Sleepy Hollow trustees are saying cuts will have to be made in order to rein in property tax increases.

The village's draft budget was released last week and indicated almost a 5 percent tax increase for village residents, a number that trustees feel is unacceptable.

"The board is willing to do anything to cut costs, even if it comes to making tough decisions," Village Administrator Anthony Giaccio said in reference to possible layoffs.

Trustees began to tackle the draft budget last week and have already made adjustments to lower the tax increase to 4.05 percent. Trustee David Schroedel said the reduction was made, in large part, by adjusting revenue assumptions which were overly conservative.

"We took a look at some of the latest trends on revenue," Schroedel said. "We looked at what is coming in and we're getting more than we anticipated."

All together, budgeted revenue was only increased by about $50,000. Schroedel said it takes about $90,000 in cuts or increased revenue to lower village tax hikes by one percentage point. Since trustees have already looked at revenues, they will have to start looking at department costs to bring the tax hike even lower.

"We're done with all the adjustments on the revenue side," Schroedel said. "Now we have to look with a very hard eye at every single line item from every single department, and there will no doubt be cuts."

Giaccio said ongoing discussions were aimed at paring the budget below a 3 percent tax increase.

"They won't accept anything higher than 3 percent, and I would guess it would be below 2 percent," he said.

However, trustees have a hard job ahead of them in trying to cut expenses from an already meager budget – two years ago, trustees approved a zero increase budget, and last year the tax increase came in under 2 percent.

"They are cutting from an already lean budget, that makes it that much more difficult," Giaccio said.

Another problem are the unknowns and variables that are making solid budget numbers hard to pin down.

"It's a fluid document," Giaccio said. "Even as we're cutting there are more expenses coming in."

Major cost increases for the village includes new state mandates to pay more into municipal employee pension programs. The village has to pay in an additional $195,000 for employee pensions, $80,000 for workers compensation and $22,500 for dental benefits this year.

The village may also have to deal with union contract negotiations. The contracts for the unions representing court officers, police officers and public works officials are all expiring.

Schroedel said layoffs were on the table, but noted that trustees were looking to eliminate positions that are currently unfilled first. Trustees are also eyeing soft costs – money for supplies, training, memberships and travel expenses.

"We're asking everyone to go down 2 percent across the board," Giaccio said in reference to village department budgets.

The village also has some unknowns in its favor. A special permit for development on the Castle Oil property has a one-year limit. When developers begin to make their move they will have to begin taking out, and paying for, construction permits.

Overall, trustees are approaching the 2010-2011 spending plan with as much fiscal restraint as possible.

"It's a very difficult task they have," Giaccio said.

Trustees will discuss aspects of the budget during their work session tomorrow. There is a public hearing at 7 p.m., April 6 to hear comments from the public about the draft spending plan for 2010-11.