INDIANAPOLIS -- House Democrats approved a $26 billion, two-year budget bill Sunday night without a single vote from House Republicans, who had threatened its passage because they said it did not provide enough property tax relief to homeowners this year.

Democrats control the chamber 51-49, and it took yes votes from all 51 to pass the bill -- the only thing lawmakers were mandated to do this session. The Republican-controlled Senate later passed the budget by a 41-9 vote, sending it to Gov. Mitch Daniels for consideration. The Legislature faced a midnight Sunday deadline for adjournment.

The Senate adjourned shortly before the deadline, and the House wrapped up its business one minute before midnight.

Lawmakers began the day with several weighty proposals still awaiting votes, including the budget, property tax relief and restructuring, authorizing slot machines at horse racing tracks and raising cigarette taxes to fund health care initiatives.

Both chambers passed the property tax restructuring bill, which among other things will allow local governments to raise local income taxes instead of property taxes to fund future spending growth. They also passed legislation that would raise the cigarette tax by 44 cents per pack to provide health insurance to more Hoosiers and fund other health care initiatives.

Besides including at least $550 million in property tax relief, the budget bill would increase basic spending on schools by about 3.7 percent in each of the next two years, increase spending on higher education, steer $92 million toward full-day kindergarten, and provide enough money to hire 400 more child welfare caseworkers.

Partisan tensions over the budget ran high in the House throughout the day and night, threatening passage of the budget bill. That in turn would have put the slots legislation in danger, because money for property tax relief in the budget was to come from revenue the state stands to get from authorizing the gambling machines.

But after the budget was approved, the House passed the slots bill 54-44. The Senate also voted to approve the slots bill, sending it to Daniels for consideration.

House Republicans had insisted that the budget bill provide more money for tax relief for homeowners, and that it not be provided via rebate checks as called for in the compromise proposal between Democrats who control the House and Republicans who rule the Senate.

"What they're really concerned about is property taxes. In fact, they're not just concerned. They're angry," state Rep. Jeffrey Espich, R-Uniondale, said of homeowners. "They're plain, simple scared and angry, and they have every right to be."

House Minority Leader Brian Bosma, R-Indianapolis, said earlier that he did not believe all 51 Democrats would vote for the bill. It appeared that a few were wavering as debate on the bill took place, but in the end, all Democrats supported it.

The legislation would provide $300 million in tax relief to homeowners for this year's property tax bills, which would reduce a projected average 24 percent increase in bills to about 10 percent. Under the plan, homeowners would pay their bills in full but get a check reflecting higher tax credits toward the end of the year.

House Democrats said the increase in homestead deductions, when combined with the higher credits, would bring the average increase down to 7.7 percent.

The plan also would provide $250 million in property tax relief for homeowners next year, but the reductions would be reflected on tax bills instead of rebates.

Bosma, R-Indianapolis, said his caucus wanted an extra $50 million in tax relief this year and next. The additional $50 million this year would keep property tax increases on homeowners to a traditional 5 to 6 percent, he said.

House Democrats said that by providing relief through rebates, it would ensure the homeowners knew the General Assembly had acted.

Bosma called it "ludicrous" to "take people's money, keep it for awhile and say we're going to send it back in part later." Doing that was meant to benefit lawmakers politically, not taxpayers, he said.

Bosma acknowledged that House Republicans could not get everything they wanted, but, "We understand that we have to plant our flag on important issues -- the most important of which is property tax relief."

But Democrats said it was meaningful property tax relief that still left the budget balanced, and said if the bill did not pass, a special session would be needed that would waste taxpayer money and might result in taxpayers getting no property tax relief.

"You can go home and tell the taxpayers why you voted against $550 million in property tax relief and spending their tax dollars coming up here in a special session, if that's what you want. This is the right thing to do," said state Rep. Russell Stilwell, D-Boonville.

The property tax package would allow local units of government to raise local income taxes instead of property taxes to fund future spending growth. They could also impose an additional supplemental income tax to reduce existing property tax levies on residential, commercial or industrial property.

The slots bill would authorize 2,000 slot machines at horse racing tracks in Anderson and Shelbyville of the operators each paid a $250 million licensing fee. That money and tax revenue from the machines would be used for property tax relief.

Gov. Daniels Praises Lawmakers, Says He'll Sign Bills

Gov. Mitch Daniels did not have as successful a session as he did his first two years. Before the final week, he'd already given up on privatizing the lottery and building two new privately run toll roads.

Daniels praised lawmakers for making what he called dramatic changes and progress for Indiana. He said he would sign the $26 billion state budget approved by lawmakers, as well as bills that increase the cigarette tax to fund health initiatives, restructure property taxes and authorize slot machines at horse racing tracks.

"We had vigorous debate, but it was civil and constructive -- lots of give and take, as there should be, and lots of positive contributions by people in both parties," Daniels said. "I have nothing but thanks and appreciation for all their hard work."

Daniels said not all homeowners will get all the tax relief they need, but he praised lawmakers for taking direct action to address the immediate problem of the huge impending tax hikes.

Daniels indicated that some of his failed initiatives, such as lottery privatization, might be back next year.