North Hempstead increasingly using reserve fund to balance budget

The Town of North Hempstead plans to use $16 million in reserves to balance its budget next year, 60% more from the $10 million it used in this year's spending plan. 

The town proposed a $143 million tentative budget for 2027, a 3.8% spending increase. The budget would keep the tax levy flat at $42.9 million for the second straight year.

The rise in reserve spending follows a trend in recent years' budgets. Use of reserves jumped from $6.7 million to $10 million, or 49%, from 2025 to 2026.

It decreased from 2024 to 2025, but rose 183% from 2023 to 2024, and 152% from 2022 to 2023. It went from $950,000 in 2022 to $2.4 million in 2023. It rose to $6.8 million in 2024, then dropped to $6.7 million in 2025. 

Democrats have criticized Supervisor Jennifer DeSena, a registered Democrat who caucuses with Republicans, for increasingly relying on reserve funds to balance the town's budget. DeSena is running for reelection next month against Democratic nominee Sean McCarthy.

Robert Troiano, a Democratic councilmember, said in a statement that "using money set aside for an emergency to balance the budget means the Town is spending more than it takes in as income."

"Every homeowner knows that using savings to pay monthly expenses will result in financial ruin when their savings are wiped out and they are no longer able to continue paying their bills," Troiano said.

Sean Dolan, a town spokesman, said in a statement that "using reserve funds to provide tax relief and maintain services is not only sound fiscal practice, it is the right thing to do." 

"For years, taxpayers were overtaxed, inflating the reserves with money that could have stayed in residents’ pockets," Dolan said. "During an affordability crisis, we have a responsibility to put that money to work for the people who paid them."

Town officials did not respond to multiple requests to share the town's remaining reserve fund balance if the budget passes, but town spokesperson Umberto Mignardi said in an email that “the proposed budget maintains fund balances above the levels required by Town Code, with reserves at 10.3% in the General Fund and 8.08% in the Town Outside of Village Fund."

In February, credit rating agency Moody's assigned the town a Aaa issuer rating, the highest possible in that category, "despite the planned use of reserves to balance the budget," the report read.

"The use of reserves is below what management originally budgeted," the report stated. "However, the budget for 2026 also included significant budget appropriations, a growing trend that, if it continues, will put pressure on the credit profile."

Lauren Freire, an associate director at S&P Global, said in an interview that "it's not atypical" to see municipalities use reserve funds as a "revenue hold" to help balance the budget.

"Where we might have some concerns, is are they utilizing more fund balance without other revenues increasing," Freire said. "Sometimes we'll see local governments use their reserves as an offset to a tax levy increase, as a give-back to local residents ... Is there a history of the municipality not fully regenerating the appropriate fund balance?"

Troiano added that the town had wasted money on "frivolous" lawsuits, such as its blocking of the Hillside Islamic Center's proposed expansion. The town spent $874,000 related to a pair of lawsuits filed by the mosque, between legal fees and damages. 

The Town of Hempstead will use $30.4 million in reserves to help balance its $591.7 million budget, and Nassau County plans to use nearly $44 million from its reserve fund to balance its proposed $4.6 billion budget.

Oyster Bay Town recently adopted a $366.7 million budget for next year that uses $5 million in reserve funds. It is the first time the town has used reserve funds to help balance the budget in more than a decade, officials said. The town will have $93 million remaining in reserve funds.