Long Island town and city pension costs rise to $137M amid new sweeteners, straining local budgets

Long Island town and city pension costs surpassed $137 million last year, up $13 million over 2024, as the expense continued to strain municipal budgets, a Newsday analysis found. 

State data shows two consecutive years in which the cost of funding employee and retiree pensions spiked across Long Island's 13 towns and two cities by more than 10%. The costs rose from $110 million in 2023 to $123.7 million in 2024, a 12.5% increase. A year earlier, the total had declined from $114 million to $110 million, a 3.6% drop, according to data from the State Comptroller's Office.

Local governments historically have offered pensions to recruit and retain workers. The idea was to compete with higher-paying jobs in the private sector, where pensions have  grown increasingly out of favor over concerns about long-term costs. While the state has tried to rein in benefits for newer employees, advocates have successfully pushed to restore some of them, prompting legislative battles in Albany.

New York has sweetened pension benefits in recent budget cycles. Changes in the 2024-25 state package ultimately boosted pension calculations of Tier 6 employees — municipal workers hired after April 1, 2012. The new calculation factors in the employees' three highest salaries, rather than five. When the sixth pension tier was created, the idea was to pare back benefits for newer employees and offer them less expensive benefits.

East Hampton established a pension reserve fund to offset increases to retirement benefits that the town is unable to absorb. In 2024, the town withdrew $400,000 to cover police pension expenses and $5,200 for other employee pension costs. The fund has about $1.6 million left, she said. 

In Huntington, Town Supervisor Ed Smyth said he expects to pierce the cap. Not piercing, he said last month, would be akin to "fiscal suicide."

The town experienced a 6.6% increase in its 2024 pension bill, which rose to $8.7 million that year. Then, it jumped by almost 14% in 2025, hitting $9.9 million. 

From 2022 to 2023, village pension costs grew $4 million Islandwide, or 6.3%, to $67.9 million. Then, the cost jumped nearly $10 million in 2024, or 14.5%, rising to $77.8 million. By 2025, the total had grown by $8.6 million, or 11.1%, swelling to $86.4 million, state data shows.

"It's simple math," Goulding said in an interview. "If 80% of your budget is for workers with these kinds of large increases, you can't convert that into something 2% or below," he said, referring to the state tax cap limit. "I think that's why you're seeing all these villages and towns pierce the cap — it's mathematically impossible."

Shelter Island, with roughly 1,400 households on about one square mile of land, was billed $614,000 for pension contributions for first responders in 2025. That was up nearly $100,000, or about 19%, from the year before. Its bill for municipal workers went from $588,000 to $675,000, an almost 15% increase.

Some municipalities started the year by hiking fees and exploring spending cuts. Glen Cove raised the cost of construction permits and parking fees, while Smithtown eyed cuts to its vehicle fleet. In February, the Smithtown council raised fees on some residential and construction-related permits, such as doubling electrical permit fees to $100, Newsday has reported. In the spring, Islip officials sought an early vote giving the board permission to pierce the cap in the fall. The town board tabled the measure.