Gov. Murphy and Democratic lawmakers have reached an agreement to avoid a state government shutdown and give a property tax cut to New Jersey’s senior citizen population.

“We’re going to have to strike a very delicate balance,” said state Senate Budget Committee Chairman Sen. Paul Sarlo. “Right now, we have a significant surplus, but we also have to make sure that we’re showing taxpayers that’s where we can cut taxes. And where we can send money back to them, we’re going to do it.”

Sarlo said on Tuesday that the negotiations included setting an income limit for seniors who would benefit from what’s called the STAY NJ program.

“I think if they settle out around a half a million dollars for a family income, I think that’s something that everybody could live with,” Sarlo said, adding that he would support this plan.

Lawmakers will be working on a tight timeline to get this done. Sarlo said he doesn’t expect a full budget to be delivered to his committee until June 26 or 27. Final votes would happen on June 30 – just hours before the midnight deadline when the state will run out of money and shut down if a budget is not approved.

“We’re a little behind because most of the focus has been on STAY New Jersey,” Sarlo said.

A senior Murphy administration source tells News 12 that the governor ensured senior citizens who rent their homes also received a benefit. All seniors – homeowners and renters – will receive $250 more on their ANCHOR property tax rebates for the next two years, and then a maximum of $6,500 off their property taxes in January 2026 - just as the next New Jersey governor is entering office.

“There is going to be a correction in the economy. There will be some type of correction. Will we have a recession? I don’t believe so, but there will be a correction in the economy the next couple years,” Sarlo said.

The state treasurer reported last week that tax collections for this May fell almost 20% compared to May 2022.

The details of the deal will be announced Wednesday afternoon at the New Jersey State House.