Corzine's $33 billion budget proposal calls for eliminating valued state aid for municipalities with less than 5,000 residents and cutting it for those with 5,000 to 10,000 residents. The state has 323 such communities.
His goal: force New Jersey's small towns to share services or merge with neighbors as Corzine seeks $2.7 billion in state budget cuts amid troubled state finances.
"The fact is New Jersey has a government its people cannot afford," Corzine said.
New Jersey has 21 counties, 566 municipalities, 616 school districts and 186 fire districts, all with their own bureaucracies many argue contribute to property taxes that average $6,800 per homeowner, or twice the national average.
But local officials who met Thursday with Corzine's administration contend the cuts would lead to higher property taxes, reduced municipal services and police and firefighter layoffs.
"This is the most unfair legislation I've ever seen," said Knowltown Mayor Frank Van Horn.
Eastampton Mayor Richard Renzulli cited statistics that show 72 of the 100 lowest per capita spending towns in New Jersey have less than 10,000 residents.
"I'd like to know how the governor is telling us that small towns are the most inefficient ones in the state," Renzulli said.
Legislators have also questioned the cuts. Senate Budget Chairwoman Barbara Buono, D-Middlesex, described it as "legalized blackmail."
Jon Rheinhardt, a Wharton Township administrator, said his town already shares police, courts and school superintendents, yet would still be penalized.
"Bigger is not better," he said.
Corzine spoke by taped video to the more than 400 local officials Thursday and said there's no reason the cuts should lead to higher property taxes, a comment that was openly laughed at by municipal officials.
"He must believe, to be polite, that we're extremely gullible," said Harold Karns, the administrator in Hillsdale.
Corzine said smaller communities would receive priority consideration for $32 million in grants to develop shared services and merge, but local officials said they already share as much as they can.
In Somerset County, for instance, Manville, Bound Brook, Raritan, South Bound Brook and Bridgewater share daytime weekday ambulance service.
"We're already sharing services," said Fair Haven Mayor Michael Halfacre. "But all you give us is the stick."
Joseph Doria, Corzine's community affairs commissioner, insisted small towns weren't singled-out, arguing cuts would affect nearly all state services.
"We're saying you need to be working together on a cooperative basis to do what needs to be done in a better way," Doria said.
Merging towns is often touted as a potential solution to New Jersey's property taxes.
Many of New Jersey's cities and towns insist on having their own schools, police departments, public works crews and the like. The state has more municipalities per square mile than any other.
But history shows voters often balk at that idea.
Voters in South Orange and Maplewood rejected studying whether the two Essex County municipalities should merge.
Princeton Borough and Princeton Township voters rejected a merger three times.
Other towns, such as Franklin and Hardyston, rejected a merger after studies showed Franklin would benefit more than its neighbor.
The state has had only two town mergers since 1952, when Vineland and Landis merged.
Pahaquarry and Hardwick merged in 1997 simply because Pahaquarry was down to seven residents and couldn't run a government.
