With the legislative session's end approaching, lawmakers on Friday remained divided on several key issues, and key party leaders said they expected the impasse to continue.

Republican and Democratic leaders said Thursday that they hoped to reach compromises on several bills Friday, before the session ends at midnight Sunday.

But House Speaker Patrick Bauer, D-South Bend, said Friday afternoon he was not hopeful those differences could be overcome by the end of the day.

He said House Democrats were willing to go along with delaying by one year an increase in taxes that businesses pay into the state's unemployment insurance fund. Republicans want to delay the tax increase because they say it would cause businesses to lay off workers in an economy that is still foundering.

Senate Republicans passed a bill earlier this session that would delay the tax increase slated to take effect in April by one year. Bauer said that would save businesses about $500 million, but now Senate Republicans want a two-year delay.

He said that was unacceptable, characterizing it as a $1 billion bailout for businesses at a time when the state's unemployment insurance fund has borrowed $1.6 billion to remain solvent.

He said Senate Republicans were using the unemployment insurance issue to hold other measures hostage. They include a bill that would allow schools to tap money from property tax accounts to offset a portion of $300 million in cuts for general operating expenses.

"If they set those free we will try to deal with them," Bauer said. "If they won't, we haven't gotten any other option but to leave."

He said he was only willing to keep the session going over the weekend "if there was a purpose for it."

House Minority Leader Brian Bosma, R-Indianapolis, said he and other GOP leaders from the House and Senate met with Republican Gov. Mitch Daniels to update him on negotiations.

"It's my impression that discussions have not been going well today, that the speaker has been a moving target, that he's picked up the cause of a number of special interests including the AFL-CIO, language that the State Teachers Association desires, and he's injecting a lot of new material in the closing hours here," Bosma said. "I'm not confident that we'll have an opportunity to complete our work."

Senate Appropriations Chairman Luke Kenley, R-Noblesville, said the parties were in a "waiting period" that he couldn't decide was good or bad.

"Nothing is happening and nobody's talking right now," he said. "I think it can easily be done, but I don't see the signs yet."