The deal outlines a faster rise in New York City, but carves out a slow lane for small businesses and its surrounding counties. In less prosperous areas north of the city it rises to $12.50 per hour before a state review of the law's impact.

The minimum wage has been a sticking point in difficult budget negotiations that threaten to delay a spending plan past the start of the state's fiscal year on April 1. The agreement still needs to be approved by lawmakers.

A broad budget deal still seemed someway off late on Thursday. Shortly after 7 p.m. Cuomo was seen heading to his press office wearing a windbreaker and carrying a gym bag while waving to a reporter, although his aids continued to scurry in and out.

The senate had broken for dinner and the assembly recessed until later in the evening after passing the only three budget bills that had been printed.

Phil Steck, a Democratic Party assembly member, said that under the terms of the deal the minimum wage would rise from its current $9 per hour to $15 over three years in New York City starting on Dec. 1, 2016. City businesses with up to 10 employees would be given four years to implement the measure.

Long Island and Westchester County around New York City would be given six years to push through the increases while the rest of the state would see the minimum wage rise to $12.50 in five years, with increases to $15 possible after review.

Several other lawmakers confirmed the terms of the agreement to Reuters.

The compromise is a climb down for Cuomo and his fellow Democrats who had pushed for a $15 state-wide minimum and no carve outs for small businesses. Republicans argued that a flat state-wide rate could hurt businesses in less wealthy areas.

"It may not go to $15. There's no guarantee, that's the good thing," said Senator George Amedore, a Republican representing a constituency upstate, who commented on the agreement to Reuters.

Steck, however, who represents a district 165 miles north of the city, argued that the opposite was true, and a lower minimum wage would be a blow to the upstate economy.

"We have a very strapped economy in upstate New York and the surest way to ensure continued poverty is to run a low wage economy." he said. "If anything, the poorer areas of the state needed an increase in the minimum wage more."

The multi-tier solution could also dampen the national drive for a $15 minimum wage that has gathered pace as Democrats mobilize their base ahead of the presidential election in November. They hailed an important victory when California Governor Jerry Brown and legislators reached an agreement on Monday to raise the state's minimum wage to $15 an hour by 2023.