New Jersey will scale back eligibility for a tax relief program legislative leaders had championed as a way to keep seniors from abandoning the state, according to a Sherrill administration official with knowledge of a budget deal announced on Tuesday.

Gov. Mikie Sherrill and New Jersey’s top lawmakers said in a joint statement on Tuesday they have agreed to a $60.7 billion spending plan that reforms Stay NJ, grows the state’s surplus and slashes a multibillion-dollar spending gap.

Their shared announcement didn’t address specifics of those reforms, but the administration official said it would place Stay NJ payments on a sliding scale, and cap eligibility to seniors with incomes of $200,000 — down from the $500,000 in the program’s current iteration.

The administration official asked not to be identified because no formal bill has yet been introduced or made public.

“We are pleased to have worked closely together to reach an agreement on an FY 2027 budget that makes New Jersey more affordable and protects our state from the Trump administration's dangerous policies that harm residents,” Sherrill said in the joint statement with State Senate President Nick Scutari and Assembly Speaker Craig Coughlin.

New Jersey has some of the highest property taxes in the nation. Stay NJ, which gives many seniors a break on those taxes, is a top priority for Coughlin, who spearheaded the original bill creating the program in 2023.

Reforming the program had been the main focus of negotiations, the administration official told Gothamist. The program in its current form offers up to $6,500 in property tax relief for seniors. But under the budget deal — which must still be written into legislation and adopted by June 30 — people with incomes less than $100,000 would still be eligible for up to a $6,500 benefit, while people with incomes between $150,000 and $200,000 would be capped at a $4,000 benefit.

Chris Widelo, the state director of AARP New Jersey, said his organization looked forward to seeing the full details of the changes. But he applauded the deal for preserving the maximum $6,500 benefit.

"For months, we have heard from older adults across New Jersey who were counting on this benefit. Many have already planned their household budgets around the promise of Stay NJ, and today's agreement provides important certainty for residents facing ongoing affordability challenges," Widelo said.

The new budget would give New Jersey a roughly $6 billion surplus. The state would still have a roughly $1.5 billion spending gap, but that’s down from what had once been projected as high as $3 billion. Those top-line figures match Sherrill’s own budget proposal this spring.

Some key items remain in negotiation. Sherrill has proposed tightening business tax laws to close loopholes and boost revenues. It’s still unclear if lawmakers will agree to that.

Negotiations also remain ongoing over Jersey City’s request for $150 million to help cover that city’s $255 million budget gap. Jersey City spokesperson Nathaniel Styer said city leaders are still in active discussions with state officials.

Jersey City Mayor James Solomon last week announced a plan to raise local property taxes 20% to help get the city through its fiscal crisis. That increase would take effect for residents’ third quarter tax bills if it's approved by the city council.

Jersey City is expected to pass a new budget later this summer, after the state budget and state aid for the city is finalized. Local taxes could change again based on the aid the city receives.

The budget bill is expected to be introduced in the coming days. The bill must be passed and signed into law before July 1 to avoid a state government shutdown.

Republican lawmakers, who are largely sidelined in budget negotiations, said the Garden State's opaque budget process is leaving New Jerseyans in the dark.

“Everything is being negotiated behind closed doors, and even the final budget won’t answer those questions,” Republican state Sens. Declan O’Scanlon, Mike Testa, Doug Steinhardt and Carmen Amato said in a joint statement. “A new governor may put a fresh coat of paint on the process, but it’s still the same broken state budget — one that treats fairness, transparency, and taxpayers as an afterthought.”

This story has been updated with more information.