TRENTON - Ending a daylong logjam, the state Senate yesterday approved a $2.3 billion property-tax relief package that would provide most New Jersey homeowners with a 20 percent tax break.

Senators overcame some serious opposition to pass a proposal that majority Democrats have made the centerpiece of a six-month effort to reduce the country's highest property taxes.

The measure, approved 28-10 and already passed by the Assembly, will head to Gov. Corzine, who indicated yesterday that he would sign it into law.

"Relief is on its way to overburdened property taxpayers in New Jersey," Corzine said at a news conference shortly after the bill's passage. "I believe we have reached a turning point with regard to reform."

For a while, it looked as if the bill would go nowhere.

The measure was stalled Monday amid concerns that the relief package was unconstitutional and that the state had insufficient funds to pay for it beyond this year. Lawmakers who were critical of the plan also had complained that a provision intended to prevent annual tax increases from eating into the tax relief was too weak.

Late Monday night, after hours of closed-door discussions and vigorous lobbying, Senate President Richard J. Codey (D., Essex) was still three votes short of the 21 needed to pass the bill. Three of his fellow Democrats - John Adler of Camden County, Nia Gill of Essex County, and Shirley Turner of Mercer County - broke party ranks to oppose the legislation, and a fourth - Wayne Bryant of Camden County - was withholding his vote.

At 11 p.m., Codey ordered the Senate to go home and return yesterday morning.

After they reconvened, just before noon, Codey kept the voting board open while Corzine met with senators in his office in an attempt to drum up support.

Codey said he was prepared to call lawmakers back every day and have them sit in chambers until 11 p.m. each night until the bill was passed.

"They realized I wasn't going to give up. I was going to get it done," Codey said afterward.

Under the bill, more than 70 percent of all households - those making less than $100,000 - would get a 20 percent break. Households making $100,000 to $150,000 would get a 15 percent cut, and those making $150,000 to $250,000 would get 10 percent off. Households making more than $250,000 would not get a break.

Legislative leaders have said they hope to provide the relief, which would be delivered later this year, in the form of a direct credit on tax bills.

Democratic legislative leaders said the program, which will touch 95 percent of the state's households, was designed to most help those least able to pay. But some lawmakers argued that the plan could violate the state constitution because it bases relief levels on the homeowner's income - not the property's value.

Critics also worried that the state would not have enough money to pay for it in future years. Many Republicans have dubbed the program an "election-year gimmick" to woo voter support for November, when all 120 legislative seats will be up for grabs.

This year, legislative leaders plan to fund the tax relief program by using $1.4 billion in sales-tax money, and $1 billion more that the state now uses to fund property-tax rebate checks. But they have yet to identify a way to pay for the plan for the long term.

Critics also attacked a provision in the bill that prevents local taxing authorities, including towns, counties and school districts, from raising property taxes more than 4 percent a year. Under the provision, certain costs, including some debt service and health-care payments, would be exempt from the cap calculation. Local officials could apply to the state in an attempt to have other costs excluded, too.

Bill advocates said that local officials, who have warned that they may have to cut services to meet the cap, needed leeway to deal with costs that are out of their control. Roughly 75 percent of local spending, they say, will be subject to the cap.

But opponents said there were still too many exemptions for the cap to be meaningful. And even Corzine, who has endorsed the cap concept, has said it would take a few years for it to have its intended effect.

In the end, though, many of the tax plan's seemingly toughest critics folded.

Several of the 10 GOP senators who ultimately voted for the tax package said they still had concerns about the legislation. But ultimately, they said, they decided that something was better than nothing.

And homeowners, Republicans said, deserved something out of a property-tax relief effort that they insist has otherwise proven a failure. Critics of the Democratic-led process say lawmakers have watered down changes aimed at reducing the tax burden in order to please influential groups, such as public employee unions.

Sen. Robert Singer (R., Ocean) was one of the first Republicans to defect and vote for the tax relief and caps bill yesterday. He said he did so after Corzine summoned him and showed him how much financial help taxpayers in his district would get.

"The numbers were big," Singer said. "We were hoping for a better piece of legislation. . . . But the fact of it is, people in my district want relief this year."

Sen. Diane Allen (R., Burlington) cast her yes vote not too long afterward. She said the bill was "very flawed" - in large part because it offers, in her opinion, too little relief to seniors, who would get at least the $1,200 they now receive in the property-tax rebate check.

But, she said, "I felt that if I was able to at least help some people cut their taxes, that's a plus."

Allen said she would try to get seniors more relief through separate legislation she introduced yesterday.

Other senators, including four Democrats, would not budge in their opposition to the tax package.

Gill - who cast a "no" vote alongside fellow Democrats Adler, Turner and Bryant - said the state didn't have enough money to pay for the tax relief program and the new school aid it had proposed giving to mostly middle-class school districts, also to defray property taxes.

The state, she predicted, would be forced to sell or lease such assets as the turnpike and state lottery - proposals now being studied by Corzine's staff - to meet the financial commitments.

"Real reform," Gill said, "hasn't happened here."

Property-Tax Relief Q&A

As New Jersey moves toward cutting the nation's highest property taxes, here's what you and your family should watch for:

Question: How much would property taxes be cut?

Answer: The plan would give a 20 percent cut for households that earn up to $100,000, a 15 percent cut for those up to $150,000, and a 10 percent cut for those up to $250,000.

Q: Will Gov. Corzine sign the bill?

A: He is expected to, along with other tax relief bills, but emphasized that he will review the bills thoroughly.

Q: If he does sign it, when does it take effect?

A: Essentially, when the new budget year starts: July 1.

Q: So when will I start seeing lower property taxes?

A: The tax cut would take effect this summer, after property tax bills were finalized.

Q: How will I get this relief? Will I get a higher rebate check? Or will my property tax bill show a decrease?

A: The plan calls for crediting property tax bills, but if that system cannot be created on time, checks would be sent to homeowners.

Q: Do I need to alert my mortgage company?

A: No. Local governments should tell your mortgage company how much property taxes you owe, as they have been doing.

Q: What's all this talk about a 4 percent cap?

A: Property taxes have been increasing 7 percent a year, so the 4 percent cap is designed to control property taxes and ensure that relief given through the tax cut isn't devoured in a few years.

About 75 percent of spending areas by municipal and school budgets would be subject to the cap, but costs for debt, increased school enrollment, and public worker health benefits would be exempt.

Municipalities and school districts also would be able to ask either the state or voters for authority to exceed the cap, but 60 percent of voters would have to approve.

Q: Why are New Jersey's property taxes so high, anyway?

A: Largely because New Jersey relies so heavily on property taxes to fund schools and local governments.

According to the U.S. Census, 53 percent of funding for New Jersey schools comes from the property tax, the highest such rate in the nation. The national average is 43 percent.

Q: Does the legislation affect businesses, or just property owners?

A: Just homeowners and renters, who will see rebate checks double to $150.

Q: How are senior citizens affected?

A: Senior citizens received $1,200 last year through a rebate check. They would receive no less than that under the new tax cut plan, but maybe more.

Q: What other tax-reform measures have been advanced?

A: The Assembly and Senate both adopted bills to ask voters to merge towns, create a comptroller to investigate government spending, impose new rules for school administrator contracts, and strip pensions and require jail time for corrupt public workers.

How They Voted

Senators whose districts include parts of Burlington, Camden or Gloucester Counties and their vote on the Tax Relief/Tax Cap Bill. Voting to approve:

Fred H. Madden (D)

Stephen M. Sweeney (D)

Diane B. Allen (R)

Martha W. Bark (R)

Robert W. Singer (R)

Voting against:

John H. Adler (D)

Wayne R. Bryant (D)

Leonard T. Connors (R)

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- Associated Press
Contact staff writer Jennifer Moroz at 609-989-8990 or jmoroz@phillynews.com.