NORWICH – City officials couldn’t debunk rumors of a possible double digit tax increase during a public hearing that was called to order on Wednesday.

Officials met at Council Chambers on Tuesday night to hear public concerns regarding the proposed override of the state imposed .73 percent tax cap for the 2016 fiscal year. Given the present financial condition of the city, the proposed cap is an “unrealistic” expectation, according to City Chamberlain John Zielinski; but after several years of deficit spending and using money from its surplus to ease the tax burden, the surplus account has dried up and the city is now between a rock and a hard place heading into the 2016 fiscal year.

“We’re at a crossroads, and the Council knows this. It’s either raise taxes to pay for services, or cut the services.” said Zielinski. “There is no surplus to reduce tax increases.”

Norwich’s practice of deficit spending has led to a drastic decline of its surplus balance over the last five years. At the end of the 2009, the city had a fund balance of approximately $1.6 million. Projected through the end of 2015, the finance office estimates that balance to be reduced to $137,000.

“Essentially nothing,” said Zielinski. “Why did that happen? Deficit budgets were passed to keep budgets low, and they did that by spending their savings ... Unfortunately now, there is no more option of a balanced budget. A balanced budget hasn’t even become accessible because we don’t have any surplus to bridge the gaps.”

Last year, the Common Council adopted a budget with a $372,000 deficit, thus evading an 18 percent tax increase for 2015. Unfortunately, that maneuver’s no longer an option.

“There is no surplus to reduce tax increases,” Zielinski said.

Adding to the pressure, Norwich faces a number of mandated expenses. Approximately 75 percent of the annual budget is earmarked for benefits for active and retired employees. The expense of employee retirement alone will cost taxpayers an estimated $223,000 in 2016. Retiree health insurance, after contributions made by retirees, will cost $422,000. The city will also have to pay $80,300 in taxes imposed by the Affordable Care Act; and another $261,000 to front the projected 14.1 percent health insurance increase from Excellus Blue Cross (despite the fact the city has paid $2.8 million more than Excellus has paid out of claims).

But raising money to pay those expenses doesn’t come easy. Raising taxes 1 percent generates just $30,600, based on the average Norwich home value of $55,000. Raising taxes one percent equates to an $11.84 per year increase for the average taxpayer.