Fairfield's selectmen and finance board members on Tuesday launched their joint review of the town budget proposed for 2011-12, but instead of focusing on spending in the $264 million package, they first scrutinized the revenues.

For about two and a half hours, the officials combed through a range of revenue sources, from building permits and investment income to state grants.

And, to the surprise of some, money from the state could make Fairfield's financial picture a bit rosier, even if the austere budget proposed by Gov. Dannel Malloy is approved as now proposed.

Under the Malloy proposal, the town in 2012 could realize a net increase in state revenues of about $1.3 million.

However, Fiscal Officer Paul Hiller cautioned that whatever level of state aid is ultimately approved by the General Assembly won't be decided until after the town adopts its own budget this spring.

The town's allocation under the state's education cost sharing program will likely remain flat, but proposed changes to the real estate conveyance tax could mean another $818,703 in revenue for a total of $2 million.

Hiller had estimated about $1.2 million in conveyance taxes when the town budget was formulated last month. "What the governor has proposed is expanding the local option," he said. The state collects one-half of 1 percent on the sales price of real estate and towns can collect an additional one-quarter of 1 percent.

And there are 18 "distressed" communities, such as Bridgeport, that have the right to add an additional one-half of one percent to the state conveyance tax and keep that money. Under the governor's budget plan, the rest of the state's towns and cities could collect an extra one-quarter of 1 percent -- up to the same level now allowed for the distressed communities.

"The proposal is to expand it to all 169 towns," Hiller said. "Obviously, if it were to come to pass, it would be a significant windfall."

Currently, when a home is sold in Fairfield, the state collects $5 per each $1,000 of the sales price and the town collects $2.50

A 1 percent increase in the hotel room occupancy tax would also go directly to the towns, Hiller said, if approved by the legislature. That would mean an estimated $25,000 in additional revenue for Fairfield.

The governor's budget, however, also cuts some sources of revenue for the town, such as payments in lieu of taxes for boats and manufacturing equipment.

Although the town would lose the boat tax revenue temporarily, Malloy's proposal calls for towns to be able to tax boats as they do motor vehicles beginning in 2013. So while that means a loss of $61,000 for Fairfield in 2012, in 2013 it could mean in excess of $1.3 million , according to Hiller.

Hiller also expressed optimism that investment income would grow from $1 million this year to $1.1 million.

But not all the Board of Finance members shared that optimism that interest rates will rise.

"Hope is not a strategy," said Thomas Flynn, the finance board chairman.

"This is five months into the future," First Selectman Kenneth Flatto said. "I don't see it being a big deal one way or the other."

Some finance board members questioned whether the estimated revenues from building and zoning permits might be too high, considering the economy.

Flatto's proposal estimates $14,000 in Zoning Board of Appeals waiver fees, another $29,000 for zoning compliance permits and building permit fees of $1.4 million.

Hiller said there are some large projects on the horizon, including two "major" church projects -- Black Rock Congregational Church and St. Pius -- and several new subdivisions "and frankly, just an overall positive trend."

Some building activity is also expected late this year on permits for at least one building at the Metro Center property where the town's third train station is nearing completion, he said.

"Do you get a sense the increase is based more on commercial than residential?" said Vice Chairman Robert Bellitto. "Housing starts are still stagnant."

Flatto said it's a combination of commercial and institutional, but there's still a "fair number" of residential permits being applied for.

Selectman James Walsh, who is a lawyer, said when he looks at the agenda calendar for both the Town Plan and Zoning Commission and the ZBA, it does not appear that full. When the economy is doing well, he said, there is a three- or four-month wait to get on the ZBA agenda. "I can apply right now for April," he said. "That's not showing to me there's a lot in the pipeline."