Democrats said the agreement will be made public in a hearing next week, with a vote scheduled for Thursday.
"Everyone has worked very, very hard," said State Sen. President Pro Tem Darrell Steinberg, D-Sacramento. "These are very difficult circumstances and difficult times. Not a lot of celebrating. But we all stepped up and did the work we had to do."
No details were available on how lawmakers and the governor are planning to close the $19 billion budget gap.
A republican leader said the agreement does not call for any new taxes.
The governor previously said he would not sign a budget without pension reform. That was a major sticking point in the negotiations.
