Trenton - Not since the preservation of the Pinelands 25 years ago has New Jersey undertaken such an ambitious environmental feat.

Gov. McGreevey and a bipartisan coalition of legislators have proposed protecting 800,000 acres of the sensitive Highlands region in the state's northwest, home to the reservoirs where much of the state gets its water.

In North Jersey, a battle has erupted between environmentalists and builders, pitting homeowners weary of sprawl against those fearful of losing property rights.

The Highlands debate is also reopening wounds in South Jersey, where some towns in the Pine Barrens' million-acre expanse of sandy soil say they have been sacrificed to developers in the name of preservation elsewhere - and others say they have been so restricted that time has stood still.

The towns say the Highlands proposal builds upon the Pinelands' mistakes, setting aside money for land acquisition, municipal planning and tax stabilization across seven counties without a penny for the Pine Barrens towns still smarting under strict regulations.

Some South Jersey state senators have promised to block the Highlands legislation until the state rights old wrongs in its first preservation area, the Pinelands.

"I credit Gov. McGreevey for understanding what went wrong in the Pinelands and trying to avoid the mistakes of the past," Sen. Stephen Sweeney (D., Gloucester) said. "But these problems still exist, and we need to fix them before we move forward."

Sweeney, who sits on the Senate Environment Committee, which will debate the Highlands legislation today, said he had prepared a stack of South Jersey-focused amendments to the bill. His support is conditional on "both ends of the state being treated fairly," he said.

He said he was also concerned that the Highlands would swallow up open-space funding traditionally distributed equally throughout the state.

Sweeney's position is shared by Sen. William Gormley (R., Atlantic), a longtime champion of Egg Harbor, Galloway, Hamilton, and other Atlantic County municipalities on the outskirts of the Pinelands that have been saddled with extra development to compensate for preservation.

Like the Pinelands act, the Highlands proposal outlines a preservation core - 395,000 acres - that would remain off-limits to building, while the remaining protected land would still accept some development. The Highlands area would be governed by a council similar to the Pinelands Commission.

But the proposal would avoid creating growth areas like those in the Pinelands. Towns may receive financial incentives for taking on extra growth, but development would not be forced on them, bill sponsors said.

"If it's now being conceded by the governor and the Senate that what was done to these growth areas 25 years ago was wrong, isn't it time to correct it?"

Gormley said. "Or is South Jersey a test tube for other parts of the state?" Gormley said extra school and municipal aid for Pinelands growth towns must be added to the Highlands legislation.

About 145,000 acres in the proposed Highlands preservation area are privately owned, and the legislation proposes paying fair-market value. Gormley contends this, too, is an inequity - one that Pinelands landowners who were paid a lower value for their land have complained about for years.

McGreevey spokesman Micah Rasmussen said the state had spent more than $200 million in the last 25 years on the Pinelands, including aid to municipalities in both the growth and preservation areas. The state does not yet have a cost estimate for the Highlands preservation, he said.

"Preserving the Pinelands was arguably one of the best things this state has ever done, but concerns inevitably arise from that preservation," he said. "We're doing our best to address those concerns in the new preservation areas in the Highlands and the existing preservation area in the Pinelands."

The Highlands proposal's proponents said South Jersey lawmakers were shortsighted to hold up legislation that would benefit the entire state.

The Pinelands and the Highlands could not look more different, they said - one is flat and sandy, covered with scrub pines and swamps, while the other is defined by steep, rocky ridges and valleys. But both are valued for their water supplies: the Kirkwood-Cohansey aquifer under the Pinelands and the large reservoirs in the Highlands.

"If we allow the North Jersey water supply to be contaminated by overdevelopment, there will be greater demand for South Jersey's aquifers, which are already overstressed," Sen. Bob Smith (D., Middlesex) said.

Pinelands residents are particularly sensitive to the need to preserve the Highlands, said Buena Vista Mayor Chuck Chiarello, vice chairman of the Pinelands Municipal Alliance.

"We know what it's like to have the state come in and plunk down a national park on top of people who already own their land," he said. "We understand both areas are national treasures - but everyone wants compensation, so it gets complicated. The issue is that Highlands towns are getting a voice at the table, something we never got back in 1979."

If Highlands towns receive money to stabilize tax rates while land is being preserved, that benefit needs to be extended to Pinelands towns, Chiarello said.

But Pinelands Commission chairman Jim Florio, the former governor, said the goal of preserving such a large swath of forested land in the Highlands should prevail over municipal squabbles.

Most Pinelands municipalities are now at peace with their role in the preservation area, he said.

"If we hadn't preserved the Pinelands, the area would be desecrated by now," Florio said. "The bottom line is it's no more in the public interest to have unfettered growth in the Highlands now than it was in the Pinelands 25 years ago."

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Contact staff writer Kaitlin Gurney at 609-989-7373 or kgurney@phillynews.com. Copyright 1996-2004 Knight Ridder. All Rights Reserved.