The public battles over tax reform in Trenton during the last six months may come to be seen as little dustups when compared with the labor negotiations in which Gov. Corzine is trying to get hundreds of millions of dollars in concessions from state unions.

Corzine wants to tell his audience that he's made progress when he gives his budget address Feb. 22, but he may not be able to announce concessions that soon. Yesterday's picketing at several government sites indicates there is more work to do.

The stakes are high. The millions in union givebacks would be about the cost of sustaining the recently approved property-tax rebate program beyond this year, noted Assembly Speaker Joseph Roberts, a Camden County Democrat who has been driving the property-tax changes.

"The reason his [the governor's] work at the bargaining table is such a key is that's where immediate savings will be realized," said Roberts. "Those are dollars we can use immediately."

The Legislature, earlier this week, finished work on a rebate program that gives most property taxpayers a 20 percent cut on their bills this year. Roberts and others are hoping to sustain the program in future years, in part, by cutting government spending, and one area with a bull's-eye on it is the state's 80,000-member workforce.

Corzine and the unions still have plenty of time to make their deal. The administration and union leaders have been bargaining since the late fall on contracts that expire June 30. New contracts would begin July 1 with the new fiscal year to be covered by Corzine's budget, expected to be about $31 billion.

"We're still dancing," said one union leader.

And, Gerard Meara, director of AFSCME Council 73, said he "can't imagine" the talks being concluded in time for the governor's budget address. Meara represents 4,000 workers, mostly at the New Jersey Turnpike and Garden State Parkway, as well as thousands of county and municipal employees.

"The negotiations are not even close at this point," he said. "There's no money on the table, and they're asking for major concessions on pension and health benefits and we're not even near middle ground."

Sherryl Gordon, director of AFSCME Council 1, which represents 11,000 mostly mental health care and nursing home employees, said that the talks' early start is historic. Asked if she thought the issues would be resolved by Corzine's budget address, she laughed and said: "I am no Alice and this is no wonderland."

Corzine's spokesman, Anthony Coley, said the administration would not comment on the talks.

The bargaining table is set with some tricky problems for both sides.

A liberal Democrat, Corzine became governor with the help of labor organizations. Late last month, he swung his support to the American Federation of Teachers' drive to organize administrative staffers at Rutgers University.

Last summer, when the government shut down for a week, Corzine spent about $50 million to cover the paychecks of the 45,000 nonessential employees who had been furloughed. And, as a U.S. senator, he supported the Employee Free Choice Act, which would make it easier for unions to organize workers.

Despite his pro-labor background, the governor has promised to cut the costs of the $74 billion employee retirement fund, which sends $5.7 billion a year in checks to 220,000 retired state and local government workers, teachers and their beneficiaries. He was roundly criticized by legislators for pulling from their property-tax reform list a series of changes to the pension system and saying he'd rather handle the matter at the bargaining table.

He also pulled changes to employee health-care programs, another big-ticket item. A report prepared for the governor said the cost of providing promised health care to government workers when they retire could top $78 billion - almost four times as much as estimated more than a year ago by then Gov. Richard J. Codey.

Those with knowledge of the retirement health-care costs, however, said the true cost is somewhere in the middle - but still staggering. So staggering that even as legislators imposed a 4 percent spending cap on municipalities, they exempted escalations in health-care costs.

Until the 1990s, the government had built reserves to cover those expenses, but when times were tight, the reserves were depleted.

Government officials say concessions are needed to cut government spending in the nation's highest property tax state.

The talks are difficult for union leaders because they understand there is a lot of political pressure to make changes amid citizen frustration with taxes. But they hasten to note they have made sacrifices over the years.

Robert Master, political director for the state's largest employee union, the Communications Workers of America, which represents 35,000 state workers, said in the last few contracts an increasing number of employees have been moved into less expensive health-care programs and have been paying higher deductibles and co-pays.

"We don't see ourselves as the cause of rising property taxes," he said. "We see that in the Whitman tax cuts for the rich."

Delivering on a campaign promise, former Gov. Christie Whitman cut income taxes and partially financed the cuts by stopping the government's payments into the pension and other employee benefit funds, as well as raiding the retirement health-care reserve.

At the same time, government employees continued to put an average of 5 percent of their incomes aside for pensions annually. For the first time in a decade, Corzine has resumed government matching payments into the fund.

As Corzine's bargaining team and unions representing 50,000 state workers talk, government workers around the state, including 200,700 teachers' union members, are watching carefully - knowing that this contract will set the bar for future talks.

Contact staff writer Cynthia Burton at 856-779-3858 or cburton@phillynews.com.