As Lamont unveils state budget, Woodbridge faces major drop in state aid

Governor Ned Lamont last week unveiled his proposed $28.7 billion state budget for FY27 in an address opening the new session of the Connecticut General Assembly. Statewide, the governor’s proposed FY27 budget would fund a one-time sales tax rebate, scale back a planned hospital tax increase, and maintain recent increases in Education Cost Sharing, special education, and health and social services spending, according to an analysis published in the CT Mirror.

But beneath those headline figures, the budget reveals a sharp projected reduction in state aid for Woodbridge next year, reflecting how the state’s motor vehicle tax reimbursement formula — first applied beginning with the 2021 assessment year — now interacts with the town’s lower mill rate following last year’s revaluation.

The impact of reduced statutory formula aid

Under that formula, reimbursement is tied directly to a town’s mill rate, and Woodbridge’s post-revaluation decline places it outside the range where the program provides meaningful aid. As a result, Woodbridge’s statutory formula aid is projected to fall by $1.67 million, a 57.1% decrease, from $2.93 million in FY26 to $1.26 million in FY27, according to the Office of Policy and Management’s municipal aid tables. Readers can find the full municipal aid breakdown in OPM’s FY27 budget documents.

The change is not primarily the result of a new policy decision in the governor’s FY27 budget. Instead, it reflects how existing state aid formulas interact with local tax decisions — specifically, Woodbridge’s significant mill-rate reduction following last year’s town-wide revaluation. While the revaluation itself was fiscally neutral in terms of overall revenue, the resulting mill-rate change now places Woodbridge outside the range eligible for certain forms of state reimbursement under current law. 

Although revaluation itself is required every five years under state law, municipalities have discretion in how resulting tax changes are implemented. Had Woodbridge chosen to phase in the revaluation over multiple years, as town officials considered last spring during the budget-setting process, the associated mill-rate reduction would have occurred more gradually. In that scenario, the loss of motor vehicle tax reimbursement likely would have been delayed or spread over time, rather than appearing as a single-year drop. A phase-in would not have changed the underlying state formula or eliminated the exposure entirely, but it could have altered the timing of its fiscal impact. As it stands, the town is now positioned to see the full effect in the coming year. 

When Woodbridge officials began assembling the FY27 budget this winter, the town’s revenue projections assumed that motor vehicle tax reimbursement would continue at roughly prior-year levels. Those assumptions were reflected in the FY26–27 revenue estimates presented at recent joint budget meetings of the Boards of Selectmen and Finance (see FY27 revenue assumptions document prepared for the January 29th joint budget meeting).

The governor’s proposed budget — which reflects the state’s application of the motor vehicle reimbursement formula to updated mill rates — introduces a revenue shift that was not incorporated into Woodbridge’s initial FY27 projections. The projected $1.67 million reduction therefore represents not just a lower aid figure, but a change to assumptions underlying the town’s developing budget.

What this could mean for the town budget

If the projected reduction in state aid holds as the budget process moves forward, town officials would effectively face two broad paths forward as they finalize the proposed FY27 budget that will be presented at the Preliminary Budget Hearing in April.

Passing the loss through to taxpayers

One option would be to offset the $1.67 million reduction by raising the mill rate used to calculate local property tax bills. Based on the town’s current FY26 budget, one mill of the tax rate generates roughly $1.5 million in revenue. On that basis, absorbing the full impact of the state aid loss would require just over one additional mill.

For homeowners, that would translate into an increase in the average tax bill, depending on assessed value. A one-mill increase equals $1 in additional tax for every $1,000 of assessed value, before accounting for exemptions or phase-ins. For example, on a property with a net assessed value of $375,000 — close to the town average — a one-mill increase would add approximately $375 to the owner's annual tax bill.

Reducing expenditures by a comparable amount

Alternatively, the town could seek to close the gap through spending reductions totaling roughly $1.67 million in the FY27 budget — an amount equivalent to a little over one mill of the current FY26 budget.

To put that figure in practical terms, a $1.67 million reduction is on the order of the annual cost of seven to nine classroom teaching positions, once salaries and benefits are taken into account. That comparison is illustrative rather than prescriptive; the town budget spans many departments and cost categories, and any reduction of that magnitude would likely require a combination of measures rather than a single line-item cut.

A structural choice, not a one-year fix

Because the loss of state aid reflects how the reimbursement formula applies to Woodbridge’s current mill rate, it should be understood as a structural shift, not a one-time gap that can easily be absorbed and reversed in a future year. Whether addressed through taxes, spending reductions, or a mix of both, the adjustment is likely to shape the town’s fiscal decisions beyond FY27.