TRENTON - Gov. Corzine hopes to revive a proposal to give towns a break on their pension payments over the next three years by making some key changes to address the concerns of local leaders.

The plan would allow towns to pay only half of what actuaries say they should to cover the current fiscal year's liabilities, then 60 percent in 2010 and 80 percent in 2011. Legislation on the issue stalled in the Senate for lack of support in December.

Corzine's fellow Democrats have a 23-17 majority in the Senate, but a number of Democrats joined all the Republicans in opposing the bill, saying the state should live up to its obligations to employees. The bill would likely have an easier journey through the Assembly, which Democrats control by 48-32.

The governor hopes the pension breaks will help towns to keep property taxes - already the highest in the nation - in check in a year when state aid to towns is likely to drop, given the state's fiscal woes.

Under the previous proposal, towns that wanted to make their full pension contributions would have had excess funds directed into a separate account. But mayors worried that those accounts would not earn the 8.25 percent state law requires for the pension fund, leaving towns responsible for the difference.

Corzine said yesterday the changes would include directing funds beyond the required minimum into pension accounts to avoid extra costs down the road. Another change would require towns to repay skipped payments within 15 years instead of the 30 originally proposed.

One of the plan's sponsors, Assemblyman Joseph Cryan (D., Union), said he expected the revised plan to win approval in the Senate this month and in the Assembly on March 16.

"Nobody likes this bill. . . . It's a vote of necessity," Cryan said.

The New Jersey State League of Municipalities offered its enthusiastic support for the amended proposal.

William G. Dressel Jr., executive director of the league, said the changes would mean that any towns that opt to make their full pension payments would not pay the price for others' pension holidays.

But lawmakers who opposed the bill on the ground that the state should uphold its obligations to workers may be more difficult to persuade.

Sen. Stephen Sweeney (D., Gloucester), the majority leader, voted against the bill in the Senate budget committee and said he remained unconvinced.

"They're listening to the complaints and concerns of a lot of elected officials, which is a good thing, but for me it's just a principled issue," Sweeney said.

In the past, Republican and Democratic administrations have skipped payments to the pension funds for government workers, teachers, police and firefighters to come up with an easy source of extra cash, and allowed towns to do the same.

As a result of skipped payments and downturns in investments, the state pension system had an unfunded liability of $28 billion as of June 2007, a problem that would remain unaddressed even with full pension payments.

Under Corzine, the state has contributed more to pension funds than it did in the previous 15 years combined.

Still, Republicans and worker unions have criticized Corzine's pension-holiday proposal.

Senate Republican leader Thomas H. Kean Jr. of Union County, for example, has called it a gimmick and "a bad deal for workers and taxpayers."

Corzine is dealing with a tough economic hand, seeking legislative approval for $812 million in midyear budget cuts after the state budget gap grew from an estimated $1.2 billion to $2.1 billion.

The current state budget was approved at $32.9 billion, about $600 million less than the previous year's.

The governor cut state aid to municipalities in the current budget and may have to trim even more in the next budget, putting pressure on local property taxes.

"I do know that we're going to have to move" on the budget cuts, Corzine said. "We have a legal obligation to be in balance."

Contact staff writer Adrienne Lu at 609-989-8990 or