Not sure that's exactly accurate as far as their cap space goes, but a lot of New Jersey's position depends on options. It seems to me that KG wouldn't have interest unless Williams stays (which I don't really expect, but it could happen) and Wallace does too. Let's say for argument's sake they just take their options. With Williams, Wallace, Farmar, Morrow, Petro, Damion James, Brooks and Jordan Williams, the Nets are at $42.3 mil on 8 players. After the cap hold for Lopez, a restricted free agent, they'll be at $50 mil. Then you add in a cap hold for their first round pick through Houston (assuming Houston makes the playoffs) and another rookie minimum salary hold to get to 11 roster spots, and they're at about $51.5 million.
With a cap estimate of about $56.5 mil, that leaves them with about $5 mil in cap space. They can add about $855K by declining their option on James (drop $1.33 mil but add about $475K for another minimum cap hold), and could save $3.8 mil if Farmar doesn't take his $4.25 mil player option. But that leaves a maximum of $9.5 mil in space and they don't have control over Farmar's option. Most likely scenario is that they have at most $6 mil to offer Garnett or Ilyasova. To have more space, they'd have to renounce Lopez. (They already used their amnesty on Travis Outlaw so they can't use that.) And I'd imagine Lopez will be a higher priority for them than Garnett, which means it could be even less space if Lopez takes a deal starting at anything over $7.7 million.
I think it would be a smart team to put together - try to persuade Williams to give it a shot, at least for one more year, with a supporting cast of Brooks, Wallace, Garnett and Lopez, and a bench of Farmar, Morrow, James, Petro, Jordan Williams, their first round pick and whoever they can get for 2 years, $5 million total with their cap space midlevel. If KG is on a one year deal, the only contracts they'll have past next season are Brooks, their first round pick, and maybe Deron and Lopez. Still space for Dwight.
But I don't think Garnett would pick them over the Celtics - if the Celtics wanted to bring him back - for 1 year, $6 million. And I would DEFINITELY bring KG back to Boston if that's the market rate. More importantly, I don't think Williams comes back to that team if he could instead go home to Dallas.