Islandia officials have proposed a $4.4 million budget for 2017 that cuts taxes by 25 percent for the average household — a result of the revenue from an agreement to develop a Suffolk OTB casino in the village.

Under the proposed budget, the average household will save about $200 on the village portion of taxes, according to Islandia Mayor Allan Dorman at a public hearing about the budget Tuesday night.

The estimated tax rate for 2016 was 1.62 per $100 of assessed value; in 2017 under the proposed budget the tax rate will be 1.21 per $100.

The proposed 2017 budget calls for an increase in spending over the current $3.2 million budget, including purchasing new vehicles for the village, according to treasurer Felix Wienclaw.

The proposed budget expects that about $1.5 million will be raised in property tax revenue. The other $2.9 million of the budget will be raised through other revenue streams such as fines, permits and state aid, as well as $2 million in special assessments on the casino.

In August, the village of Islandia finalized a deal with the company Delaware North, which bought the Islandia Marriott Long Island hotel and plans to lease space to OTB for the casino with 1,000 video lottery terminals. OTB officials expect to open the facility in the hotel by the end of this year.

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In the deal, Islandia will receive $2.35 million a year for the next two decades from Delaware North, under a $47 million “taxpayer relief agreement.” Delaware North also agreed to make a single payment of $1.53 million for improvements to the village-owned First Responders Recreation Baseball Field.

Dorman said he expects the village property tax bills to ultimately be cut in half, with a 25 percent decrease this year and another 25 percent tax decrease anticipated for the 2018 budget.

There were no public speakers at the hearing.

The board is scheduled to vote on the budget at its Nov. 29 work session at village hall.