A report from New York State Comptroller Thomas DiNapoli's office cautioned Hempstead Village on its proposed $81.7 million budget that would hike taxes by 9 percent, saying the village already has used up most of its taxing authority.
While the village board this month voted against piercing the village's state-regulated 1.68 percent tax cap, it is scheduled to revote on the matter on April 30.
If that vote fails, the board will consider an alternate budget that would cut services and departments by $3 million.
Deputy Comptroller Gabriel F. Deyo wrote that, if the village exceeds its tax limit, the comptroller is required to withhold state aid equal to the amount exceeding the tax limit.
"The village's ability to rely on real property taxes as an increased revenue source in the future is limited," he wrote. "We caution the village that if property values do not increase, the ability to increase taxes may be reduced in the future."
The village proposes in its initial budget to collect a property tax levy of $64,397,475, according to the audit. The village said it has about $4 million in its general fund.
The April 10 audit found that the village has exhausted more than 91 percent of its taxing authority, and that the proposed budget exceeded the state-mandated 2 percent tax cap, which requires a vote to adopt a local law to override it.
If the board does not vote to pierce the tax cap and instead approves the alternate budget, residents still will face a 4 percent tax hike that is under the state limit.
The alternate budget would cut every department, laying off five positions and eliminating six vacant police officer positions to make up the difference between the proposed budget and the alternate budget.
Hempstead Village Mayor Wayne Hall has allocated $500,000 of the $2 million tax stabilization fund for either budget. The board must pass a resolution to use the funds before it passes the budget.
The comptroller's office did not make recommendations for the budget because it was not a comprehensive audit, only a review of the proposed revenue and expenditures and "unrealistic increases or decreases."