FAIRFIELD — The town is in strong financial shape, said First Selectman Mike Tetreau in his annual State of the Town address, but it needs to grow its grand list and reduce the tax burden on residents.

In their response, the Republicans agreed expanding the commercial tax base and growing the grand list of taxable properties is needed.

“Our town is financially strong and economically vibrant, but the trends at the state and federal levels are having an impact,” Tetreau said.

For example, he said, just two years ago, Fairfield received $3.5 million in Education Cost Sharing funds from the state. That has been cut to less than $1 million. The state will also not be reimbursing the town $414,000 for tax credits given by the town to elderly and disabled residents. Tetreau said the state has also eliminated $70,000 in operational support for the regional fire training facility located here.

Add to that, the first selectman said, are concerns that new federal tax laws limiting local and state tax deductions on federal returns could cause a “negative disruption” in the real estate market.

According to Tetreau, Westport has been able to increase its expense budgets, and yet have a lower mill rate, with only half the population of Fairfield. The same is true, he said, in Darien, Greenwich, and New Canaan.

“The lesson here is that we cannot get to a lower mill rate just by cutting expenses,” Tetreau said. While his administration will continue to improve cost management, “It is clear from these four other town examples that to control our mill rate growth, we need to grow our grand list,” Tetreau said.

Commercially-zoned property in town makes up 4.5 percent of town land, and generates 10 percent of the tax revenue, he said.

“There are only two primary ways to grow our commercial tax base — either expand our commercial and area or add value to the current land area zoned commercial,” the first selectman said. He said the town needs to decide whether it expands commercial zones, or increase the value of existing zones through methods like increasing density with five, six or seven-story buildings.

He cited two projects bringing in new tax dollars — Trademark Fairfield, a mixed-use building at the corner of Black Rock Turnpike and Commerce Drive, and the Orthopedic Specialty Group located just across the street.

“The key to any approach is to maintain our town’s charm and character,” Tetreau said. “We need to be strategic and targeted with any commercial zone changes.”

To help the goal of expanding the grand list, Tetreau said the Economic Development Commission has completed a long-range plan, and the town has joined the Fairfield County 5, a multi-town economic development initiative. An overall strategic plan is also being developed.

“Working together, we will make Fairfield a leader in moving Connecticut in the right direction,” Tetreau said.

The GOP, in its response delivered by Deputy Minority Leader Michael Herley, said Fairfield is facing serious problems and needs serious people willing to work together.

“After listening to the first selectman’s address, however, you’d think it’s just another warm, sunny Saturday afternoon at Jennings Beach and that we were attracting major corporations to Fairfield, not losing them — but we all know that’s not a vision grounded in reality,” Herley said.

Herley said if the town is to lower the tax burden, “we must grow our commercial tax base. Thriving commercial districts require good roads so people can get to and from work — not 30-minute bumper-to-bumper traffic to cross town,” he said.

He said residents need to ask themselves if traffic congestion has gotten worse under the Tetreau administration. “We all know the answer here, it has gotten much worse, and it’s impeding our economic progress.”

And economic development, Herley said, follows well-designed transit, not the other way around. “What type of infrastructure program has the first selectman proposed in recent years to improve traffic flow and to help attract businesses of significance,” Herley asked. He said outside of the Fairfield Metro Center, “nothing comes to mind.”

Herley was also critical of the income limits on the elderly tax relief program. Those limits are set by the RTM, and are reviewed on a periodic basis. A committee to review and update the tax relief program was approved by the RTM at Monday’s meeting.

“When Fairfield is united, we are unstoppable in what we can achieve,” Herley said. “We urge the public to join us in building a better vision for Fairfield’s future.”