Norwich — City Manager John Salomone presented two wildly diverging possible futures for the fiscal year 2018 municipal budget Monday night: one version assuming that the governor’s budget passes the legislature unchanged, the other assuming no change in state aid from the current fiscal year.

Gov. Dannel P. Malloy included several radical adjustments to the way state aid is distributed to towns in his February proposal that would have widely varying consequences for municipalities across the state, but would mean a revenue bump for cities like Norwich.

But a state Senate split evenly between Democrats and Republicans, and a nearly evenly split House of Representatives means negotiations over Malloy’s proposals are anticipated to be lengthy and complicated, at best.

If the state aid Malloy proposed passes the legislature unchanged, Salomone said, the tax rate for most city residents would go down.

Total city spending in that case would come to $121.7 million, which represents a proposed overall decrease in spending on city operations, debt service, capital improvements and education by about 1 percent.

Under this “best case scenario,” the tax rate for residents living in the central fire district would go down by about half a mill, to 48.49 mills. In the town consolidated district served by the city’s volunteer fire departments, taxes would go down by more 1.68 mills to 40.01 mills.

With money from a new ability to tax hospital property and a boost in special education funds, the city would be able to cover $1.8 million more than normal in capital spending.

It would be able to add a part-time parks and recreation director, an information technology technician in the Finance Department and an administrative clerk in the assessment department while consolidating other positions and eliminating other vacant ones.

And it would be able to fully fund the education budget the school board proposed, which calls for $2.3 million more in school spending than in the current budget.

If the governor’s budget passes without changes from the legislature, Norwich would also have to pay an additional $3.3 million to cover a proposal for the state to bill municipalities for nearly one-third of the annual cost of municipal school teachers’ pensions.

The teacher pension costs would not come out of the school board’s operating budget, Salomone said, but woud rather represent a bill to the city that would be paid from the general fund.  

Salomone, who has put together town budgets as the town manager in Newington, the head of several cities and towns in New York and Connecticut and working as the director of finance in three towns, said the governor’s proposals would accomplish what Malloy envisioned when he proposed it: put less tax burden on the residents of cash-strapped cities, make school funding more fair and allow for more local spending on infrastructure.

But if Malloy’s hospital tax proposal, education funding changes and teacher pension plan are all shot down in legislative negotiations, the City Council could be looking at a very different budget next year.

The hospital property tax in particular, Salomone told the City Council Monday, is a controversial one that could make or break the city's plans.

"Many hospital are obviously against it," he said.

In that "almost worst-case scenario," Salomone said, the city would not be able to count on an additional $3 million from the proposed hospital tax, or the $10.5 million boost in education funding.

The city would then be exempt from the teacher pensions burden, but the resulting budget would still likely include a significantly smaller capital budget and a significantly smaller education budget increase, plus a more than 3.7 mill increase in the tax rate for residents.

Neither extreme will likely come to pass — the real best case scenario, Salomone told reporters Monday, is that the legislature negotiates a state aid package that puts the city budget somewhere in the middle of the two scenarios he laid out Monday.

“It’s really like a moving target,” he said Monday before the City Council meeting where he presented his proposal. “We give the best case and the worst case, and hope for something in the middle.”

Salomone’s budget would eliminate a planning and community development director position out of the city’s planning department, replacing it with a grant-funded community development position that would be able to work across departments, he said.

It also envisions eliminating town management of the Rogers Road transfer station, replacing two Public Works positions there with a private contractor.

But each of the changes in the budget are still subject to the vote of the City Council, whose members will deliberate with the city's department heads throughout April. By charter, the council must adopt a final version of the budget by the second Monday in June.

Salomone said the council members will have more indication from state legislators about what the final state budget will contain by the time they take a vote, and acknowledged that the city's spending and taxing plan could change significantly in the coming months.

“We’re (cognizant) of the fact that (the budget) might not exist in this form by June,” he said.

m.shanahan@theday.com