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Albany council hears proposed biennial budget; staff says FY2026 balanced, FY2027 projects shortfall
Summary
Finance Director Rainer Schwartz presented a proposed two‑year budget May 19 that staff described as balanced for fiscal year 2025–26 but likely to return to deficit in 2026–27 because of rising pension costs, uncertain revenues from the closed Golden Gate Fields property and ongoing labor cost pressure.
On May 19, 2025, the Albany City Council received a formal presentation of the proposed biennial budget for fiscal years 2025–26 and 2026–27. Finance Director Rainer Schwartz told the council the proposed 2025–26 budget is balanced and that the city will adopt the final budget at a public hearing scheduled for June 2. Schwartz said the city expects a small deficit in FY2026–27 unless further actions are taken.
Schwartz said the FY2025–26 proposed budget reaches a $0 bottom line through a combination of conservative revenue estimates, planned turnover savings, and holding three currently vacant positions unfunded. He highlighted continuing pressures that could push costs higher in later years: increasing CalPERS pension payments, a tight regional labor market that raises salary and benefit costs, and the closure of Golden Gate Fields, which has already reduced the general fund by roughly $300,000 this fiscal year and may reduce about $700,000–$800,000 a year in special revenues tied to that property depending on future uses.
The proposed budget includes an estimated $226,000 in sugar‑sweetened beverage tax revenues to be used for health‑related programs; the finance director warned that spending SSB proceeds beyond that amount would make the overall operating budget unbalanced for FY2025–26. Property tax growth is budgeted at roughly 3.7 percent for FY2026, and the city plans limited transfers from special funds to support operations and capital work.
Council members asked detailed questions about the budget. Several sought clarity on the city’s longstanding pension and override funds: the pension unfunded liability remains a multiyear pressure and the city’s annual required CalPERS payment is expected to rise (Schwartz cited an increase of roughly $300,000, about an 8.7 percent jump). When asked what would happen to a dedicated pension override fund once the last retirees are paid, staff said the legal options require further evaluation before any repurposing could be proposed.
Staff also described internal adjustments: a vacant management analyst position that previously supported risk management is proposed to move to the police department to become a civilian records and communications supervisor; risk management duties will be redistributed among existing staff. The city projects no net increase in funded positions (118.3 full‑time equivalent), though it plans to leave three positions unfunded to help balance FY2026.
Schwartz and other staff provided fund‑level context: the Emergency Medical Services fund relies on Measure K and ambulance billing and will carry a modest transfer from a pension‑override parcel tax; the sewer operating fund will use collected fund balance to pay for capital work including the Brighton sewer project. Councilmembers and staff also discussed the long lead time and uncertain financial outcomes tied to the Golden Gate Fields property, which was announced closed in July 2023 and remains in transition.
No formal action was taken on the budget at the May 19 presentation; adoption is scheduled for a June 2 public hearing. Councilmembers asked staff to return with additional clarifications on long‑term pension strategies, the composition of projected revenues, and the accounting of recent reserve and fund transfers.
