AUGUSTA — Negotiations between Republican and Democratic legislative leaders continued late Wednesday but a deal on a new two-year budget remained elusive as the sides struggled over income tax cuts and other issues.

Earlier Wednesday, lawmakers from both parties seemed optimistic that a budget package – or, rather, two competing budget packages – would be voted out of the Appropriations and Financial Affairs Committee. But just after 8:30 p.m., legislative leaders sent some visibly frustrated committee members home as they continued to meet privately.

“We are in the process of wrapping things up,” said Sen. Garrett Mason, R-Lisbon, the Senate Republican leader.

While both sides painted the ongoing negotiations as a positive sign, lawmakers talked of a potential government shutdown should either side refuse to budge on the more than $6 billion, two-year budget with just less than a month left in the fiscal year.

“Right now we have a bipartisan budget deal that we have struck,” said House Speaker Mark Eves, D-North Berwick, referring to a compromise brokered last weekend by Democratic leaders and the Senate Republican leadership. “If government shuts down, it will be because House Republicans want to give a tax giveaway to the rich. We will not do that. It is too important to make sure that middle-class Mainers get a tax cut, that we invest in education and that we provide property tax relief.”

The biggest sticking point between the two sides appears to be tax cuts – and, more precisely, who should receive them.

Republican Gov. Paul LePage jumpstarted the conversation in January when he unveiled a sweeping tax reform proposal that cut personal income and corporate income taxes and phased out the estate tax but increased the sales tax while applying it to more goods and services. But the latter sales tax proposals quickly ran into opposition from LePage’s fellow Republicans while Democrats accused LePage of offering tax cuts that disproportionately benefited the wealthy.

Democrats, who proposed their own tax reform package, have said consistently that they are willing to cut taxes but not for wealthy Mainers. House Republicans have insisted on a broader income tax CUT? but also a suite of welfare reforms included in LePage’s $6.57 billion budget.

The House minority leader, Rep. Kenneth Fredette, R-Newport, reiterated that the House Republican caucus “needs income tax and welfare reforms as part of this budget” but he wasn’t giving up hope for a late agreement on Wednesday.

“Any time you take dedicated, hardworking people sitting down at a table and talking, there is a way to find compromise, and I think there is an opportunity to do that,” Fredette said. “There have been lots of tax plans out there over the past 4½, five months … it’s where you find common ground.”

Without a late breakthrough, the 13-member Appropriations and Financial Affairs Committee is likely to depart from recent tradition and send a budget proposal to the full Legislature without unanimous support.

In votes taken over the past week, the committee’s seven Democrats and two Republican senators have voted to increase funding for K-12 education, maintain municipal revenue sharing and continue the popular Homestead property tax credit program. Those nine committee members rejected Gov. Paul LePage’s proposals to cut income and corporate taxes.

Meanwhile, the four House Republicans on the committee have pushed for a budget that includes some version of the income tax cuts, welfare reforms and other proposals in LePage’s spending plan.

While talks continued Wednesday, leaders from both parties acknowledged that the clock was ticking. It takes more than a week for staff to compile the massive budget document before it can be sent to the full Legislature for consideration, plus typically several more days for lawmakers to review, debate and vote on the bill. Finally, LePage has 10 days – not including Sundays – to veto, sign or allow the budget to become law without his signature.

Many government offices will close on July 1 if the Legislature doesn’t adopt a budget. And with Fredette claiming that House Republicans are “solid” in their insistence that the budget cut income taxes, there are legitimate questions about whether Democratic leaders can muster enough votes to override a threatened veto by LePage.

“We are out of time,” Eves said. “If we don’t vote out a two-thirds budget on the night of June 18th, we’re done. Time is running out.”