Federal probe sought after Hempstead Town uses $70M in stimulus funds for payroll

Long Island lawmakers are asking the U.S. Treasury to investigate how the Town of Hempstead spent $133 million in federal stimulus funding, including more than $70 million that was used to cover payroll.

In a letter Thursday to Deputy Treasury Secretary Justin Muzinich and Special Inspector General Brian D. Miller, local representatives said an investigation on how the funds were being used is warranted, citing "little to no details" provided by the town.

"The lack of transparency with regard to how the CARES Act funding is being spent by the Town and the length of time it has taken the Town to spend this money — the deadline for expenditures is quickly approaching and these hearing documents were just made public — necessitate an immediate investigation," the letter stated.

The letter was signed by Rep. Kathleen Rice (D-Garden City); Nassau County Executive Laura Curran; Sen. Todd Kaminsky (D-Long Beach); Sen. John Brooks (D-Seaford); Sen. Kevin Thomas (D-Levittown); and Sen. Anna Kaplan (D-Great Neck).

The move comes after town board members on Tuesday approved $70.1 million in payroll resolutions using CARES Act funding, including $43 million for the town’s sanitation department and $17.3 million for other departments, such as for bay constables, and $8.3 million for the water department.

Hempstead Supervisor Don Clavin, a Republican, and town Comptroller John Mastromarino said the spending was deemed as public safety expenses during the pandemic and authorized by the Treasury. Clavin and Mastromarino said the town has shown transparency by approving each item through town board resolutions.

Many of the resolutions for the town’s funding, including the $70.1 million in payroll expenditures, did not appear on the town’s Tuesday meeting agenda and were added as emergency hand-up resolutions just before the board voted on them. The deadline to allocate CARES funding is Dec. 30.

Town officials said they were added after a legal review and new guidance from the Treasury Department late last month that stated "all payroll costs for public health and public safety employees are payments for services substantially dedicated to mitigating or responding to the COVID-19 public health emergency."

Hempstead was the only town in the nation to receive CARES funding, based on its population of nearly 800,000 people, making up more than half the population of Nassau County. Nassau received $103 million, which officials said they have used for first responders, public health and the county morgue.

"I think it’s a sad partisan attack by the county executive and her cohorts while the town has spent millions testing residents and helping feed over a million people, and giving millions to the county and being open and transparent," Clavin said. "All of these elected officials should be ashamed of playing pure partisan politics during the pandemic."

The town also on Tuesday approved nearly $1 million for local fire departments and villages for personal protective equipment costs, and $1.7 million in town improvements, including air filters and sanitation costs in town facilities.

The town previously awarded about $27 million to local hospitals, universities and food banks.

Mastromarino said the spending on previously budgeted salaries and overtime was equivalent to Nassau using federal funding to pay salaries for police.

County officials cited Treasury guidance in September that said payroll costs were ineligible for employees not responding to the pandemic.

"The town’s recent allocation of critical CARES funding should be used as it was intended — to provide economic support for those who continue to directly save lives," said Curran spokesman Michael Fricchione. "The supervisor is risking his money being clawed back by the federal government and lost forever."

The town also plans to allocate its remaining $25 million for internal improvements, such as 400 touchless bathrooms, air filters and upgrades at 82 town buildings.

But as local governments have asked for more aid, town officials said they have nearly exhausted all of their federal funding and urged local representatives to seek additional funds for New York and Long Island.

Mastromarino said the town waited until the end of the year to calculate payroll, which he said included departments classified as public safety, such as sanitation. The expenses still face an audit by the Treasury’s inspector general for expenditures incurred by Dec. 30.

"The CARES Act clearly said from the beginning: If the expenses were for public safety or public health, you can in effect have payroll that was related to that," Mastromarino said. "You are eligible to utilize that criteria to draw down those funds."

By John Asbury

john.asbury@newsday.comJohnAsbury

John Asbury is a breaking news and general assignment reporter. He has been with Newsday since 2014 and previously worked at The Press-Enterprise in Riverside, California.