TRENTON - New Jersey Republicans yesterday criticized Democratic talk of extending a utility tax, as a top Democrat said an agreement has been reached on cutting benefits for newly hired government workers. The legislators are working to craft a new state budget by July 1.

Senate Budget Chairwoman Barbara Buono said legislators will back Gov. Corzine's plans to offer retirement incentives to state workers. In return, the retirement package will be pared and the Democratic governor will support new pension reforms, she said.

"I'm pleased there seems to be a commitment to move forward on some significant pension reforms that will end some of the systematic abuses and gaming of the system and in the process reduce some of the long-term unfunded liability," said Buono (D., Middlesex).

Corzine has proposed saving $136 million by offering retirement incentives to 3,000 state workers. That move would save $457 million within three years but boost pension costs by $517 million in that time.

Buono declined to elaborate, but legislators have been pushing Corzine to raise the eligibility age for retirement incentives from 50 to closer to 60.

Republicans, meanwhile, said they oppose extending a tax on public utilities, calling it an unfair burden on consumers. The extension would raise $62 million for the budget and help restore some of Corzine's proposed budget cuts.

"After all the talk of spending restraint, it is unbelievable that the Democrat-controlled Legislature is seeking to take more from people every time they turn on their air-conditioning or flip a light switch," said Sen. Phil Haines (R., Burlington).

Sen. Joseph Kyrillos (R., Monmouth) said he was disturbed Corzine would even consider the proposal.

"Energy prices are hurting working families and businesses," he said.

Assemblyman Joseph Malone (R., Burlington) recalled Corzine's vow not to raise taxes in the budget plan for the fiscal year that starts July 1.

"I am puzzled as to why we are looking at adding a new tax to this budget when there are so many additional areas of spending that can reasonably be reduced to fund these programs," Malone said.

Corzine's office declined to comment.

Assembly Speaker Joseph Roberts Jr. on Monday said lawmakers are discussing extending the tax.

"That's certainly something that we've talked about," said Roberts (D., Camden).

The tax is to be slowly phased out by Dec. 31, 2010.

It is expected to raise $252.96 million this fiscal year and was projected to raise $181.9 million next fiscal year.

The New Jersey Utilities Association, which represents 16 utilities including Elizabethtown Gas, Jersey Central Power & Light and Public Service Electric & Gas, said utilities just collect the tax from consumers.

"We are very sensitive to the financial pressures many of our customers are facing and are hopeful that the Legislature and governor will be able to pass a balanced budget with as little pain for consumers as possible," said Karen Alexander, the association president.

Corzine's proposed $32.8 billion budget proposal calls for $2.9 billion in cuts, including less state aid for towns and cities, hospitals, colleges, nursing homes and property-tax rebates.