That must work. We had a crazy drunken asshole in our neighborhood named Matthew that called me a cunt when I didn't give him money. Everyone knew he was a crazy dick but still gave him food.
Bring an airhorn shopping and blast her with it everytime she calls you a "c***". She will remember you and it will not happen more than a couple of times....
Here's what you need to know: Judy is the mayor, and you are a wanker. And if you need to, you can call her a cunt. I guarantee you that she has faced a lot worse than that. She would probably laugh.
Tell her you will give her five dollars if she never asks you again and she will honor that deal.