New London — The governor's proposed cuts to revenues for municipalities has the potential to increase the tax rate here in New London, according to Finance Director Don Gray.

Gray said Monday that the city is bracing for unexpected revenue losses in a variety of areas that include a drop in the Educational Cost Sharing grant and payment in lieu of taxes programs.

Gray said that Gov. Dannel Malloy's proposal eliminates the $235,000 budgeted for public school transportation, cuts Educational Cost Sharing funds by $115,690 and decreases by $1.3 million in combined revenues from PILOT funds, motor vehicles sales and sales tax reimbursements.

In all, the city would face about $1,672,652 in cuts from what was budgeted in Mayor Michael Passero's proposed $45.9 million general government spending plan. The City Council has already proposed that an additional $189,850 be spent to hire two public works department employees.

With the council's proposed addition, Gray said the tax rate would increase by approximately 1 mill.

The council has not yet approved a final budget proposal and continues to weigh Passero's $42.4 million education spending plan. That figure is already a drop of more than $1 million from what the Board of Education requested.

The proposed budget goes to a public hearing Monday night before going for review to the Board of Finance and later to the City Council for final approval.