Hempstead Town budget for 2015 uses $24.9 million from reserves

The Hempstead Town budget for 2015 will use $24.9 million in town reserves, leaving $80 million left over for the next year, officials said Tuesday.

Town board members held two public hearings on the proposed $431.8 million budget for 2015 before it is adopted. It is not expected to exceed the town's 3.2 percent tax cap.

The proposed budget calls for a 3.3 percent tax increase and a $100,000 reduction in spending from the $431.9 million budget this year. The increase is to be offset by the state tax rebate program for families making less than $500,000, town officials said.

Public comments Tuesday included a list of questions by Felix Procacci, a frequent town critic and former Democratic challenger for Hempstead Town supervisor. He said that, while the town has posted three years of tax cuts, taxes have gone up in special districts and for services.

Procacci noted that the town has been judged to be in "moderate fiscal stress" by the state comptroller for having a low reserve fund balance and cash flow.

Moody's downgraded the town in April for using reserves to balance the budget and for ongoing budget imbalances, but also credited the town with strong fiscal management, conservative budgeting practices and multiyear financial forecasting. Its outlook is stable.

Deputy Town Comptroller Michael Capobianco said that even though the town was downgraded to an Aa1 rating, it is still the second-highest bond rating given by Moody's. He said the town is taking steps to correct the downgrade.

"The use of reserves is something quite common, accepted and reasonable due to the economic downturn at this time," Hempstead Town spokesman Mike Deery said.

This year's spending of reserves is a 20 percent reduction from the $31.2 million in reserves the town used last year, Capobianco said.

The town's bond debt was listed at $349 million in April and expected to be cut by about $19 million for 2015, Town Comptroller Kevin Conroy said during the meeting.

Town officials said the budget has been strained this year because of a downturn in the housing market and loss of sales tax revenue.

Capobianco said the budget is only a spending plan and the town could still see a surge in fourth-quarter revenue or a windfall by the end of next year.

"I think Wall Street acknowledges these budgeting and financial practices," Capobianco said. "Rating agencies love to return to budget balance mentality. There are also factors of the economy they can't deny."

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.