A Senate committee yesterday debated a constitutional amendment that would dedicate $150 million annually, to be raised from a proposed water tax, to support land preservation.

If three-fifths of both legislative houses approve sending it to voters, the amendment question would appear on the November ballot.

Sen. Bob Smith said the tax would be 40 cents per 1,000 gallons of water, or about $32 a year per household.

"The most important thing is it happens only if the people of New Jersey say they want it," Smith (D., Middlesex) said. "This is not the Legislature imposing a tax."

A water tax has been discussed for years, but never implemented amid legislative concern over taxing a necessity in a state that has the nation's highest property taxes and lofty income, corporate and sales taxes.

Smith said voters would weigh the merits of imposing the tax against their desire to preserve farmland and open space.

"There is no free lunch," he said. "There has to be a source of money."

In November, voters approved borrowing $200 million for land preservation, but that money is set to run out in two years.

Smith said the water tax would mean an end to borrowing for preservation, while providing $150 million in annual pay-as-you-go funding.

"That's a pretty good open-space program, and it's forever," said Smith, the Senate Environment Committee chairman.

Republicans questioned the plan.

"I don't see why raising taxes is always the first option for the Democratic Party," Senate Minority Leader Tom Kean (R., Union) said.

Democrats control the Senate, 23-17.

The Senate Environment Committee yesterday delayed action on the bill after Smith said the panel would consider how to include money for historic preservation in the legislation. Smith expects the panel to vote May 19 on sending the bill to the full Senate for consideration.

The Legislature has until Aug. 3 to weigh proposed constitutional amendments.

The plan was backed yesterday by environmentalists, who argued the state needed long-term funding for land preservation.

"It takes some courage because we are concerned about the high price of energy, the cost of food going up and the state budget, but it's also the right thing to do," said Jeff Tittel, of the New Jersey Sierra Club.

But water companies and businesses said the legislation would hurt consumers and water-reliant businesses.

"Every dollar spent on a new tax makes them that much less competitive," said David Brogan, a New Jersey Business & Industry Association vice president.