I would recommend keeping the dog inside so it won't bark, and then after a week or two talking to the neighbor and letting him know that the dog will stay inside to prevent any inconvenience on his part. I would also tell him that I did not appreciate being sprayed by the hose, and that in future dealings I would appreciate a phone call if there were any issues. That's what I would recommend.
That being said, if he sprayed my dog with a hose I'd kill him a few months later and dump his body in a vat of lye and dissolve his ass. Where did he go? No one knows. "He was always a weird neighbor, muttering about just packing up and leaving."
I'm not a violent guy, but I really like my dog. He's just hanging out doing dog stuff not causing nobody any harm. Don't mess with a man's dog.