The Farmington Select Board is facing a $2.3 million budget shortfall after a homestead exemption figure used during this year’s property revaluation was found to have been significantly overstated.

The board voted Nov. 4 to pursue setting the town’s tax rate at 10.5%, and will also seek voter authorization to use $700,000 from the fund balance to help close the budget gap.

The final rate will depend on approval at a special town meeting. The board had originally set the tax rate at 9.81% on Oct. 14.

Town Manager Erica LaCroix said that the homestead exemption total provided during the revaluation was “overstated by ten times, approximately.” LaCroix later confirmed the incorrect homestead total used was about $386 million, while the accurate figure is approximately $35 million.

“This is not the news we want to come to the public with,” LaCroix said. “I want to start by saying I’m not an assessor, but this happened under my watch, so it’s my responsibility.”

LaCroix said the town did not detect the error until after tax bills were printed and revenue projections were reviewed.

“When we ran the bills, it became apparent we were going to come up approximately $2.3 million short to cover the budget that was voted on back at town meeting,” she said.

She said she pushed the town’s contracted assessor, Frank Xu, Town Assessor, to finalize numbers ahead of the Oct. 14 deadline.

“Frank did tell me he wasn’t confident in the numbers, but I pushed him anyway,” LaCroix said. “We didn’t catch it.”

The town’s undesignated fund balance stands at about $3.2 million. LaCroix said covering the shortfall directly would reduce that balance below the level needed to maintain Farmington’s bond rating.

LaCroix presented three approaches. Option 1 would have kept the tax rate at 9.81% and required using a significantly larger amount of the fund balance, which would have dropped the balance below the level recommended for maintaining Farmington’s bond rating.

Option 2, the middle-ground approach, sets the tax rate at 10.5%, uses $700,000 from the fund balance, and liquidates a $600,000 investment account. Option 3 would have set the tax rate at 11.70%, not used any money from fund balance, and would likely have required issuing supplemental tax bills.

The board voted to adopt Option 2 as its intended course, which would set the tax rate at 10.5%, use $700,000 from the fund balance, and liquidate a $600,000 investment account.

Because the use of fund balance requires voter approval, the town will hold a special town meeting Nov. 13 at 7 p.m. at the Town Office.

The tax rate cannot take effect until that vote.

If voters do not authorize using the $700,000, LaCroix said the town would likely need to set the tax rate at 11.70% to fully fund the budget and would issue supplemental tax bills. LaCroix confirmed that the revised tax bills are already at the printer and should be mailed by Nov. 10.

Selectman Dennis O’Neil supported the motion, saying the adjusted rate balanced the impact.

“If we stay at the 9.81, we’re going to cripple ourselves next year,” O’Neil said. “My feeling is to approach the 10.50, splitting the difference. For the majority of the people, they should not be any worse off than what they paid last year.”

Selectman Scott Landry also voted in favor. “There is going to have to be some real belt tightening,” he said. “I hate to take the taxpayers to the full 11.70; I think it’s going to hurt too many people.”

Selectman Matthew Smith agreed. “When we do our budgets this year, they’re going to be really tight,” Smith said.

LaCroix noted that the average home in Farmington increased from about $153,000 to about $300,000 following the revaluation. That means some residents will still see bills similar to or lower than last year, while others may see increases. She encouraged property owners to review their record cards and file abatements if needed.

The board also discussed reviewing planned equipment purchases, including a fire truck, once the final budget impacts are clear. No action was taken on that matter. LaCroix later clarified that the ladder truck is still moving forward, with no funds required until 2029. However, without the annual set-aside, the town will need to borrow more at the time of delivery.

“All I can commit to everybody is we are going to take steps to ensure this never happens again,” LaCroix said.