Riverhead Town added nearly $4.9 million to its general fund balance in 2025 as revenue grew faster than spending, according to the town’s recently accepted audited financial statements.
The general fund, which pays for most town operations, ended the year with a balance of $33.3 million, up from $28.4 million in 2024. About $28.8 million of that balance was not restricted or designated for a particular purpose.
The increase gives the town a larger financial cushion as officials prepare the next budget. But much of the additional revenue came from property taxes, raising a question for taxpayers: How much should the town retain for future needs, and how much could help limit future tax increases?
That question may be answered today when Supervisor Jerry Halpin unveils his 2027 operating budget.
PKF O’Connor Davies submitted the audit report to the town on Aug. 7. The Town Board accepted the audit on Sept. 1 and authorized its public dissemination, including posting on the town’s website. The board has not publicly discussed the audit.
A separate audit report, which was not disclosed by the Town Board resolution or attached to it, accompanied the audit report on the town’s financial statements. The separate report identified three “material weaknesses” in the town’s accounting and oversight of federal grant money.
See separate story: Riverhead audit flags failures in processing $3.57 million federal water grant, which examines those findings.
Higher revenue, led by property taxes
General fund revenue increased to $67.4 million in 2025, up $4.7 million, or about 7.5%, from the previous year. Spending increased to $60.2 million, up $3.2 million, or about 5.6%.
Those figures exclude transfers between town funds. After accounting for transfers in and out, the general fund added $4.9 million to its balance.
Property-tax revenue increased by $4.1 million to $48.6 million, accounting for most of the overall revenue increase. That is the increase in property-tax revenue reported by the general fund, not the percentage increase in an individual homeowner’s tax bill.
Employee benefits accounted for much of the spending growth, increasing by approximately $2.4 million to $18.8 million. General government expenses also increased, while public safety spending declined slightly.
The year also ended considerably better than the town’s revised budget anticipated. That plan called for using approximately $2.7 million of accumulated general fund balance. Instead, the balance grew.
Revenue exceeded the revised estimate by about $4.3 million. Income from interest, rentals and other uses of town property, along with departmental fees and other revenue, came in above expectations.
Spending and outstanding commitments were approximately $2.6 million below the revised budget. The report attributes much of that difference to lower-than-budgeted insurance, fuel, utility and employee-benefit costs.
A growing cushion, with competing demands
The general fund balance has risen from approximately $26.6 million at the end of 2023 to $28.4 million in 2024 and $33.3 million in 2025.
Fund balance represents resources accumulated from prior years. Some amounts are restricted, designated for upcoming expenses or tied up in items such as prepaid costs. The portion available without those restrictions or designations increased from approximately $23.9 million to $28.8 million during 2025.
The town’s other governmental funds also ended the year with larger combined balances. Across those funds and the general fund, the total reached $77.8 million, up from $67.2 million. Much of that money is dedicated to specific purposes and cannot be used to pay general operating expenses.
The Community Preservation Fund, for example, ended 2025 with $30.1 million, up from $25.6 million. Its balance increased even though revenue from the real-estate transfer tax fell by approximately $2.5 million to $7 million.
Some problems persisted
The stronger overall results did not eliminate deficits in the town’s recreation program and Police Athletic League funds.
Their combined deficits increased by approximately $116,500 to $765,873. The previous audit said the deficits were expected to be eliminated in 2025. The new report says they are expected to be eliminated in 2026 through lower expenses and higher program revenue.
The town’s risk-management fund also ended the year with a smaller cushion after accounting for its liabilities. Its net assets fell from approximately $350,000 to $95,000. That does not mean the fund had only $95,000 in cash: it held about $1.73 million, but also had approximately $1.64 million in claims liabilities.
Long-term costs remain substantial. The estimated obligation for retiree health and related benefits increased by approximately $10.3 million to $142.8 million. That is an estimate of benefits payable over many years, not a bill currently due. The town paid approximately $4.2 million in those benefits during 2025.
Meanwhile, outstanding bonds and short-term borrowing totaled approximately $60.4 million at year-end, down from $66.8 million a year earlier.
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