A deal is taking shape in Annapolis that would give the Baltimore school system money to help close its $130 million funding shortfall and also create a tax break that Gov. Larry Hogan proposed for manufacturers.

Del. Maggie McIntosh, chairman of the House Appropriations Committee, predicted Friday that the House of Delegates would pass legislation to create a tax break for manufacturing companies that move to Baltimore and other financially distressed areas of the state after the bill gets through the state Senate.

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The Baltimore Democrat told education advocates at a rally outside the State House that she's hopeful the governor will deliver a supplemental budget as soon as Monday that will include money for Baltimore and nine other counties where student enrollment has declined in the past year. She estimated the size of the package at $28 million.

"If these things fall in place, we're fine," she said Friday.

Just minutes before, Hogan said his administration and Baltimore are getting close to a solution to the city school system's budget problem.

"The state, I believe, will help with some additional funding," the Republican governor said during a State House news conference.

Hogan said he's speaking with Baltimore Mayor Catherine Pugh, as well as city schools CEO Sonja Santelises and legislators, and believes the talks have been "fruitful and productive."

Both Hogan and McIntosh said the emerging agreement also would include what the governor described as an "accountability and responsibility component" for the city school system.

McIntosh said the city schools would agree to such provisions. Teachers unions also are expected to make concessions that would hep avert widespread layoffs, she said.

"All of us in the city delegation have been very forthright with our friends in labor that they are part of the equation too," McIntosh said.

Pugh, a Democrat, said she had spoken with McIntosh and was hopeful the money would be in the budget.

"I had conversations with Governor Hogan, and I am hopeful. I always tell people, it's not done until it's done," Pugh said. "We do believe the next supplemental will include educational dollars."

Meanwhile, the chairman of the Senate's budget committee said Hogan's tax credit bill was "somewhat linked" to school funding.

Since being elected, the governor has pushed the idea of providing tax credits for manufacturers who locate in Baltimore, as well as some counties in Western Maryland and on the Eastern Shore. Last year, he proposed such a bill, only to see it rejected.

This year, Hogan submitted a retooled version of the bill that he calls The More Jobs for Marylanders Act of 2017.

Sen. Edward J. Kasemeyer, chairman of the Budget & Taxation Committee, said his panel had approved the bill late Thursday, but it had been significantly pared back

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Kasemeyer, who represents Howard and Baltimore counties, said Hogan's version proposed 100 percent income and property tax credits for new manufacturers, as well as relief from corporate filing fees. Both provisions have been taken out of the revised bill.

What remains, Kasemeyer said, is a 5.75 percent credit for qualifying manufacturers' salary payments to employees.

"We think it's a good bill," he said.

Senate President Thomas V. Mike Miller said Friday that the deal would be approved in his chamber.

"Whether it's going to pass the House or not, we don't know. But it's going to pass the Senate," Miller said. "It's coming together. We're working with the administration. It's got an educational component. It's got a manufacturing component, and it's bipartisan."

Miller said that passage of the tax credit might not be required to secure the aid for schools but is "a very important component" in any deal.

McIntosh expressed disappointment Thursday when the governor announced a supplemental budget that did not include money for city schools and other systems with declining enrollments.

While she continued to express hope Friday that a deal would be struck with the governor, McIntosh said she also had taken steps to help Baltimore and those nine counties by amending a bill before her committee so that it would reduce those jurisdictions' contribution to school system pensions, thus freeing money for other uses.

She called that bill, which passed the House later in the day, an "insurance policy" in case the deal doesn't come together.

McIntosh emphasized the urgency of completing an agreement with the administration. She said the House and Senate would begin a conference committee Friday to resolve differences between the two chambers' budget bills.

"We need to wrap things up," she said.

Baltimore Sun reporters Pamela Wood and Yvonne Wenger contributed to this article.

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