The bill was sent back to the Senate, and all sides predicted a six-member, bipartisan conference committee of senators and representatives would be appointed to attempt to find common ground.
"Hopefully we can do it within hours or days, and not weeks," said House Majority Leader Todd Eachus, D-Luzerne.
A spokesman for the Senate's Republican majority said a conference committee was likely to be the next formal step.
"Negotiations will continue even before the committee members are appointed," said Senate GOP spokesman Erik Arneson. "Our leaders are, and have been, available for discussions around the clock."
House Democrats have passed a $29.1 billion proposal that combines cuts with new and expanded taxes. But it would spend $2 billion more than the austerity budget the Senate approved Monday night with the support of a single Democrat.
Chuck Ardo, spokesman for Democratic Gov. Ed Rendell, called the House vote "a step forward from where we were yesterday."
"It's more hopeful than it's been, but it's a long, long way from being done," Ardo said.
Appointment of a conference committee would clear some procedural hurdles that might otherwise slow final passage of a deal, but by itself would do nothing to bring the sides closer on the core political differences that have so far prevented a deal from being struck.
Republicans have proposed deep cuts and eschew new taxes. They also have emphatically rejected broad-based tax increases on income or retail sales.
Democrats want more spending on education and health care and insist considerable new revenues are required to avoid catastrophic cuts - and to prevent trickle-down tax increases imposed by local governments or school districts.
Pennsylvania is one of three states that have been unable to enact budgets for the new fiscal year, and state government lacks legal authority to pay most of its bills.
Tens of thousands state workers received partial pay last week, and they will get even smaller paychecks on Friday.
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