Top Capitol Hill negotiators are close to agreement on a $900 billion COVID-19 aid package that could end a monthslong impasse, lawmakers said Wednesday.

Most elements of the emerging pact, like providing more money for small businesses, vaccine distribution, health care workers and education needs, have been effectively agreed to for months, although negotiators continued to fine tune the details.

The key breakthrough came in the wee hours of Wednesday morning when the “big four” congressional leaders’ agreed to drop the two most contentious items in play — Democrats’ push for direct aid to state and local governments, and Republicans’ demand for business liability protection against pandemic-related lawsuits.

Instead they agreed to add another round of tax rebates for lower-income households, though in smaller amounts than lawmakers in both parties have sought.

A few hours later, Senate Majority Leader Mitch McConnell and Minority Leader Charles E. Schumer headed to the floor to report a deal was close but not final.

“We made major headway toward hammering out a targeted pandemic relief package that would be able to pass both chambers with bipartisan majorities,” McConnell said. “We committed to continuing these urgent discussions urgently until we have an agreement. And we agreed we should not leave town until we’ve made law.”

Added Schumer: “We are close to an agreement. It’s not a done deal yet, but we are very close.”

Despite the public optimism, some snags emerged as leaders tried to hammer out the final details. Democrats were pushing to provide an emergency backstop for states through a $90 billion Federal Emergency Management Agency fund, raising alarm bells in the GOP.

“If it’s simply a way of disguising money for state and local government, we’ll have a lot of opposition but it depends a little bit I guess,” said Senate Majority Whip John Thune, R-S.D. “The way they were talking about it is distributing it through other programs the states benefit from. But I’m sure it’s a way of trying to convince our guys this isn’t what it looks like.”

Leaders plan to attach the coronavirus aid to the $1.4 trillion fiscal 2021 omnibus appropriations measure, which is largely finalized. Lawmakers have been racing against the clock to pass that measure by Friday, when current stopgap funding runs dry.

Depending on how quickly a final aid deal can be reached and drafted into text, the House could vote on the combined package as early as Thursday. The Senate would take it up shortly thereafter.

Leaders of both parties have been clear that this aid package is unlikely to be the last and that the debate over state and local aid and liability protections will emerge again in negotiations with President-elect Joe Biden’s administration next year.

Biden on Wednesday called the emerging agreement “an important down payment” on a bigger package that he and the incoming Congress will need to get done in January or February.

Rebate debate

The bulk of the aid package is expected to resemble the $748 billion measure unveiled earlier this week by a bipartisan group of House and Senate lawmakers, with the addition of the direct payments.

The amount of the tax rebates is expected to be around $600 or $700 per individual, with more for families with kids, according to Thune.

“It depends a little bit on kind of what the triggers are … what kind of conditions they put on,” he said. “And that will probably be done, designed to fit within the parameters of the number they’re trying to hit.”

Adding the tax rebates was key to winning over progressive Democrats and some Republicans who had wanted another round of checks.

Sens. Bernie Sanders, D-Vt., and Josh Hawley, R-Mo., have pushed to provide the same rebates distributed under a March aid package, or $1,200 per adult and $500 per child for families making up to $150,000. They declined Wednesday to say whether checks roughly half that amount would be enough to drop their objections, which had threatened to delay swift passage.

“Right now we’re going to do our best to get the $1,200, but this is a good start,” Sanders said.

Senate Minority Whip Richard J. Durbin, D-Ill., was concerned about rebates being used as an excuse to pare unemployment benefits. “I don’t want to have to do a second compromise at the expense of the people who are suffering the most,” he said.

Mark Warner, D-Va., said the roughly $140 billion for direct payments required paring back some $180 billion for unemployment benefits that the bipartisan group negotiating the bulk of the underlying provisions agreed to.

That plan would have provided an extra $300 a week for unemployment insurance, for 16 weeks. Warner said on MSNBC that including the rebate checks meant the final package would reduce the number of weeks for available benefits. “It’s not a perfect bill,” Warner said. “But at $900 billion, this is a lot of aid for people in need.”

Time crunch

Even if the House acts quickly, it wasn’t clear all 100 senators would grant their consent to speed up the typical Senate clock for considering legislation. Neither McConnell nor Schumer would commit to reporters that the Senate could pass a package by Friday.

Thune wouldn’t rule out the need for another short-term stopgap to buy a few extra days to process everything, but said he was hopeful one wouldn’t be needed.

“I think there’s a real incentive to get it done by [Friday]. I think both sides are sufficiently motivated given the time of the year and everything that’s at stake,” Thune said.

Sen. Rand Paul, R-Ky., who often stalls action on spending agreements, said he wouldn’t delay the process. “I will make a point to let people know that they’re giving away money they don’t have and that it’s not good for the country, but I won’t object to the time it takes to do it,” Paul said.

Senate Finance Chairman Charles E. Grassley, R-Iowa, who’s been working on tax provisions that would ride along with the omnibus and COVID-19 aid, said there wasn’t a final agreement yet. But he was optimistic about extending temporary tax provisions, saying as of 3 p.m. Tuesday “there was good hope of reaching an agreement.”

Grassley said having a coronavirus relief deal makes it easier to attach the tax extenders package, because the latter would have trouble moving without the former. Some lawmakers have argued against renewing business tax breaks without aid to individuals and families hurt by the pandemic

The Finance chairman was less certain a technical corrections measure for the U.S.-Mexico-Canada trade agreement would make it in the final deal. “There ought to be, but I don’t know that there will be,” he said. “But we’re trying to get that done. It’s very important that it be done.”

It was also unclear Wednesday whether the package would include an agreement to curb surprise medical bills that health leaders in both chambers reached Friday.

Among all of the various policy struggles Congress has faced this year that lawmakers are trying to resolve in this year-end deal, a new round of coronavirus relief has caused the most heartburn.

After working together to pass a $2 trillion package in March, the parties differed greatly on how much to provide in another round and what it should contain. House Democrats last spring sought as much as $3.4 trillion in new aid, while Senate Republicans months later offered about $500 billion.

A path toward compromise cleared when the bipartisan House and Senate group this month proposed their initial $908 billion package, which included $160 billion for state and local assistance and liability protections. The group later agreed to split the latter two provisions off into a separate bill because they couldn’t reach agreement on the liability language.

Despite the struggles, lawmakers were upbeat Wednesday as they awaited leadership to clinch the long-elusive deal.

“I think it is in the oven, being baked as we speak, and I hope it comes out soon,” said Sen. Lindsey Graham, R-S.C.

Paul M. Krawzak and Doug Sword contributed to this report.