This decision forces the town board to come up with a new renovation plan.
The referendum would let the city borrow up to $3.2 million to renovate and expand the 90-year-old building.
Many of the residents questioned whether a town of 6,300 people needed to spend that amount on its town hall.
Town supervisor Dan Ross said if the town had bonded for $3.2 million at the current interest rates, the project would have a steep price for property owners.
The renovation project would have cost roughly $50 a year per $100,000 of assessed property over the next 30 years.
"We have to find a plan because something still needs to be done," Ross said. "If this plan is not acceptable, we'll work on something else."
Ross and the town board had a work session on Thursday in order to create a new plan.
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