Groton - The financially troubled Poquonnock Bridge Fire District has two options short of bankruptcy that it has not yet explored, according to the under secretary for legislative affairs in the state's Office of Policy and Management.

Under Secretary Gian-Carl Casa said Wednesday that state law allows a fire district to issue a supplemental tax bill to residents if funds are insufficient to pay yearly expenses.

Casa said this power is intended to prevent bankruptcies.

In addition, the state's Municipal Finance Advisory Commission, whose members are appointed by the governor, works with municipalities referred by the secretary of OPM to provide financial help.

The eight-member commission can require a fire district's chief executive officer to appear and discuss finances, to take remedial action to improve finances and to submit written reports of what actions it has taken based on commission recommendations. The commission also may review audits, budgets, accounting and other district financial practices.

The commission includes four financial or executive officers of municipalities, three non-officers with financial or other expertise and one representative of the OPM.

The tax rate in Poquonnock Bridge is 5.2 mills, based on the current budget. The owner of property assessed at $200,000 would pay $1,040 in annual taxes. The Poquonnock Bridge tax rate is the highest among Groton's nine fire districts.

Legal advice

Glenn Carberry, a lawyer for the Poquonnock Fire District board, said the board has asked his firm and a special counsel from a Providence law firm to look at any possible financial remedies.

"We're in the process of doing that and expect that there will be a broad list of options made available for them to consider," he said.

District board member Deb Monteiro said she knows the board may levy a supplemental tax. She said she has suggested that, but some other members won't support it.

Monteiro said she believes the board is creating more debt by seeking legal advice about bankruptcy.

"Who do you think is going to pay all these legal fees in the long run?" she said. "The taxpayers are going to wind up paying much more for their fire district than if they'd just established a reasonable budget."

Discussion at the fire district so far has centered on a possible bankruptcy filing or receivership, and trying to come up with a way to make the district's funds last through the fiscal year. But bankruptcy would require approval of the governor, Casa said.

Union wins

The district board also learned last week that it must honor a 10-year union contract that provides annual wage increases of 3 percent.

The State Board of Labor Relations ruled in favor of the firefighters' union Aug. 28. The decision means the fire district must pay back wages and benefits it owes from the date of the agreement in July 2012, and must notify the labor board within 30 days of how it has corrected the situation. Fire Chief Todd Paige said the district would need about $400,000 more this fiscal year to honor the contract.

The board's next regular meeting is at 7 p.m. Thursday at the Groton Senior Center.

Lori Watrous, a member of Representative Town Meeting and a resident of Poquonnock Bridge, said she believes the district should go back to taxpayers and ask for more money.

"There's something about that word, 'bankrupt,' that's not right," she said. "If you know what those obligations are, you're supposed to fulfill them."

She said the board knew $3.5 million wasn't enough to run the fire district when the amount was proposed at its annual meeting. Board Chairman Alan Ackley put forth the figure but said in an earlier interview that he thought it would be amended.

Debt remains

Casa said another option would be for fire district residents to vote to end the district's existence. But, he said, taxpayers would still have to pay the remaining bills even if this were done.

If the district dissolved and the town didn't want to take over, it's unclear what would happen next, Casa said. But, he said, the burden of sorting things out ultimately could fall on the town's shoulders. The town then potentially could levy a supplemental tax on fire district residents.

"We don't believe the statutes are clear," he said. "Ultimately, someone's going to have to pay that debt, and ultimately someone is going to have to take responsibility for providing fire service in that district. And I don't know who else would do it but the town."

Professor Mark Robbins, head of the department of public policy at the University of Connecticut, said special taxing districts are common and may be deeply rooted.

Some districts were started more than 100 years ago because residents needed fire protection and set up a taxing district to pay for it, he said. The Poquonnock Bridge Fire District was established in 1943.

Meanwhile, the government and community have grown. But people often maintain strong ties to a district, Robbins said.

"You don't see local towns giving up their charters and regionalizing into county governments," he said.

Like a local government, fire districts are obligated to follow their charters when taxing residents, to file financial statements and to meet their financial obligations, Robbins said.

In Poquonnock Bridge, one of the key questions has been whether taxpayers have the right to refuse to pay to support union contracts.

Robbins said there are legal questions about whether government can walk away voluntarily from long-term obligations or whether they can be forced to honor them even if taxpayers refuse.

He said the standard for many municipal labor disputes has been taxpayers' ability to pay, not their willingness to pay. There may be obligations that taxpayers can't decline to pay because they're legal obligations, he said.

d.straszheim@theday.com