"We'll have to go back to adjust it," Thomas Kelly, chairman of the Board of Finance, said after the vote.
The finance board will meet at 7:30 p.m. Thursday in Town Hall to discuss budget cuts.
Oxford has no deadline for setting a budget. If a budget is not approved by July 1, the start of the new fiscal year, then town departments will work with a quarter of this year's budget until one is approved.
Tuesday's budget rejection came despite clear sailing for the spending plan at a town meeting last month. First Selectman August Palmer III said it is obvious taxpayers who didn't speak at the meeting had the louder voice.
"It's in the people's hands," Palmer said.
The rejected budget would have meant a property tax increase of $126 for the average home assessed at $175,000.
The $29.9 million budget represented an increase of 7.9 percent over the current fiscal year's $27.4 million spending plan.
The Board of Education may be a likely place to cut, since it is the largest chunk of the budget, with $19.9 million, a 9.3 percent increase from the current $18.2 million.
However, town officials learned Tuesday the state's Education Cost Sharing funding to the town will increase by $110,000. Other additional state revenue is also expected.
"We're hoping they can look at additional revenues that have just been approved by the state," rather than budget cuts, said Robert DeBisschop, school board chairman.
