TIVERTON — Angry voters last night refused to authorize the town to exceed the state’s 5 percent limit on growth in the overall tax levy during the next fiscal year, leaving the Budget Committee’s proposed $42.2 million spending plan in a shambles.

The state has authorized the town to go over the 5 percent ceiling so that it could begin paying off a $20 million school construction bond approved in 2004 and make up for projected declines in non-tax revenue in the next budget cycle.

But the majority of the 437 taxpayers who attended the annual Financial Town Meeting last night in the high school gymnasium didn’t care about what the state had authorized.

Shouting “no,” the voters signaled that they would not approve the final $2 million of the Budget Committee’s proposed $30 million tax levy.

Once the voters’ intention was clear, Budget Committee chairman Christopher Cotta called for a recess in the meeting so that the committee could rework its numbers downward.

Cotta, as well as Town Council president Louise Durfee and other town officials, stood sharply at odds with the nay vote, warning that the loss of $2 million in tax revenue would result in sharp reductions in municipal services.

Cotta talked about legal restrictions against cutting some areas of the budget, leaving other areas like trash pickup on the chopping block.

One woman called out, “Is that a threat?”

“That’s not a threat, just the facts, ma’am,” Cotta replied.

Citizens focused their ire on the schools, particularly in connection with the cost of the $20 million bond for renovating the Pocasset and Fort Barton elementary schools. The town’s debt service would jump by about $1 million, or nearly 50 percent, to $3,261,786 from $2,254,257.

Roger Bennis questioned the size of that increase.

School Committee chairwoman Denise deMedeiros reminded the townspeople that voters approved the school bond in 2004. The School Committee was “very clear” at the time that the debt service on the bond would represent a tax over and above the operating budget.

Bennis said that he limits his own borrowing costs to his income, and while there are some who don’t follow that practice, they end up in the Adult Correctional Institutions.

Durfee, the Town Council president, promptly took Bennis to task, saying, “I can’t let that go.”

The vote to renovate the schools in 2004 was legally binding, and the property tax-relief legislation later passed by the General Assembly progressively restricting the growth in municipal levies provided for a vehicle to recognize contractual obligations already in effect.

“With all due respect,” she said, those bonds have to be paid,” Durfee said.

If the town does not have the revenue to pay the debt services, it will be in bankruptcy, and there will be “state ramifications,” she said.

Moreover, Cotta told voters that the School Department, by law, must receive at least as much money from the town next year as has been allocated for the current budget cycle.

And he said the town is also under a legal obligation to pay the costs of minimum-manning clauses in the Police and Fire department contracts.

Joe Sousa asked fellow voters to “send a message upstate” that the town’s taxpayers reject unfunded state mandates, particularly those related to the schools, like the education of special-needs students.

“We can’t afford it any more,” Sousa said.

“The prices we’re paying to send these children to school are outrageous,” he said.

Sousa said he didn’t want to recess the meeting. He said he wanted to move forward last night.

Cotta accused Sousa of proposing an “irrational motion that violates the law,” calling it “inappropriate.”

The recess was approved for one week, the time period specified in the Home Rule Charter.

In reality, it will take “a good month to do what we have to do,” Durfee said.

gmacris@projo.com