Hempstead Town officials are proposing a 1.9 percent tax increase in the tentative 2018 budget, which averages to about a $20 increase per homeowner.

Town Board members were presented a $418.6 million budget Tuesday — a 0.97 percent decrease from the 2017 budget of $422.7 million. The board will vote to approve the budget Oct. 17.

The tentative budget calls for a $3.7 million cut in expenses, with a $4.1 million reduction in spending compared to the current budget. The 2017 budget also included a 1.8 percent tax increase, equaling about $6 per household.

The proposed 2018 tax hike is under Gov. Andrew M. Cuomo’s 2.33 percent tax cap.

The town is presenting its second straight structurally balanced budget, where expenses are equal to revenues. Previous town budgets from 2009 to 2016 used between $18 million and $53.9 million in reserves to balance the budget and avoid a tax increase. The town is expected to increase revenue in 2018 by $17.5 million, made up of real estate taxes, sales tax, mortgage tax and utility fees.

The budget includes the tax increase to make the town compliant with a policy that requires the town’s emergency fund balance to be equal to one-twelfth of operating expenses, Town Comptroller Kevin Conroy said. The town has not been in compliance with the policy for several years.

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The town’s budget calls for a total fund balance of about $140 million, including $120 million of reserve cash available by the end of 2018.

“We were out of compliance with our policy and previous budgets were using the fund balance to mitigate a tax increase,” Conroy said. “We’re raising taxes exclusively to replenish the fund balance.”

Town officials said the increased fund balance should reduce the cost for homeowners for borrowing debt service for mortgage payments. He said it should also improve the town’s bond rating, which stands at Aa3 with Moody’s Investors Service and A+ by Standard & Poor’s credit rating agency.

The town’s bond rating was downgraded three times in a row by Moody’s, most recently in February for imbalanced budgeting operations and a narrow available fund balance. The town had $30 million available at the end of the 2015 fiscal year. The town was given its third straight outlook upgrade to “positive” in April.

Democratic supervisor candidate Laura Gillen has criticized Republican Town Supervisor Anthony Santino for touting a $5 million operating surplus at the end of 2016.

That figure was different from a 2016 audit by the town for the state comptroller’s office, which showed a $53 million deficit, including capital projects. The town had simultaneously taken out $75 million in bonds to cover the projects and ended 2016 with a $6.1 million deficit.

Town officials said the town was working with an operational surplus at the end of 2016 because the budget did not account for an $18 million garbage tax judgment from Nassau County and a $3.4 million equipment write-off by the town’s highway department.