom are philosophically opposed to his push for business incentives, said they were responding to recent forecasts that showed that Florida's economy may not be growing as fast as it once was.
"The facts on the ground have changed and leaders have to be willing to shift,'' said Sen. Tom Lee, the Brandon Republican and Senate budget chief. "We did everything we could to try to get the governor as close as we could to the priorities he had.''
Scott, who came into office five years ago promising to create jobs, contended that large tax cuts and money for business incentives were needed to help diversify the state's economy before the next downturn. He even used money from his own political committee to run television ads touting his proposals.
There were signs, however, that incoming House leaders were skeptical of spending additional money on business incentives. The House this past week approved a bill to overhaul the state's existing mix of tax credits and subsidies for business. But a large number of Republicans voted against it, and the bill needed help from Democrats to pass. With no money for the program, the legislation is unlikely to pass.
"We have a very, very conservative house,'' said Rep. Richard Corcoran, the House budget chairman and incoming House speaker. "They are going to push for those very, very conservative things they believe in.''
House Speaker Steve Crisafulli added: "While I firmly believe that all members of the Legislature want to see our economy grow and increase jobs in Florida, there is great bipartisan disagreement over whether our current economic incentives are the best way to achieve those goals.''
Jackie Schutz, a spokeswoman for Scott, said that the decision by lawmakers would mean the state might no longer be able to lure employers to Florida.
"We are beginning the process of notifying cities across the state there would be no funding available to help them recruit businesses if the Legislature does not take immediate action to reverse course,'' Schutz said in a statement.
When running for re-election, Scott promised to cut taxes by $1 billion during the first two years of his second term. Legislators cut taxes more than $400 million last year, so he will come close but still fall short of his pledge.
Lawmakers have not yet decided what kind of tax cuts they will pass, but Lee and Corcoran said that half of the tax cut package will come in the form of one-time types of tax cuts such as the state's annual back-to-school tax holiday.
The agreement reached between Crisafulli and Senate President Andy Gardiner means that legislators will start working this weekend on individual spending items throughout the budget.
The session is scheduled to end March 11. State law requires that the budget must be on the desks of lawmakers 72 hours before a final vote. The budget year begins July 1.