Unknowns Make New Tax Rate Shaky

The town's Board of Finance Wednesday night set the tax rate for the next fiscal year at 22.47 mills, or $22.47 for every $1,000 of assessed property value.

But the new tax rate didn't appear very solid, as board members noted that Fairfield could lose $2.4 million in state aid if Gov. Dannel P. Malloy is unable to get concessions from state unions, and they said the cost of unemployment compensation may rise if the Board of Education is forced to lay off employees to deal with the $2.8 million cut to its budget imposed by town boards.

Other unknowns are how much tax revenue Fairfield might lose if residents successfully challenge their new property assessments in Bridgeport Superior Court; whether a 98.89 percent tax collection rate in 2011-12 was too optimistic; and whether a budget-restoring referendum will be held and succeed. Petitions were pulled Wednesday by at least two residents to restore $800,000, or, as an alternative, $500,000, to the school board's budget.

But the potential loss of $2.4 million in state aid seemed to be the biggest unknown of them all. Board members even discussed the possibility of revisiting the tax rate if Malloy can't get concessions and the state legislature allows municipalities to set the tax rate at a higher level, after the fact, to make up for lost state aid.

"When there have been significant changes in revenue like that, legislation is often passed giving municipalities the ability to change what you will do tonight," Town Fiscal Officer Paul Hiller said to board members. "I believe the legislature would allow us to go back and reset the mill rate."

Board of Finance Chairman Tom Flynn said, "If the governor doesn't get his concessions, he has to revert to his Plan B. Taxpayers in Fairfield are looking at either a reduction in services or a raise in their tax bills."

Finance board member Michael Tetreau said the Board of Education's budget is locked, and Flynn pointed out that annual debt service also is locked. That means the only way to find reductions is in the townside operating budget, though the board could take money from the town's accumulated surplus, which is also called its undesignated fund balance, to make up the difference.

But the problem with taking money from the surplus is that bond rating agencies previously expressed concerns that it's too low. The surplus is supposed to be from 5 percent to 7 percent of a municipality's overall budget, and, without using any of the surplus and with a projected annual budget surplus of $1.5 million on June 30, Fairfield's surplus would be about $13.7 million, or 5 percent of its overall budget, according to Hiller.

Hiller said he'd seen the potential loss of $2.4 million in state aid to Fairfield in the media but hadn't confirmed that figure. "I haven't seen anything other than what's been in the general press as far as that's concerned," he said.

Supt. of Schools David G. Title is scheduled May 12 to recommend where the school board should cut $2.8 million from the $148.5 million budget that school board members approved in January. Title told the Representative Town Meeting on Monday night that as many as 30 to 35 school district employees may have to be let go. Title already made significant cuts to maintenance and technology requests before the school board approved the budget in January.

Layoffs to school district employees could cause the unemployment compensation account in the 2011-12 budget to run into a deficit, Hiller said. "Obviously, a $2.8 million decrease in their budget is going to impact staffing. One individual can cost us in excess of $500 a week," he said.

The Board of Finance would have to reconvene and adjust the tax rate if a referendum were held and were successful, Hiller said. "We would have to reconvene and establish a mill rate based on that new number," he said.

On the bright side, Hiller said the town was due to receive $234,000 more in state aid than had been projected based on the approved state budget for 2011-12.

When Board of Finance members sat down to start business Wednesday night, a tax rate of 22.45 mills was proposed for adoption. Tetreau suggested it be bumped to 22.47 mills in reaction to the unknowns. "This just lowers the risk a bit. It doesn't make it go away," he said.

The tax bill under a tax rate of 22.47 mills would total the following amounts for residents with various property assessments:

* $350,000 property assessment - $7,864.50 tax bill.

* $400,000 property assessment - $8,988 tax bill.

* $500,000 property assessment - $11,235 tax bill.

* $600,000 property assessment - $13,482 tax bill.

* $700,000 property assessment - $15,729 tax bill.

* $800,000 property assessment - $17,976 tax bill.

* $900,000 property assessment - $20,223 tax bill.

* $1 million property assessment - $22,470 tax bill.

The tax increase from this fiscal year to the 2011-12 fiscal year, which starts July 1, won't be the same for everyone because of the recent townwide revaluation, in which residents' property values declined, rose or stayed the same to varying degrees.

But the overall amount of money needed in local taxation to finance the $263 million town budget in 2011-12 - less nearly $4 million in tax relief for senior citizens and totally disabled residents - is $238.4 million, which is $12.2 million, or 5.4 percent, higher than the current tax levy of $226.2 million.