The Hempstead Town Council plans to pass the town’s largest tax hike in at least a decade on Tuesday, with a 12.1% tax increase, surpassing the state tax cap for the first time since its implementation in 2011.

The city will hold afternoon and evening public hearings Tuesday on removing the tax cap and approving the 2025 budget. The budget proposal would increase the city’s tax levies from $346.8 million to $389 million of dollars, an increase of $42.1 million and the largest tax increase in at least a decade.

The plan would increase city spending to $549.1 million, a 5% increase from the $522.5 million passed in the 2024 budget. City spending has continued to rise under leadership of Town Supervisor Donald X. Clavin, Jr. since he took office in 2020 and passed his first budget in 2021 with a $453.5 million spending plan.

In a letter included in the proposed budget, Clavin called the tax increase “a modest positive adjustment to property revenues.”

City spokesman Brian Devine said in an email last week that the city has “aggressively controlled costs that are at the city’s discretion, while employing cost-saving measures to offset the cost.” ‘Impact of Increases in Costs of Non-State Funded Mandates’. Devine said a reduction in the city workforce, in the form of a retirement incentive offered earlier this year, would save taxpayers money.

While Clavin has touted a “tax freeze” since taking office, tax levies have increased slightly – by less than 1% – in 2021, 2023 and 2024, according to city records. Property tax levies decreased by 0.29% in 2022, according to city records.

With tax revenue remaining essentially flat while spending increases, the city has used federal pandemic aid, raised fees and dipped into its reserves. In 2024, the city planned to use $56 million in reserves to balance its budget. It is not yet clear whether the reserves will be used in the 2025 budget.

In April, Moody’s Investors Service, a Wall Street credit rating agency, warned Hempstead that it could see its Aaa bond rating downgraded if it continued to adopt “structurally unbalanced budgets that rely on the use of reserves to support ongoing operations.

The rating agency revised its credit outlook for the city from stable to negative, signaling that the rating could fall.

“The city has relied on available reserves to balance its budgets in recent years and has failed to implement either revenue increases or spending reductions, resulting in decreased financial flexibility” , the report says.

Earlier this year, the City Council increased salary spending for elected officials, granting raises of up to 14 percent this year and making future increases automatic, based on inflation.

On the revenue side, the city’s use of stop-arm cameras on buses is expected to bring in about $29 million in revenue annually. Devine said in an email that about $10.5 million would be paid to the seller and $3.5 million to Nassau County to cover arbitration costs.

Democrat Kevan Abrahams, who is running against Councilman Chris Schneider, a Republican, in a special election this year, criticized the tax hike.

“This is not a tax that is necessary, it is not justified,” Abrahams said. “City residents are struggling to pay for their groceries, pay for gas at the pump and pay all the utility fees that exist in the city. It’s not a question of tightening its belt, the city could do better.