TRENTON - The Highlands watershed preservation bill is still on hold after the Senate environment committee balked Thursday on voting on the measure.

Committee Chairman Bob Smith, D-Middlesex, said he was stunned when none of his colleagues would second the proposed legislation, following intense negotiations since Monday over their concerns.

"I hope this isn't the first shot of the war between the South and North," Smith said in a dejected tone after not getting support.

Three of the holdouts are from South Jersey - John H. Adler, D-Camden, Andrew R. Ciesla, R-Ocean, and Stephen M. Sweeney, D-Gloucester. The fourth is Henry P. McNamara, R-Wyckoff.

McNamara made no public comment, but earlier Thursday told reporters that he wants perpetual state funding to Highlands towns to compensate for tax impacts from conservation efforts. The bill now offers 10 years of tax stabilization aid.

Called the Highlands Water Protection and Planning Act, the bill would ban major developments on privately owned and municipal tracts near reservoirs and feeder streams. A regional council would regulate limited development within a preservation area, oversee conservation buyouts, and recommend growth areas elsewhere in the region.

The mountain region, which supplies water to half the state, stretches from northern Bergen County through portions of Passaic, Morris, Somerset, Sussex, Warren, and Hunterdon counties.

The Thursday afternoon session was the third time that the Senate committee postponed voting on the bill, starting on Monday - when its Assembly counterpart voted the bill out - and again Thursday morning. The bill would go to the vote of the entire Legislature if the Senate committee gives it a stamp of approval.

Late Thursday afternoon, Sweeney said he was committed to "voting for a strong Highlands bill. It's not North vs. South."

But, Sweeney added, there are issues he wants addressed, including increased state spending to offset local school taxes in the Pinelands in South Jersey.

Adler said he is close to voting for the bill, after he reviews the latest round of amendments, which include a proposed $1.8 million annual tax stabilization fund for Pinelands towns for five years - on top of a previous five-year aid package.

Ciesla said he echoed "the sentiments of the senators [Adler and Sweeney] who have spoken."

"I'm extremely disappointed that there won't be a vote today," said Smith, who rescheduled it for June 14 and said he would continue to bring it up until it is voted on.

Governor McGreevey, who was on vacation in Canada, issued a terse statement that he intends to "continue to work with the Legislature to get this done. If they don't act, I will."

The Senate committee had originally scheduled an 11 a.m. vote Thursday. But for nearly an hour, committee members huddled in the rear of the hearing room with sponsors of the Assembly version, a representative of McGreevey's office, and legislative aides.

Shortly before noon, Smith convened the meeting to announce that the bill would be delayed for further discussion.

"It's doable," Smith told reporters after the meeting broke up and committee members continued buttonholing one another in hallways for intense one-on-one talks.

"We're down to millimeters of change," that needed to be written into legal language and then reviewed, he explained.

Among the outstanding items was the status of a Saddle Mountain tract in Ringwood and West Milford that is owned by Braen Stone Industries, which operates a stone quarry on an adjacent site. An amendment in the bill would exempt contiguous lands owned by quarry operators from the proposed preservation area.

"Saddle Mountain is a big one," Smith said.

That issue was resolved in side talks by industry representatives and environmental activists who have fought to preserve the forested peak, which overlooks the Wanaque Reservoir.

"We agreed to the Sierra Club language," William F. Layton, executive director of the Concrete and Aggregate Association, said of a proposal to keep Saddle Mountain in the preservation area, exempting only the existing quarry.

"The Braen family has been willing to act in good faith," Layton said of the compromise.

Other sticking points were not so easily resolved.

"There are issues I'm discussing with the governor, which I agreed to not talk about," Sweeney said after the vote was postponed in the morning. "The bill is a good bill, but we're not done yet."