Hempstead Town approved a $453.5 million budget that does not raise taxes, but takes nearly $20 million in reserves to close a deficit blamed on the COVID-19 pandemic.
The town faced a projected $19 million deficit in 2021 after officials said estimated expenses this year will be $465 million, $28 million more than 2020's approved $437 million budget.
Town Supervisor Don Clavin said the budget, which is $17 million more than the 2020 financial plan, maintains town services, but he asked department commissioners to cut projected spending next year by $11.4 million.
The budget projects $433 million in revenue next year, including $253 million in taxes, $180 million in special district fees and $19 million from reserves.
"It is incumbent on government to lead by example at all times, but especially as families struggle during difficult economic periods like the current Coronavirus pandemic, which was so abrupt and unexpected," Clavin said in a statement.
The budget projects generating $25 million in mortgage recording taxes and receiving $3.8 million in state aid. About 20% of the budget includes health insurance and pension costs, which increased by $4 million.
Town officials said they chose to borrow from reserves in its fund balance to avoid a tax increase. Taxes went down by 3.8% last year. The town is still expected to have more than $100 million in reserves after next year.
"This is not a good environment to do a tax increase. We’re doing more with less. We don’t have a choice. The last thing we wanted to do was raise taxes," Hempstead Comptroller John Mastromarino said. "It’s a balanced budget and we utilized accumulated funding from a rainy-day fund. This sure is a rainy day."
Mastromarino, who was hired as a consultant by the town board majority before he was named comptroller, said budgeted expenses were too low.
He said the town was $21 million short in its revenue projections for 2020, including $5 million in sales tax and $4 million in park fees.
The town was hit hard by the pandemic, including several employees who were sick. Many staffers had to work from home.
"We had four cases of the virus and one fatality that shut us down," Mastromarino said. "The first quarter of sales tax was on track for an increase of 7%, but then the pandemic hit and the rug was pulled out from under us."
The new budget cuts 37 vacant positions, bringing the total number of employees in the town to under 1,800. The budget also eliminates $1 million in spending from the supervisor's office after several positions were cut and transferred before Clavin took office.
The town is not using any of $133 million in federal CARES Act funding to manage the deficit, but has spent some of it on virus-related costs, such as retrofitting offices and bathrooms.
The town has about $100 million remaining, but the U.S. Treasury has said the money cannot be used to replace lost revenue.
Hempstead Town 2021 budget
- $253 million tax levy with no tax increase
- Borrows nearly $20 million in reserves
- Projects $453.5 million in expenses