Hempstead Town, on eve of budget hearings, adds information on reserves

On the eve of an expected vote on the 2026 budget in Hempstead, Supervisor John Ferretti added a motion to his budget proposal to include information about the town's reserves following queries from Newsday. 

The town board will hold afternoon and evening hearings on the budget Thursday, after which a vote is expected. 

The budget does not include information about the town’s available reserves despite a state audit that warned that the town was required by law to provide those details. A motion posted on the town's website late Wednesday stated that the town estimates it will end 2026 with $129.1 million in fund balances but does not indicate what the balances are today or provide certain details. 

The proposed $576 million budget would use up to $50 million of reserves, according to town officials. How much in reserves the town has available in each of the funds that make up the budget is information that state law requires to be part of the proposal.

In 2022, State Comptroller Thomas DiNapoli’s office told the town in an audit that it hadn’t been including that information in previous budget proposals. State law requires that preliminary budgets show detailed information about fund balances, which are often used as reserves.

“Due to a lack of required information provided in the preliminary budget, officials and taxpayers may not have had adequate information to properly assess budget estimates,” the audit said. “Further, officials and taxpayers did not have complete and sufficient financial information to effectively assess the reasonableness of fund balances and its effect on the overall budgets.”

The audit also criticized how the town described its uses of fund balances in its past budgets. Past budgets showed general information about expenses and revenues that listed “Balances” as funding sources.

“While appropriation of available fund balance as a financing source is a common and accepted practice, the Town’s practice of calling it “Balances” is not the correct way to present the amount of appropriated fund balance in the budget,” the audit said. It also said that this practice was creating deficits.

Subsequent budget proposals, including the 2026 proposal, continued the practices of using "Balances" as funding sources. 

"The preliminary budget, as presented, appears to not address the findings of the state comptroller's report regarding compliance with the Town Law to present fund balances in sufficient detail,” Janet Penska, senior fellow at CUNY Institute for State & Local Governance, said in a statement after reviewing the town’s 2026 preliminary budget.

Information added Wednesday

Town officials did not respond to questions submitted about the town’s compliance with the findings in the comptroller’s audit, but Wednesday evening — a day after Newsday inquired about compliance — town spokesman Brian Devine emailed a link to the new motion with 2026 estimated fund balance information. 

Before Ferretti modified budget information Wednesday, Mark Johnson, spokesman for the state comptroller’s office, said in an email, "It would not be appropriate for us to comment or opine on current actions of the town board, as the issue maybe be something we’d audit in the future." 

Under former Town Supervisor Donald X. Clavin Jr.’s tenure, the town repeatedly drew down from its reserves to balance its budgets without increasing taxes to keep up with increased spending. This practice led to Moody’s Investors Service warning that the town’s perfect credit rating was in jeopardy.

After the town board hiked the tax levy by 12.1% for 2025, Moody’s said the town’s fund balances were being replenished and the town’s finances had stabilized.

A Newsday analysis of the 2026 budget also found inconsistent presentations of how fund balances would be used in individual budgets for special districts, such as parking, parks, water and fire protection. Most of the districts would draw down from fund balances to close deficits, while 21 districts would use taxes and/or other revenue to increase their fund balances. The budget presentation doesn't distinguish between reserve drawdowns and reserve replenishments. 

In an interview in September about the district budgets, Hempstead Town Comptroller John Mastromarino told Newsday that the inconsistency was a software issue; that the program wouldn’t display brackets when the number should be negative.

“We’re working on it ... but the math is always correct,” Mastromarino said.